“The task of a leader is to get people from where they are to where they have not been.”
– Henry Kissinger, diplomat and former US Secretary of State
So, you’re a business owner, turning over somewhere between $5 and $30 million? You have a rough plan of attack for the future, but the plan is in your head, not on paper or in the form of a forecast. You may be experiencing a rapid period of growth, developing new products, selling the business or acquiring new ones. You may be travelling smoothly but don’t feel that you have adequate transparency of your finances. These are just a few examples of when it might be the right time to hire a Virtual Chief Financial Officer (VCFO).
VCFO services are designed to bridge the gap present in an organisation that needs high-level financial advice but doesn’t yet have or require a full-time employee in the role. A VCFO should give you a better understanding of where your business is today and how you can maximise opportunities and avoid threats. Just like any relationship though, you need to find out if your candidate VCFO is the right one for you.
There are three ways to tell if your prospect can deliver everything you need from a VCFO.
1. He doesn’t have all the right answers but asks all the right questions
You’re the expert when it comes to your business. A VCFO is there to ask you the tough questions about your business. A VCFO is a sounding board using financial analysis to confirm your ideas. They are a helping hand. High on the list of required skills for the would-be VCFO are communication skills. A VCFO should come to a CEO and ask the questions that get the CEO thinking. An astute CFO will know the questions to ask to prompt the CEO to think about the future.
2. They can assist you at any time in the lifespan of your business
While at a start-up phase your VCFO should be able to provide advice on structure, funding, planning, forecasting and cash management. In an established business they can assist in employing systems and policies to protect the business. While growing or exploring new ventures, they should ensure changes planned are the best ones available by doing the required analysis and due diligence. On the flipside, a VCFO can help build value a business in preparation for sale.
3. They provide you with detailed financial data critical for making sound decisions
Often, monthly reporting in a business is produced, but the management team don’t read them because they are difficult to understand, out of date or don’t address the needs of those reading them. Reports must not be ignored and a lack an appropriate reaction is a sure sign your VCFO is not the right one for you. Remember, the goal of reporting is action.
A VCFO requires both creative and strategic thinking abilities coupled with commercial acumen. Someone needs to keep a constant watch for issues arising from the company’s regular financial numbers. In effect, this results in pulling and pushing the appropriate levers of the business. If no one is doing this within your organisation, it’s another sign that your VCFO is not right for you.
Ultimately, the role of the VCFO is to help ensure the CEO/business owner is never surprised by an issue with weighty financial consequences.