B2B CFO® Partners are asked this question often by bankers and attorneys whom we partner with that have business owner clients at various stages of growth within their company. You may be considering the same question as you assess strategic financial leadership within your business.
Here is a run-down of some common symptoms suggesting when a B2B CFO® strategic advisor could add significant value to the business.
1. High Stress: By nature, business owners have a hard time relinquishing “control” and are so busy working in the minutia of running the business, they can’t focus on or find a minute of time to work “ON” the business. This leads to burnout! A CFO can provide guidance, expertise and strategic financial leadership so you can delegate some of these critical financial and business initiatives to those with deep experience.
2. Fast Growth: A company growing 25% to 50% year over year, with the primary focus being the top line revenue number. Fast-growing companies face liquidity challenges. Experts in financial, cash flow and financial statement management can help greatly to fast growing businesses.
3. Tight Cash Flow: If making payroll has become a major worry and it seems like there isn’t enough cash to pay the bills-yet the business is growing-this is a problem. A strategic CFO can help prepare a cash flow forecast, document clear credit terms with customers (especially late-to-pay customers), as well as recommend cash flow reporting and forecasting technology solutions so you can see your cash on the move.
4. Bank Wants Out: A banker can break ties with a business at any time. If the banker doesn’t want to extend or even continue the existing line of credit—this can create major cash flow issues for the business… fast. So, what do the financial statements say to the banker creating this situation? A CFO can ensure you have a solid financial performance and projections package that can include year-to-date P&L, updated within the past 60 days, statements from the previous two or three years, and a pro-forma look ahead to justify your borrowing needs. A B2B CFO® can assist with not only preparing your performance and projections package, but help you create the right relationships with the right bankers.
5. No Exit Strategy: The business owners/family are “all in” their business, without a discernible way to cash out for retirement. B2B CFO® sees this frequently. A CFO can help you identify the value drivers in the business, make improvements that will enhance those drivers with the objective of increasing the company value of the business, and finally, guiding the business owner who is ready to exit in building a team to complete a successful and profitable exit.
6. No Succession Plan: Some business owners think that they will wind up dying at their desk and never leave the business. The common belief is that it is unlikely you can find a number 2 leadership person to take over or continue the business in the owner’s absence. A CFO can assist management with succession planning before the ownership transfer event occurs. Doing so insulates the company from risk because successors—whether they’re insiders, third parties, or family—have an idea about what to do to keep the company running and how to best do it. A CFO can get the succession plan in place, moving in the right direction.
7. Financing: The business owner needs capital for an acquisition or to simply grow the business organically, but does not know what type of financing is best suited for their situation. In today’s economy, many businesses have outgrown their current credit facilities. Obtaining financing is a complicated process, but the right CFO can help identify and execute to successfully raise capital needed to finance various initiatives for the company’s growth or expansion.
8. Advice: The business owner is an entrepreneur who needs advice from an experienced business executive, someone to talk with and exchange ideas. Not just a bookkeeper providing numbers on a financial statement that likely does not tell the story about the business. B2B CFO® Partners provide a wealth of financial experience in various industries, in businesses of varying sizes and stages. Advice from those who have “been there” can provide invaluable insight to your business.
Why B2B CFO®? Business owners choose B2B CFO® when they need strategic advice for two primary reasons: 1) they can engage a professional advisor on their terms—on an hourly basis and when they need it, and 2) when they engage a B2B CFO® advisor, they engage B2B CFO® Partners LLP—a firm of 230 financial professionals serving over 1,200 business owners nationwide for over 30 years. Our partners have experience in almost every industry, which means that it is unlikely that a business owner is facing an issue that we have not already seen. And we are connected nationwide with every type of service provider, from bankers to M&A firms, attorneys and wealth managers. No wonder our average length of engagement between our partners and their business owner clients is over five years. If you are considering outsourcing a CFO, contact AnnastaciaMitchell@B2BCFO.com to get started!