My life purpose is for business owners to gain financial freedom. Resources enable people to live a life of purpose instead of scarcity or struggle.
This purpose has taken me on a journey over three decades to invent the Growth CFO Financial Freedom System.
The right time to hire a CFO is when the business exceeds one million of annual revenue or when the business is funded by private investors. The good news is that you won’t need a full-time CFO until reaching $50 million or more of annual revenue.
Revenue One Million Plus
Reaching one million of annual revenue is a significant milestone for business owners. Only nine percent ever reach this benchmark. Then they get stuck in the $1 to $5 million blackhole.
At one million, the business starts to have the capacity to sell and deliver beyond the business owner founder and a small team. The business worked out basic decision making and follow through while establishing support services like talent, technology, and accounting.
This level of capacity is needed before the startup will benefit from the clarity that a true CFO is capable of providing.
Make Sure That You Hire a True CFO
Most CFOs are actually high level accountants. When speaking with CFO candidates, listen to what they say. If they talk about accounting systems, financials, and GAAP they are actually a Controller Accountant. Start ups need a solid accounting foundation but this is not the domain of a CFO.
True CFOs will ask about your destination, motivation to get there, about your future self at that point. They are checking to see if you got the right stuff for the flight.
True CFOs will dive into your toughest challenge beyond finance and accounting functions to understand the business. Furthermore, they will provide clarity of options, the right choice, and the ability to follow through using their experience and data analysis mastery.
What will that feel like?
Backstage, true CFOs establish proven financial habits to engineer household income and profits while building a valuable business that isn’t dependent on the owner or other key factors.
In addition, they use their expertise in business building to assess the obstacles to growth. These obstacles include winning new customers, keeping customers, engaged team members delivering well, and proactively gaining access to capital.
These are Growth CFOs.
Do It Yourself Until You Hire a True CFO
The truth is that having a Growth CFO on-board, even in the early stages part-time, is a game-changer for your startup. In this article, we’ll explore the reasons why it’s almost never too early to hire a CFO and how their expertise helps your business thrive.
- Financial Strategy for Sustainable Growth: According to a study by the Small Business Administration (SBA), only about half of startups survive the first five years. One of the main reasons for this high failure rate is the lack of a solid financial strategy. A CFO brings invaluable expertise to the table by developing financial plans that align with your business goals. From preparing accurate financial projections to formulating funding strategies and managing cash flow, a CFO ensures that your startup is on the path to sustainable growth.
- Leveraging Data for Informed Decisions: Data-driven decision-making is essential for any startup looking to succeed in a competitive landscape. A CFO helps you identify key performance indicators (KPIs) and implement systems to track and analyze financial metrics effectively. With real-time data insights, you’ll be equipped to make informed decisions, optimize operations, and adapt quickly to market changes.
- Access to Funding Opportunities: Securing funding is a crucial milestone for startups to fuel expansion and innovation. A CFO is instrumental in attracting investors by presenting accurate financial reports and demonstrating a clear understanding of the company’s financial health. Additionally, CFOs help you navigate the complex world of funding options, from venture capital to angel investors, and ensure you choose the right fit for your business.
- Mitigating Financial Risks: Starting a business involves risks, but you can minimize them by having a financial expert on your team. A CFO will conduct risk assessments, spot potential pitfalls, and develop contingency plans to safeguard your startup from financial uncertainties. This proactive approach will give you peace of mind and enable you to focus on growing your business confidently.
- Streamlined Financial Operations: As your startup expands, so does the complexity of its financial operations. From managing payroll and accounts receivable to tax compliance and financial reporting, these tasks can quickly become overwhelming. A CFO will streamline your financial processes, implement efficient accounting systems, and ensure compliance with relevant regulations, saving you time and resources.
Make the Investment
A survey conducted by the AICPA (American Institute of CPAs) found that 69% of small business owners lacked confidence in their financial decision-making abilities. Instead of having blind spots, business owners are well advised to have a true CFO on their side.
By having a financial expert on your team from the start, you’ll gain a competitive advantage, make better-informed decisions, and set a strong foundation for sustainable growth.