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Five Questions for Your Headache

By Todd Peter

You, the small business owner, are on a roll. Every day you are out, landing a new customer at least once a week. You hired a great engineer and she is turning your new product ideas into reality and you can barely build enough to keep up with orders. But it’s payroll week again and the cash in the bank is barely enough to cover your employees. It looks like another month of explaining to your spouse the thrills of working 16-hour days and the stress of never seeming to have enough cash. You wonder, “Is this roller coaster ever going to end?” You call your Uncle who is the CFO of a Fortune 500 company and he reveals to you 5 questions that you must answer, and assures you that your headache will be gone by morning!

Question 1: Am I making any profit?
Question 2: What is the gap between profit and cash?
Question 3: Is there cash hidden in the balance sheet I can uncover?
Question 4: Can I obtain a bank loan to support the gap between profit and cash?
Question 5: Can I reach my growth goals and not run out of cash?

The Dilemma

You conferred with your bookkeeper and your CPA, and you again sought the counsel of you Uncle.  He said you need a CFO to help you answer these questions.  He noted CFOs are typically highly skilled professionals with backgrounds that span multiple decades of financial and operational experience but they may command a salary that might be unaffordable. 

The Role of the CFO

A CFO typically functions as the third leg of the stool for your company. They are as good at understanding cash as most owners are at understanding customers and operations. They are an owner’s financial partner; they work to make sense and provide business insights from the numbers that emerge from your accounting software; they work to integrate the past into a picture of the future. A CFO is there to help the owner make sure the business is healthy. They provide a little aspirin to dull the short-term pain, strong antibiotics to cure any illnesses, and a wellness and fitness program to build long-term health.

Fractional CFO Solution

Alas, many small businesses cannot afford the expense of a full time CFO. A perfect solution is the use of a fractional CFO. The use of a fractional service model allows the investment to be very moderate relative to other professional services. Most are engaged on an ongoing long-term basis, work onsite at their clients, and average a day a week over time. They work as partners and confidants of the business owners to help them meet their goals and assure the financial health of the business. How do I know this? I’ve been a fractional CFO for four years.

Todd Peter is a FocusCFO principal, based in Cleveland, OH.

Founded in 2001, FocusCFO is the leading onsite fractional CFO services provider in the Midwest and Southeast, with more than 100 CFOs and Area Presidents throughout Ohio, Indiana, Kentucky, Michigan, North Carolina Pennsylvania, South Carolina, West Virginia and Tennessee. FocusCFO works closely with small to medium sized businesses helping business owners gain control over three key financial and operational areas: increasing cash flow, reducing business risk, and creating a platform for scalable growth. This allows business owners to then realize full financial control and increased value in their businesses.

For more information, visit us at focuscfo.com or follow us on LinkedIn.

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