Whatever it was that motivated you to start your own business, it probably wasn’t the desire to hire and manage a finance team. However, if you’ve reached a certain point in your business’ growth, not having the skills and experience of one could be a barrier holding you back from realising your full potential.
You’ve probably engaged an accountant and maybe a separate or in-house bookkeeper to take care of all your compliance needs. What many business owners don’t realise right away is that there’s so much more to a finance department than just compliance.
How’s your CFO game?
Whether or not you realise it, you’ve been wearing the hat of Chief Financial Officer – in addition to all the other hats you wear on a daily basis!
Many strategic decisions have been made, either deliberately or by default, as to: hiring and firing decisions, debt and equity financing, budgeting and reporting, as well as chasing up debtors, managing cash flow and so much more.
Doing all of this well can be overwhelming for already time-poor business owners.
Some areas are often neglected altogether (like budgeting), which isn’t illegal, but certainly won’t help you in the fight to stay afloat, grow and one day see an exit of some kind.
Bringing in finance department expertise
When bookkeeping or payroll needs become significant enough, many small businesses may start by hiring a part-time bookkeeper or accountant to help. But now you have another person on the payroll, and you’re still lacking the experienced financial thinking needed to overcome and make the most of all the issues listed earlier.
This is where an outsourced finance department or outsourced Chief Financial Officer come in.
Rather than hiring an internal team or employee, an outsourced CFO is when you partner with a firm to carry out the finance function for you, often for a fixed monthly fee. This provides you with access to high-level strategic advice from a whole team of experienced professionals who can provide both your advisory and compliance needs.
How do the costs stack up?
If you hire an in-house team member, they’ll need a few years’ experience to be able to build, manage and automate parts of your finance function from scratch. Their salary could range between $65,000 and $90,000 and you’ll still require the services of an accountant to help with year-end taxes and provide other, more strategic advice.
Alternatively, you could outsource the role. At Bramelle Partners, for a typical business with approximately $1m in annual revenue, our outsourced finance department solution would range from $2,000-$5,000 a month or $24,000-$60,000 per year.
The benefits and peace of mind sure outweigh the costs
In addition to having all your compliance needs taken care of, you gain access to expert advice on-demand without limitation. Bookkeeping, payroll, tax, management reporting and a range of other areas are often bundled into the engagement so you don’t need to work with anyone else. You’ll not only comply with laws and regulations but also get on top of the “optional” activities (like budgeting and forecasting) that could change your fortunes in business! All for a fixed monthly fee, giving you total budget certainty and peace of mind.
Ultimately, outsourcing your CFO function will provide you with peace of mind that your finances, business and tax compliance affairs are expertly managed and maintained, and that the long-term health of your business is being considered.