As a business owner, you have had to wear several hats to run your business. However, as your business continues to grow, it can become more difficult for you to balance all of the responsibilities. You need to hire a fractional Chief Financial Officer (CFO) to assist your company’s finances.
A fractional CFO, such as Solved By Tanna, fills the CFO role but only for a portion of your company’s time. They’re similar to part-time or contract workers, but the benefit of a fractional CFO is that they act as an experienced advisor to your company on an ongoing basis. But before you hire one, you should be familiar with the pros and cons.
Pros Of Hiring A Fractional Chief Financial Officer (CFO)
Are you a growing business looking to add a chief financial officer to your team? If so, hiring a fractional CFO who only works part-time and typically charges an hourly fee may be the most cost-effective option for your company. Here are some of the benefits:
- They Work More Independently
When you hire a fractional CFO, you can expect them to be more independent than a full-time counterpart. In fact, one of the significant benefits of hiring a fractional CFO over a full-time one is that there’s no need to worry about any conflict of interest. This independence allows the part-time CFO to offer unbiased advice and constructive criticism to help you achieve your goals.
- You Will Have Access To Talent
When you hire a full-time CFO, you’re paying for their skillset and the experience they have in your industry. A fractional CFO doesn’t require you to pay for an entire 40-hour workweek of this expertise.
A fractional CFO will bring a depth of knowledge complex to find when hiring a full-time employee. They typically work with multiple companies and industries and thus will be able to bring ideas from outside your company about how to solve problems you may be facing.
- Your Company Will Receive Operational Support
A fractional CFO can provide additional staff through their network of trusted advisors and professional peers. Your fractional CFO will know who to bring on board when it comes time to handle special projects or support critical functions within your company. They can also help with tasks like recruiting and hiring—and even develop standard operating procedures so that critical workflows don’t get lost when employees leave.
- They Employ Strategic Thinking and Decision Making
Strategic thinking and decision-making are the two most essential skills a CFO can offer. This is especially true for small businesses and startups, where resources are limited, and every penny spent must count. If there’s one thing a fractional CFO does better than anyone else, it’s deciding how exactly to allocate your funds so that they serve their intended purpose and drive growth.
Cons Of Hiring A Fractional Chief Financial Officer (CFO)
While the benefits of hiring a fractional CFO are significant, there are also some potential drawbacks. While these drawbacks may not be relevant to your company, you must be aware before deciding whether a fractional CFO is right for your business.
- They May Have Limited Knowledge About Your Business
A fractional Chief Financial Officer (CFO) is someone you can hire to help with the financial aspects of your business. They’re not permanent employees; instead, they only work for your company on a part-time or contract basis. One of the most significant disadvantages of hiring a fractional CFO is that they may not be familiar with your business and its operations.
- Consistency Issues
Fractional CFOs may not be available to assist you consistently. It’s important to remember that they’re in high demand. They work with multiple clients at once and can’t always meet the demands of their clients. Many fractional CFOs have hundreds of clients, so they can’t address your needs regularly.
Additionally, the services provided by this professional are based on an hourly rate. The more time a fractional CFO works for one client, the more money they have to charge that client. If you’re looking for a financial expert who will work with you regularly, you may want to consider other options.
- You Might Earn Less loyalty
Hiring a fractional CFO will cost you loyalty. You’ll be sharing your service provider with other clients that may also need the fractional CFO’s help. The more clients they have, the more divided their loyalty will be, and the less you’ll get from them. Most of them are constantly juggling multiple projects and commitments, so they don’t have time to devote themselves entirely to your organization.
A fractional CFO can be a good option if you want to get some high-level help with strategy but cannot afford it or do not need the services of a full-time executive. It’s essential to remember that these professionals often charge more than others in the field because they bring extensive expertise, experience, and leadership skills. If your company is at a point where it has outgrown its current operations and needs someone to step in and develop financials from scratch, choosing a fractional CFO may not be a good fit for you.