7 signs you need a CFO for your small business – and 8 compelling reasons to hire one

As a small business owner in the UK, knowing when to onboard a Chief Financial Officer can be key to unlocking business growth and healthy finances. You might have heard that CFOs are only needed by corporations and businesses turning over more that £50m, but this isn’t true. Many small business owners say they regret waiting for so long to appoint their first CFO so let’s explore what’s going on behind the choice to bring a full-time or part-time CFO into a small business.

• 7 Signs your small business needs a CFO
• 8 Reasons to hire a CFO
• Benefits of a fractional CFO over a full-time one
• Making the decision to hire a CFO

Signs your small business needs a CFO: tackling common growing pains 

1. Rapid growth: If your business is growing very fast—with revenues multiplying—then it is time to consider CFO services. This matters because rapid growth, while exciting, can be risky if not managed properly. As the owner, you need someone who can ensure your financial resources keep pace with your growth, preventing cash flow issues or overextension. A CFO can help you scale sustainably. Your CFO will manage your growth efficiently by monitoring financial resources, analysing cash flow, and optimising resource utilisation. 
2. Cash flow problems: Cash flow is the lifeblood of your small business. If you’re experiencing issues here or struggling with working capital management, it could threaten your entire operation. A CFO can help you anticipate and prevent cash shortages, ensuring you can always meet your financial obligations and invest in growth opportunities.  Your CFO will be able to introduce cash flow projection models to highlight any shortfalls that may be developing and create a strategy to get around such eventualities. 
3. Inability to engage in strategic financial planning: Every business requires a strategic financial planning approach. Without strategic financial planning, you’re essentially flying blind. As the owner, you need a clear financial roadmap to guide your decisions. A CFO can provide this, helping you set realistic goals and measure your progress towards them.  
4. Increased financial complexity: As your business grows,  financial management becomes more complex. If you’re struggling to keep up and your financial controller is overwhelmed, it could lead to costly mistakes or missed opportunities. A CFO can manage this complexity, freeing you to focus on other aspects of the business. 
5. Better decision making: As the owner, every major decision you make impacts your business’s financial health. A CFO provides the detailed financial analysis you need to make informed decisions, potentially saving you from costly mistakes and helping you identify profitable opportunities. 
6. Raising external funding: If you’re looking to expand through external funding or venture capital, a CFO is crucial. They bring gravitas to the leadership of your small business and they can present your financial story in a way that appeals to lenders and investors. This potentially increases your chances of securing funding and on better terms. 
7. Time constraints: As a small business owner, your time is valuable and you are probably being pulled in many different directions. If you’re spending too much of it on financial management, it’s taking away from other important areas where you could be adding value. A CFO can take this burden off your shoulders, allowing you to focus on strategic leadership and growing your business. 

8 Compelling reasons to hire a CFO for your UK business

As a UK small business leader managing a company with less than £50m turnover, you might be wondering if your organisation could benefit from high-level financial expertise and what exactly you’ll get for your money. Here are the 8 main reasons mentioned in our conversations with business leaders.

1. Enhanced decision-making in the UK market
   A CFO provides you with accurate, relevant financial information tailored to the UK business environment, enabling you to make informed decisions that drive growth and profitability.
2. Improved financial controls for UK compliance
   Implement robust internal controls that ensure accurate financial statements, protect company assets, and reduce the risk of fraud while adhering to UK regulatory requirements.
3. Strategic financial planning for growth
   Benefit from expert guidance in creating and executing financial strategies that align with your business goals and the unique challenges of the UK market.
4. Improved cash flow management
   Optimise your working capital and cash flow, crucial for navigating the uncertainties of the UK economy and supporting sustainable growth. The challenge that small businesses face in getting paid was recognised by the British government when it created the role of Small Business Commissioner to tackle late payments and poor payment practices.
5. Access to a broader financial network
   Tap into a wealth of connections within the UK financial sector, from investors to lenders, helping you secure funding or explore new opportunities.
6. Expertise in UK tax strategy and compliance
   Stay ahead of the complex tax landscape with a CFO who can optimise your tax strategy and ensure full compliance with HMRC regulations.
7. Support for mergers and acquisitions
   Get expert guidance on M&A opportunities, including due diligence, valuation, and post-merger integration, tailored to the business environment.
8. Preparation for future growth
   Whether you’re aiming for rapid expansion or considering an exit strategy, a CFO can help prepare your small business for the next stage of growth. This will enable it to become a medium-sized business in the competitive UK market.

If this all sounds great but you feel daunted by the financial commitment, there is another solution. By engaging a fractional CFO, you can access the strategic financial leadership you need to thrive in today’s challenging economic climate. This cost-effective solution provides the expertise to navigate complex financial landscapes, drive growth, and achieve your business objectives.

Benefits of a part-time CFO over a full-time CFO

1. Cost-effective financial leadership
   Gain access to C-suite level financial and strategic planning expertise at a fraction of the cost of a full-time CFO. This is an ideal solution for small businesses in the £5m to £50m turnover range. 
2. Flexible support tailored to UK business cycles
   Adjust the level of CFO support based on your business needs, whether it’s year-end reporting, tax season, or during critical growth phases.
3. Access an even broader financial network than a single CFO can bring
   With a team of CFOs behind your fractional CFO, you can tap into a vast global network of expertise, partner organisations and potential allies for your business.

Making the decision to hire a CFO

Hiring a CFO depends on your specific business needs and your situation. Business leaders are prompted to get in touch with us for several reasons, including:

• Business size: There is no threshold in revenues, but businesses generally start considering the need for a CFO once their annual revenue reaches £1-2 million. 

• Growth rate: Faster-growing businesses and newly invested businesses may well need CFO expertise much earlier to handle their growth in an effective manner. 

• Industry complexity: Certain industries have more complex financial needs, meaning CFOs are in demand sooner rather than later. 

• Financial goals: If you have ambitious financial goals or are looking to make major changes (such as expansion or acquisition), then a CFO can be priceless. 

There’s no one-size-fits-all answer to when a small business needs a CFO, but one thing is for sure: many can benefit from this level of financial expertise earlier than they might think. If your business is suffering from financial growing pains, is lacking strategic financial direction, or is ready for phenomenal growth, consider bringing a chief financial officer on board. If these challenges sound familiar, you ou  don’t need to struggle on until you can afford to hire a full-time CFO.

Part-time and outsourced CFO services will get the financial guidance that you need at a much-reduced cost for your growing business. Right now, you need a Chief Financial Officer who will provide the necessary financial know-how, strategic acumen and pragmatism to ensure you sail through problems, utilise opportunities, and ensure sustainable growth. Whether you choose to bring in a full-time or part-time CFO into your team, your small business will benefit from a steadying hand on the tiller.