In order to stay competitive, businesses are being forced to examine all aspects of their
operation to identify cost savings and drive efficiencies. Those companies that can do this
successfully will be rewarded with increasing market share and improved profitability. The issue
for small business owners is how to effectively conduct this analysis without knowledgeable
resources to do it. Small businesses have always had the need for a professional accounting
support; however they have not been able to afford the cost of these resources on a full time
basis. As a result many of these companies have attempted to manage their financial operations
without the proper level of talent in place. Typically the small business owner will try to handle
these tasks on their own even though accounting is not their core strength. A common
perception being that the company will save money by handling these functions themselves and
leaving it up to their CPA at the end of the year to handle the tax returns. Consequently
companies could end up with poor financial reporting that impacts their understanding of their
business operations. Thus impacting their inability to obtain adequate bank financing or raise
equity investment for the business. Other financial problems affecting small businesses include:
an increase in the financial complexity of the business that has outgrown the capability of
existing staff; a lack of financial bandwidth on a specific project such as a M & A transaction; an
inability to respond to growth opportunities due to not understanding the relevant financial
implications; and a lack of understanding on where company profitability is coming from.
Fractional use CFO’s and controllers help their clients across multiple aspects of their business.
In addition to ensuring accurate monthly reporting much work is done in creating financial
projections of the client’s business. This helps management anticipate cash needs subject to
different revenue outcomes. It also helps them when seeking bank financing in advance of the
need. Banks typicallyare reluctant to lend when companies are operating at or near breakeven
(especially today) so being able to anticipate the need in advance and packaging up those
requirements to a bank in an effective manner will help in obtaining adequate debt financing
In today’s economic climate every business owner needs to understand their “numbers”. In
order to accomplish this, owners must have accurate and timely financial information on which
to base strategic decisions on. Finding the time to do this though is difficult. Having an
experienced CFO or Controller involved in accumulating accurate data, interpreting the data,
and then communicating to the management team is a crucial part of guiding a company
through difficult times as well as taking full advantage of economic upswings. For small
companies these tasks can be effectively handled on a fractional use basis thus allowing the
company to only pay for what they need. On average most small businesses (subject to size)
should only spend between $15,000 and $60,000 annually, which is significantly less than a
fulltime CFO or Controller typically costs. By utilizing a part time CFO or Controller to manage
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