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Outsourced CFO: How Your Startup Can Benefit From a CFO Without Paying a CFO Salary

By March 10, 2021 No Comments

It’s no secret that today’s startup ecosystem is thriving. According to a recent report by the Global Entrepreneurship Monitor, over 27 million working-age Americans are entrepreneurs. Yep, you read that right —  nearly 14% of Americans are getting a piece of the startup pie. In fact, Acuity’s home city of Atlanta has been named one of the top 10 rising cities for startups in the country, with 3-year VC investments totaling $2.9 billion.

In short, there’s a lot of startup funding out there and plenty to go around. And we hear you! You’re ready to take your slice of the pie. Have you considered who’s going to guide you in the right financial direction? What about who’s going to be in charge of all that funding you’re going after? For many new entrepreneurs, the idea of hiring a chief financial officer might be a pipe dream — something you never could really fathom doing anytime soon.

However, as your business grows, investing in part of a CFO might be exactly what your company needs. From building the right budget to knowing when you’re ready for a full-time hire, we’ve compiled some tips on how to afford a CFO.

What Does a CFO Do?

CFOs play an integral role in understanding a company’s current and future financial situation. They see the bigger picture and can provide insight into strategy, efficiency, productivity, and growth potential. From acquiring loans, pricing your products or services,  and justifying investments to determining budgets, they’re responsible for steering a company’s fiscal boat in the right direction.

A CFO is also capable of overseeing cash flow, building an efficient and well-controlled accounting infrastructure, and creating forward-looking projections for your business. By performing these functions, they have an intuitive ability to make a more informed decision on new hires, pursuing financing, and expanding your product offerings, ensuring that you’re always moving in the right direction.

TLDR; we’ve simplified the difference between the four kinds of finance people every business needs in some capacity:

outsourced CFO

Scroll to the bottom of our website here for more examples of what a CFO can do for your company.

Knowing When You Need a Startup CFO

The short answer is always, and here’s why.

As an entrepreneur, you wear many hats. In the beginning, you may be CEO, CFO, COO, sales, and marketing all rolled into one. If you’re just starting out, this makes sense — you can’t afford to bring on other people. But as your business grows, it’s difficult to do everything.

When you’re ready to give up one of those hats, the financial hat should be the first to go. Whether it’s a part-time or full-time hire, bringing a chief financial officer on board to help with your financial strategy and focus is key. After all, smart money moves are what’s going to keep your business well positioned for the future.

Hiring a Full-time Vs. Outsourced CFO

First things first: the addition of a CFO should only be forward-thinking and strategic, meaning it might be a while until a startup company like yourself needs someone in that role full-time.

However, working toward the goal of hiring a CFO will serve you well. Keep in mind, you’re actually getting a lot more than a warm body. Beyond being someone who is knowledgeable, you’re also gaining a sounding board, another soldier in the startup trenches, and in many cases, a business partner. Your CFO can help you with everything from choosing a bank for any kind of loan agreement to helping you determine product pricing. Essentially, a CFO is your financially-minded guru.

How Much Does a CFO Make? The CFO Salary Breakdown:

outsourced cfo

This is the average, and you have to figure that into where the CFO is located. Here is a snapshot of the top tech hubs in the U.S. and the cost of living based on the national average.

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This is important to keep in mind because cost of living will influence base salary, and cost of living will help you understand if you need to adjust that salary.

So, You Can’t Shell Over That Much Money Yet…

Don’t worry. That’s normal! We typically recommend a part-time, outsourced CFO for startups until it’s a recurring 20 hours/week need. Once you reach that threshold, you might want to reconsider a full-time, in-house hire.

How do you know if you’re ready? Look at your revenue. If you’re making 5-10 million in revenue, or you’ve raised 5-10 million in funding, you’re ready and should consider hiring someone.

Otherwise, keep on outsourcing on a part time basis (compare the costs here to that of a full-time CFO salary). Chief financial officers like this can bite off chunks of projects just where you need that financial or strategic guidance. Because it’s essential to have someone available to help you make those judgments, outsourcing your CFO is a great idea.

And the COVID-19 pandemic has proven to industries across the map that conducting business virtually is all the more possible, too. So, when you’re envisioning what part-time financial help could look like, we encourage you to look into the benefits of a fractional CFO.

Learn more about our  CFO services, or test them out for yourself with our free CFO Office Hours!