Recently, I had a conversation with a small business owner who was interested in diversifying his business and growing it by 50%. The owner admitted it was a goal without a plan: The business had achieved some success, but the owner didn’t know how to foster future growth. He didn’t have a solid understanding of his financials, nor had he defined any key performance indicators. He knew a CFO could help, but didn’t think his business could afford an additional cost.
I see this situation often with prospective clients: They see us as a cost, rather than an investment in their future growth and success, and they decide to keep doing things the way they’ve always been done. It doesn’t take long for them to realize the time they spent without a fractional CFO cost their business time, money, and opportunity. They call us back, and the conversation usually starts with a simple phrase:
“I wish I would have done this sooner.”
The Problem With Going With Your Gut
At FocusCFO, our fractional CFOs have decades of experience serving businesses of all sizes. Some of us have been entrepreneurs, as well. So we have an intimate understanding of the mindset of a business owner. You built your business by following your gut – by making choices that felt right in the moment and that, oftentimes, resulted in success. Trial and error has been your guide – a fairly reliable one, too – and during times of stress or change, we often revert to what gives us a sense of comfort and control.
But, as businesses grow, the hit-or-miss nature of a trial-and-error approach becomes increasingly problematic. Mistakes get more costly. Key targets get missed. And the future of your business is called into question. If you can’t reliably hit your next-level goals, how will you grow beyond that?
What You Lose With a Wait-and-See Approach
Every decision business owners make comes with a price tag. Hiring a fractional CFO is one of them, but it’s not just a question of spending money or saving it.
When you opt not to hire a fractional CFO, there is an opportunity cost that comes with it. Companies can fail to price their products and services properly, to effectively manage their inventories, or to identify bad or demanding customers or their product mix changes – all of which come at a direct cost to the business.
In addition, not tracking profitability by customer or product line can be misleading on where you are making money or losing it. Without that information, they run the risk of continuing the potentially costly status quo.
Also, many business owners fail to thrive because they don’t know what’s in front of them. A CFO can shine a light on the path ahead. We can define a strategic plan for your business that takes you from where you are to where you want to be.
Without one, you’re just sprinting into the dark, hoping for the best.
Affordability Doesn’t Always Come First
The business owner I spoke with recently understood the value of what a fractional CFO can provide. For him, it was a question of affordability, and he wanted to wait until our services became a line item he felt his business could bear.
This sounds like a reasoned and principled approach – a smart business decision not to get in over his head. In reality, though, his desire to save money now may cost him much more in the long run, depriving his business of a solid understanding of his financial performance and a strategic plan for growth.
My guess: He’ll call back next year, and I’ll hear that same phrase once more: “I wish I would have done this sooner.”
Ready to learn more about how a fractional CFO could take your business to the next level? Schedule a consult today!
Jeff Semple is an Area President for FocusCFO based in Northeast Ohio.
