What does a CFO do and how can a part-time CFO serve the needs of a business owner?

Many of the day-to-day responsibilities of a full-time CFO are executive management responsibilities that overlap with the other executives in the company.  Any great team has outstanding role players that can also fulfill the other roles as needed.  However, the specific financial discipline and skills a CFO brings to the table are specialized and can distract other executives from their roles in running a business.  Even a CEO or business owner that had been the CFO needs to have another financial executive assume the CFO role to keep the CEO or business owner focused on growing the business.

A listing of our firm's CFO Services is available elsewhere on our firm's website.  I will describe each of these services in subsequent entries, but want to summarize the services and our approach here.

The foundation for CFO services is timely and accurate financial statements.  Without this foundation, all other financial data and any business decisions made will be based on old or incorrect data.  Many business owners have a good sense of their business and make decisions based on their "gut," which is fine for their personal risk tolerance level.  However, once a company has a banking relationship, the owner's gut is generally not sufficient, although their other financial resources may be.  You will have a better relationship with your bank with good internal financial statements and they will be more likely to support your requests.

The financial skills a CFO may be best known for include Financial & Strategic Planning, Cash Flow Projections, Profit Improvement, Expense Reduction, Working Capital Improvement, and Gross Profit Optimization.  These skills and activities are crucial to the livelihood of any business.  A CFO fills the gap between the business owner and the Controller or Accountant that prepares the books and records.  A business owner often likes to work in the financial details to stay in touch with the financials, however this takes time away from growing the business or family activities, and the business can often begin to lose momentum which causes the owner to dive even further into the details to fix the problem.  This is the problem described in our firm's book The Danger Zone.  By keeping the CEO focused on "finding" activities instead of "minding" ones, the company can profitably Increase Sales.

Finally, every business owner will eventually leave their business.  The coming years will see many baby-boomers want to exit or sell their businesses and retire.  The current economic cycle has deferred many retirements.  When the market does recover, more businesses will come on the market to be sold, which will further depress prices for exiting business owners.  Our Finding The Exit program will help to define the goals, activities, and options for exiting the business, which may not necessarily mean selling the business.