Fractional CFOs Are Game-changers for Business Health

Effective financial leadership can have a snowball effect on a company, expanding your finance strategy to improve your organization’s bottom line. But while you expect to see CFOs on the roster in larger businesses, small to mid-sized companies often lack financial leadership. The role of a Fractional CFO is a transformative solution, particularly for businesses seeking expertise without the commitment of a full-time executive. This blog delves into the roles and benefits of fractional CFOs and offers guidance for organizations wondering if a fractional CFO is a good fit for their team.

What Is a Fractional CFO?

A fractional CFO is an experienced finance professional who provides their expertise to a company on a fractional/part-time or project-based basis, offering a flexible and cost-effective approach to financial leadership. This model is particularly effective for small to medium-sized businesses, typically generating between $2- 50 million in revenue.

The appeal of fractional executives is in the specificity and efficiency of their work. Fractional CFOs typically offer a range of solutions to improve the financial health of businesses, from acquisition support to general process development. No matter the tactics involved, fractional executives tackle the most prevalent issues for your company in a designated timeframe.

Fractional CFO Responsibilities

A fractional CFO occupies the same role as a full-time CFO, but in a part-time, temporary capacity. Equipped with more capabilities and insight than an accountant, a fractional CFO can help your business have a stronger grasp on your financial health. When you hire a fractional CFO, they work with you to develop a set of priorities that will guide their role (more on this process later!).

Financial Strategy: CFOs develop and execute the financial strategy for a company. Using market analytics, CFOs create financial forecasts to lead the budgeting process. They also oversee financial reporting, and communicating results to stakeholders.
Leadership: As a member of the C-suite team, the CFO acts as the head of the finance department, working in concert with the CEO. They are responsible for optimizing financial processes, managing cash flow, and integrating new technologies that steer your company toward growth and resilience.
Risk Management and Investment Decision-Making: CFOs provide invaluable input into the company’s investments, capital structure, and income/expense management. They establish risk management policies, handle your tax strategy, and ensure regulatory compliance. In some cases, they may offer expertise in niche elements of your financial strategy, like guiding mergers and acquisitions.

Determining Fit: Is a Fractional CFO Right for Your Business?

Fractional executives aren’t right for every situation. In some cases, a business needs full-time financial leadership (in that case, you may want to consider executive recruiting services). But in many cases, a fractional CFO will catalyze a shift for their clients that opens up new levels of financial assurance. So when should you consider hiring a fractional CFO? Get a sense of some of the scenarios that reap the most tangible benefits from fractional support.

Business Maturation

Say your business brings in about $4 million in revenue annually, and your vision is to get it to $7 million. At this point, your team isn’t huge, and you don’t have the resources for another C-suite team member. However, as the CEO, you are aware that your current staff doesn’t have the financial acumen to create an effective strategy to reach your goal. Bringing in a fractional CFO for just a few hours every week gives you targeted financial leadership that is ideal for businesses in a growth phase. Once you hit your mark, you will be positioned to hire a full-time CFO.

Prepare for Acquisition

In a similar vein, your goal as a small business leader may not just be to grow revenue, it may be to have your business acquired within the next two years. To do this, you need to establish your organization in the industry and position your company as a profitable investment. A fractional CFO will ensure your financial processes are in alignment with this objective. By opting for fractional support, you have clear insight into your business’s direction without the financial strain of expanding your team.

Additional Support with a Specific Project

If signed onto a specific project, fractional CFOs enter into the engagement with a clear exit goal in mind (e.g. a specific revenue). They tailor their support based on your defined objectives to provide financial leadership for your organization. In some cases, you may already have an effective finance team who can handle the day-to-day accounting for your business, but you need support with a specific project like engaging private equity or securing venture capital funding. Fractional CFOs fit in here as well. Diversification in the fractional world allows you to partner with a CFO with specific experience in the niche you need. They can partner with your finance team to offer guidance on a specific goal.

The Benefits of Hiring a Fractional CFO

Opting for a fractional CFO offers tangible financial benefits to your company. For small to mid-sized companies, fractional CFOs offer their industry expertise, established reputation, and nuanced skills to businesses with a limited budget.

The Cost Incentive: Only Pay for What You Need

In truth, the cost of a fractional executive is about the same that you’d pay for a salaried employee. However, the difference is the time investment. Small to mid-sized companies don’t need a CFO for 40 hours, Monday through Friday. Instead, paying an experienced CFO hourly or per project will give you all the same benefits as a full-time executive at a fraction of the investment.

Access to Game-Changing Expertise

It sounds appealing to save money on a CFO’s salary, but we often hear the argument that a fractional CFO won’t have the particular insight into a company’s operations and values that you will get with a full-time member of your team. While there’s plenty to say about a fractional CFO’s process to integrate into your team, we want to focus on what our fractional executives bring that a full-time CFO might lack.

The difference is in the quality and experience you are getting with a fractional CFO. At GCE, our fractional CFO, David Strong, has decades of experience running both his own companies and helping clients get on track with their financial goals.

When you hire a GCE fractional executive, you get access to top-tier talent. Rather than hire a controller or inexperienced CFO at a lower salary tier, hiring a fractional CFO will address your financial needs for a price that fits your budget.

Even at just five hours a week, a fractional CFO seamlessly integrates into your meeting cadence, providing insight into your financial position and refining your direction.

Nuanced & Efficient Solutions

GCE Strategic Consulting’s fractional leadership team has decades of experience under their belts. Not only do they have a range of experience from their initial careers, but they get access to working with a diverse array of companies in a fractional capacity. Their skill sets directly translate to the issues you have. Their solutions fit your nuanced problem and are achieved within a clear time frame. When working with David Strong, GCE’s fractional CFO, you know from the start exactly what you can expect.

The Path to A Clear Financial Strategy: The Fractional CFO Process

A Fractional CFO may work with you on a short-term or long-term basis. No matter the duration of your partnership, a fractional CFO will approach the position with a different process than hiring a full-time executive. Their process may be more regimented as they must use their limited time most effectively.

However, a fractional CFO won’t come in with an aloof prescription. To start, they will collaborate with your CEO or president to conduct an assessment of your organization’s financial health.

These initial conversations work to peel back the company’s priorities while simultaneously building rapport. GCE’s fractional CFO will always sit down with the CEO and talk through the real issues facing the company. What’s more, some of these issues might not even be finance-related. For example, if the company’s leadership team is going through a rough personal transition, that affects the company’s productivity. This candid communication supports a trusting and productive relationship from the start.

Between an assessment of your company’s financial position and conversations about your financial goals, the fractional CFO will develop proposed solutions for the scope of the work. This might include changing the financial reporting to shape the financial strategy. Their goal is to expedite what’s most important to the company by identifying where the company is bleeding and what are the greatest pain points.

Get Financial Guidance to Shape Your Company’s Future: Partner with GCE for Fractional CFO Services

Fractional CFOs offer businesses expert financial leadership without the debilitating cost of a full-time executive. In a part-time or project capacity, they work with your team to develop a more reliable financial strategy to achieve your company’s goals.

At GCE Strategic Consulting, we offer various fractional executive services tailored to meet your current needs. We then develop a transparent roadmap to guide you in achieving your strategic objectives.

Our fractional CFO David Strong doesn’t just have strong financial acumen. He’s owned and operated eight of his own companies, giving him an understanding of what it takes to run a business in addition to specific expertise in finance and sales. When you work with David at GCE, you get a financial partner with the hard skills to level up your company and a compassionate team member who understands the rollercoaster of leading a company.

Book a call to learn how a fractional CFO can craft bespoke solutions for your organization.

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