Hiring a CFO is a major milestone in the maturity and growth of a company. Finding the right operational financial executive can make all the difference in the rate of growth and the stability of a company. As a company grows, investing in sales, marketing, and operations is imperative, but an often-overlooked opportunity for growth is a Fractional CFO.
The CFO is the top financial executive of a company and has the overall responsibility for the financial management and activities of a company. Responsibilities include:
Most importantly your CFO should be a strategic partner, aligning a company’s business and financial strategy.
A Fractional CFO, often also referred to as an outsourced or part-time CFO, provides a company with experienced financial and strategic guidance, typically at a lower cost than a full-time CFO employee of a company.
Beyond the cost of a full-time CFO, a Fractional CFO offers flexibility, experience, and qualifications that are often out of reach for small and medium-sized businesses.
1 – Experience and Expertise
Experience matters. Fractional CFOs have been full-time CFOs and are experienced in navigating a company’s growth. They bring not just years of experience but the expertise and perspective that comes from years of accumulated knowledge and experience.
Likely, they have been through major transactions such as debt and equity financing, mergers and acquisitions, regulatory compliance, and implementation of systems and internal controls.
Experienced Fractional CFOs can quickly assess, diagnose, and structure plans to address a company’s needs and challenges to provide more informed decisions.
2 – Strategic Guidance
The true value of a Fractional CFO comes from bringing their expertise to long-term planning, financial decisions, and business decisions regarding growth management, cost control, investments, and risk management, which can only come from years of experience. CFOs have technical backgrounds but it’s the development of a long-term strategic perspective that contributes to better-informed decisions.
3 – Flexibility
Fractional CFOs can serve companies in various ways. They can step in when there is a vacancy to fill in a full-time CFO role, providing leadership and stability during a transition. They can become a company’s first financial leadership as a company grows or can begin on a project basis filling needs such as budgeting, capital raising, planning, or improving financial processes and systems.
Fractional CFOs can grow with a company’s needs. They can provide guidance and expertise. They can also be flexible in terms of the scope of engagement and the amount of time devoted to a company. Engagements can range from as much as full-time to as little as hours per month.
4 – Objectivity
A key factor that a Fractional CFO brings to the relationship is objectivity derived from experience - and one that comes from freedom from internal politics and corporate ambitions. Clear-eyed, unbiased objectivity can better inform decisions and provide a wider range of perspectives and options.
5 – Cost Effectiveness
Since Fractional CFOs are hired on a part-time basis, the costs are much lower than a full-time CFO. Fractional CFOs are typically paid as contractors, so there are savings on the typical employee overhead. Hiring a full-time CFO requires a commitment, a complete pay package, plus the time and cost invested in making a great hiring decision.
The cost savings combined with the experience, expertise, strategic guidance, flexibility, and objectivity of a Fractional CFO can provide incredible value to small and medium-sized businesses.
About Donna Mackenzie
Donna has navigated through multiple capital raises from seed funding to Series D to public raises. She has led due diligence and negotiations for numerous financings, mergers, and acquisitions (M&A) on both the buy and sell side, public offerings, and reverse mergers (SPACs). She has partnered with founders and management teams to grow revenue from startup to over $100M.
She is a strategic, passionate, entrepreneurial, and respected leader focused on navigating companies during periods of high growth and change bringing her financial, business, technical, and operational expertise to drive solutions and take advantage of opportunities and challenges.
Donna has been a Fractional CFO for nearly ten years after spending her career as a management consultant and then CFO of several tech and tech-enabled companies.
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