The CFO'S Perspective

Business owners in the middle market are all too familiar with the task of trying to optimize cost structures – getting the most efficiency and “bang for the buck” out of facilities, equipment, customer relationships, and many other elements of a successful enterprise. People have always been vital and important to businesses, but over the last several years, we have noticed a shift in attention toward people in a different way.

Searching for ways to optimize human capital, while fighting the inefficiencies of talent markets, is an ever-present challenge for businesses in the middle market. The human capital corollary to the engineer’s triangle (fast, cheap, reliable – pick two) seems to be availability, relevant experience, and compensation expectation.

An example could be a stable, modestly growing manufacturing business in a small town outside of a major metropolitan area in the Pacific Northwest. It has just outgrown the capability set of its hardworking bookkeeper and needs some expertise in setting up more robust financial oversight and reporting capabilities, but attracting capable, senior-level finance talent to its town with a handsome compensation package seems like overkill.

When your business gets to the point where it needs to hire a CFO, what are your options?

• Full-time In-house
• Interim Outsourced, virtual or in-house
• Fractional Outsourced, virtual or in-house

These days a lot of organizations are looking to hire virtually, which makes “hiring a virtual CFO” a hot topic. Amidst all the remote work buzz it is easy to lose your focus and forget what you were trying to accomplish in the first place by outsourcing the role.

A vital part of a business’s success is the strength of its management team.  This is always true, in good times, and during a crisis.  A successful business needs all oars of the boat pulling together at the same time.  And the boat needs to be headed in the right direction.

The current economic crisis is highlighting the importance of strong financial leadership.  That is undoubtedly true, given the flurry of new government aid programs and the impact of stay at home orders.  But a business owner always needs strong financial leadership.  In a healthy economy, the owner needs to make sure they are operating at maximum efficiency to take advantage of likely higher gross margin opportunities, or to make sure an investment in a new product or service has long term value.

This article points out a few areas to consider in determining if you currently have the “right CFO” and a pointer on “buyer beware” if you are considering making a change in CFO during a time of high unemployment.

In uncertain times businesses need continued access to experienced bookkeepers and accountants to keep cash flowing. Whether the need is part-time, interim, or project-based, a third-party financial professional can offer the information needed to make strategic business decisions. This need does not change when people are working remotely. In fact, with so many businesses temporarily pausing operations, the need for bookkeepers and accountants is likely greater than ever before.

While the future may be uncertain, there is one immutable certainty – businesses still have access to the reputable, qualified bookkeepers and accountants that they need to keep their organizations afloat. These kinds of key personnel aren’t going anywhere and are available to help businesses navigate today’s unique challenges.

To answer a question we receive frequently, we turned to our team of CFOs for their insights. We received plenty of feedback about whether a company needs a CFO with industry experience from the CFO Selections team.  The depth and diversity of experience in the CFO Selections team again proves to be an excellent resource.

Read a sample of perspectives from CFOs who have decades of experience:

Organizations looking to outsource their financial needs often wonder who is best qualified to handle the intricacies of their business operations.

With the multitude of options available the landscape of potential financial solutions is vast. Factor in the solutions catered specifically towards SMBs, local businesses, privately-held businesses, and businesses in designated industries and the result is an overwhelming sea of possibilities. Within these choices are two distinctly different options – freelancers and firms.

Business owners tend to struggle with determining which type of provider will best suit their needs. Will a solopreneur or freelance CPA-CFO be sufficient? Or is a larger firm a better option?

As the leader of our executive search practice, the most common question I get asked is, “What is the market like for CFOs?” 

My reply has generally been, “Well, in the Pacific Northwest there is an oversupply of experienced CFOs but not enough ‘up and comer’ CFOs”. 

I also mention: “It will cost you a lot more to get an inexperienced CFO than it did in the past.” 

Why do I say this?  It is all about demographics and supply and demand.

Businesses around the Northwest say their number one challenge is finding and retaining employees. For a business with an existing team, it is vital for them to retain their employees and increase engagement.

Not only are the costs of finding, hiring, and training new employees (if you can find them) high, a team of passionate employees often leads job seekers to your company. Investing in the happiness of your existing team will generate a big return on your investment.