Get back to doing what you love.
As a small business owner, do you think about the days when you first created your business and wish that you could go back?
Did you stay up until 3 am testing the perfect fabric for your new clothing line, use up all your free time scouting fresh food markets to find the perfect ingredients for your new dish, spend every waking moment doing rough drawings of the cabinets you wanted to build?
You used to do what you love, but now you’re busy with admin tasks, phone calls, emails, and a never-ending ‘to-do’ list. Your business is expanding which is good but you’ve lost touch with the reasons you began it in the first place.
You need help. We get it. At Hall Accounting Company we have a passion for giving our clients their vision and dreams back. If you’re increasingly bogged down by financial decisions and complexities, then our fractional CFO services are just what you need. We shoulder the burden by providing financial expertise and strategic guidance so that you can spend time in your business doing what you love.
Stay with us as we take a look at fractional CFO hourly rates, reasons for you to use outsourced CFO services, and how a part-time CFO can grow with your business now and into the next decade.
We will also provide you with examples of fractional CFO services and provide you with a cost-benefit analysis for these services.
Give us 5 minutes and we’ll give you hope that you can recover time to dream again.
Let’s jump right in.
I’m ready to talk to a CFO right now
Cost-Benefit Analysis of Fractional CFO Services
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Costs
The variances in hourly rate can be quite large depending on the geographical location and experience of the CFO. However, based on current trends, fractional CFO costs range from $100 to $300 or more per hour. For this analysis, let's consider a mid-range rate of $200 per hour.
The total cost will also depend on the duration and frequency of engagement. As an example, if a small business engages a fractional CFO for 10 hours per month, the monthly cost would be approximately $2,000.
By the way, the cost of a full-time CFO is much higher, averaging from $120,000 - $180,000 per annum. Monthly salaries can run into the upper $300K for some areas.
Benefits
Strategic Financial Planning: A fractional CFO can help develop a long-term financial strategy, potentially leading to better financial health and growth prospects for the business.
Improved Cash Flow Management: Effective cash flow management by a fractional CFO can enhance the liquidity and operational efficiency of the business, potentially avoiding costly cash crunches.
Budgeting and Forecasting: Accurate budgeting and forecasting can help a business avoid overspending and better prepare for future financial needs.
Fundraising and Investor Relations: Expertise in fundraising can be crucial for businesses looking to scale, potentially leading to successful funding rounds and investor relations management.
Cost Savings through Financial Efficiency: Identifying areas of financial waste or inefficiency can lead to significant cost savings.
Risk Management: Mitigating financial risks can save the business from potential losses and liabilities.
Compliance and Tax Optimization: Ensuring compliance with financial regulations and optimizing tax strategies can prevent costly legal issues and reduce tax liabilities.
Example 1 - Reduced expenses and increased efficiencies
A small coffee production facility is struggling with cash flow management, inefficient budgeting, and planning for growth. The solution was to hire a part-time CFO to work on these challenges. The business developed a robust financial strategy, improved its cash flow management, and received guidance on a successful funding round.
The Results:
Improved cash management leading to a 15% reduction in unnecessary expenses.
Effective budgeting helped redirect 10% of spending toward growth initiatives. Successful fundraising increased the business’s capital, facilitating expansion. The CFO was measured on: Reduction in operational costs, improvement in profit margins, and efficiency in vendor contract negotiations.
Conclusion:
The cost of hiring a fractional CFO (e.g., $24,000 annually at $2,000 per month) needs to be weighed against the potential financial gains from improved financial management, cost savings, and strategic growth initiatives. Even a moderate improvement in financial efficiency and growth prospects can make the cost of an outsourced CFO viable for a small business.
Let’s take a look at more examples that will help you to visualise where a CFO will be valuable in your business.
Example 2 - Navigating a Financial Turnaround
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A franchise management team hires a fractional CFO for a short-term intensive engagement at $250 per hour for 40 hours in a month, costing $10,000. The fractional CFO restructures the business's debt, negotiates with creditors, and sets up a viable turnaround strategy.
The Results:
The business avoids bankruptcy, renegotiates its debts into manageable payments, and sets a course for recovery, far outweighing the one-time cost. The CFO was measured on: Debt restructuring success rate, cash flow improvement, business continuity, and recovery rate.
Example 3 - Preparing for Business Expansion
A tech start-up decides to hire a fractional CFO for 12 hours at $200 per hour, equating to $2,400 per month. The CFO assists in preparing a financial plan for expansion, identifies potential funding sources, and advises on the financial implications of expansion strategies.
The Results:
The business successfully secures funding and expands operations, leading to a significant increase in monthly revenue far beyond the $2400 a month. The CFO was measured on: Successful capital raised, effectiveness of financial plans for expansion, and revenue growth post-expansion.
Example 4 - Implementing Cost-Effective Tax Strategies
A small retailer hires an outsourced CFO at $200 per hour for a total of 10 hours a month, resulting in $2,000 monthly. The CFO identifies tax-saving opportunities and implements more efficient tax strategies, leading to substantial tax savings.
The Results:
The tax savings achieved exceed the cost of the CFO’s services, improving the business’s bottom line. The CFO was measured on: Tax savings achieved, compliance with tax regulations, and effectiveness of new tax strategies.
Example 5 - Enhancing growth and market expansion
A new soda company that specializes in natural flavors engages a fractional CFO for strategic market expansion guidance at $225 per hour for 15 hours per month, totaling $3,375 monthly. The CFO assists in identifying new market opportunities, developing expansion strategies, and creating financial models for entering these markets. This leads to successful market entry and increased revenue streams.
The Results:
The business successfully expanded into two new markets, increasing annual revenue by 25%. The CFO was measured on: Revenue growth from new markets, successful market entry, ROI on market expansion initiatives.
You can see from these examples that it is highly achievable for a small business to make use of an outsourced CFO service, but where to from here?
That was helpful. I want to speak to a CFO about my business.
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Gearing Up To Use An Experienced CFO
For a small business looking to gear up fractional CFO costs, there are several strategic approaches to consider.
Define Clear Objectives and Expectations
Start by identifying the specific areas where the business needs the most support. This could include financial planning, cash flow management, budgeting, fundraising, risk management, or strategic growth initiatives. Clearly defining objectives and expectations will help align the fractional CFO's efforts with the business's needs.
Integrate the Fractional CFO with Your Team
Even though they are not full-time employees, integrating the fractional CFO with your existing team is crucial. Ensure they understand your business culture, goals, and the unique challenges your business faces. Regular communication and involvement in key meetings can facilitate this integration.
Focus on Strategic Financial Planning
Utilize the fractional CFO's expertise in developing a robust financial strategy. This includes long-term financial planning, investment strategies, and setting up scalable financial systems that support business growth.
Optimize Cash Flow and Budgeting
Leverage their skills in managing cash flow and creating effective budgeting processes. This is vital for maintaining the financial health of the business, especially in the early growth stages. Setting up financial reports and maintaining business financials make up a large part of the CFO function.
Fundraising and Investor Relations
If your business is seeking investment, a fractional CFO can be invaluable in preparing for funding rounds, managing investor relations, and navigating the complexities of equity and debt financing.
Leverage Technology and Analytics
Benefit from their knowledge of financial technologies and analytics tools to gain better insights into your business performance. This can involve setting up dashboards for real-time financial monitoring or using predictive analytics for forecasting.
Guide Through Regulatory and Tax Compliance
Rely on their expertise to navigate complex regulatory and tax environments, ensuring that the business remains compliant while optimizing tax strategies.
Scalability and Growth Planning
Work with the fractional CFO to plan and implement strategies for scaling the business. This includes financial modeling for growth scenarios, identifying new market opportunities, and planning for resource allocation.
Review and Adjust Regularly
Finally, regularly review the engagement's effectiveness and adjust the focus areas as the business evolves. This ensures that the business continues to get the most value out of the fractional CFO's services.
I’d like to learn more about your CFO Services
Securing your relationship with the CFO
Establishing a good relationship with the right CFO can mean a long and lucrative business partnership. You can hang on to an experienced and highly qualified fractional CFO because they can be invaluable to your business.
The outlook for this job is very positive beyond 2024. You can expect the fractional chief financial officer to emerge as a powerful force for business change, for the following reasons:
They are considered a "jack-of-all-trades" in the financial sector. They will continue to play a crucial role in building financial models, especially in light of current events and economic fluctuations.
The change in workforce dynamics has contributed to an increase in the utilization of fractional CFO services, particularly among small businesses seeking to balance financial expertise with flexible working arrangements.
Traditionally, only large corporations had the resources to afford a full-time CFO. However, the emergence of fractional CFOs is changing this dynamic, allowing smaller businesses and startups to access the crucial financial expertise needed for their growth and stability.
Bringing it all together
At Hall Accounting we really believe in fractional CFO services that can make a difference in your business. We have years of experience working with small businesses in and around Dallas and we’ve seen the results that you want.
When you work with our team you can rest assured that you’ll be receiving what you need, when you need it. We understand the unique challenges of businesses in Dallas and we’ve responded to them, like we do to everything. With focus and dedication.
We’ve done our best to show you the kind of value that you can get from hiring a fractional CFO, so we hope you go for it and make us part of your valued team today.