Fractional CFO: The Ultimate Guide to Driving Growth and Profitability
Integrate a CFO’s unique perspective, expertise, and insights to maximize opportunities for your business.
What is a Fractional CFO?
Your business may not be ready to justify a full-time in-house chief financial officer (CFO). But you still need CFO-level insights and finance support to run a growing, thriving business.
For CFO-level support without the overhead, a fractional CFO is the solution.
Hiring a fractional CFO gives you access to a highly experienced, senior-level finance professional without tying up unnecessary capital in a full-time in-house CFO. A fractional CFO brings the same credentials and experience as an in-house CFO, providing a cost-effective way to get the senior-level, hands-on finance supports your business needs at the level you need it.
To be clear, a fractional CFO isn’t the same as an interim CFO. They have all the same responsibilities as a full-time employee would, but rather than investing in an FTE that comes with overhead costs, you only pay for the level of CFO support your business needs, when you need it.
By applying the right resource at the right time, a fractional approach to CFO support gives you tremendous flexibility—while allowing you to tap the skills and expertise of a senior finance professional. Better yet, you gain a CFO who brings experience across diverse environments and can lend an objective, third-party perspective on moving the business forward strategically.
What are the Benefits of Working with a Fractional CFO?
An experienced fractional CFO offers:
Who Needs a Fractional CFO?
Any business that has aggressive growth goals but isn’t ready for a full-time in-house CFO can benefit from a fractional CFO. Your readiness for an outsourced CFO is based less on your company’s size or stage of life and more on the goals you want to achieve and the resources you need to achieve them.
Whether it’s negotiating loan terms, entering a new market, or finding the right funding sources, hiring a fractional CFO may be the right approach to gaining the financial insights you need to make informed decisions about how to drive your business forward.
If this sounds like your business, you may be ready for a fractional CFO:
Does your business need a fractional CFO?
What Does a Fractional CFO Do?
A fractional CFO becomes immersed in your business, provides financial guidance and direction to drive growth and profitability, and focuses on helping you achieve your business goals.
At a high level, a fractional CFO helps your business in four essential ways.
Whether you’re relying on an internal or outsourced bookkeeper or accountant for your day-to-day accounting, finance, and tax work, at some point your needs will outgrow their capabilities. You still need them to handle essential tasks—but you also need more.
A fractional CFO can prepare budgets, develop financial forecasts, and conduct financial modeling to help you assess what-if scenarios. They can help you understand the tax implications of your business decisions, especially if you’re considering expanding into new tax jurisdictions or venturing into global markets for the first time. If you are a consumer packaged goods company, they can ensure you are complying with strict generally accepted accounting principles (GAAP) rules for calculating cost of goods sold (COGS) or help technology companies and other innovation-focused businesses take advantage of research & development (R&D) investment tax credits and deductions.
No matter your industry or focus, a fractional CFO can provide the senior-level finance, accounting, and tax support you need to drive aggressive growth and accelerate profitability.
To gain insights on how to improve revenue and profitability, you need a solid financial foundation in place. A fractional CFO can lay that financial groundwork for you, without requiring you to hire a full-time employee.
For instance, they can help you choose and implement the right accounting software to simplify and improve recordkeeping. They can establish accounting practices and procedures that ensure everything is done accurately and consistently. And they can set up the financial reporting you need to make informed decisions—both at the organizational level and within operating units or departments—reporting back to your investors or other stakeholders.
By establishing a strong financial foundation, a fractional CFO provides the footing you need to grow strategically and profitably.
The most effective strategic decisions can make a difference in moving your business forward. But decision-making is more complex than ever—demanding that you rely on data-driven insights, not gut instinct.
A fractional CFO can provide customized insights that allow leaders across your business to make the most informed decisions. They gather and analyze data to produce accurate forecasts. They help you allocate your finite resources and capital effectively based on data trends and forecasts. And they develop and monitor key performance indicators (KPIs) that measure progress against goals.
With a fractional CFO on your team, you gain confidence to make the best decisions to grow the business and/or improve your profitability.
Business leaders recognize that they need data to enable knowledgeable decisions across the entire operation, especially when it comes to finding and capitalizing on growth opportunities. CFO-level insights provide the clarity to make increasingly complex decisions that impact a company’s ability to grow and thrive. As a decision-making tool, financial data needs to assess where your business is today and where you want it to be tomorrow.
Financial modeling plays a critical role in helping businesses evaluate various what-if scenarios and make sound decisions designed to achieve stronger growth and profitability. Financial modeling uses sophisticated software tools that combine your current financial data with assumptions about the near term, then forecast how you’ll perform in the future. By reviewing your current income statement, balance sheet, and cash flow statement—along with your historical financial data—finance professionals can use modeling to help predict what your business and your finances might look like down the road. Identifying and collecting the right data supports production of accurate forecasts for appropriate resourcing. A professional CFO’s analysis provides leaders the confidence to make the right decisions to increase market share, improve profitability, and foster growth.
You might be doing well growing revenue. But are you also taking care of your bottom line?
The more complex your business becomes, the more challenging it is to scale profitably. A fractional CFO can help you maintain your margins even through times of aggressive growth, drawing on their experience in helping many other businesses do the same. They can also help secure capital to fuel greater growth by preparing investor-ready financials that stand up to venture capital or private equity scrutiny and ensuring you don’t dilute too much ownership in the process of fundraising.
Progressive companies recognize that it’s no longer enough to tap into historical data and use it as a guide to making future decisions. Now, organizations are taking a much more forward-looking view—using predictive and prescriptive analytics to learn from the past, anticipate the future, and apply those insights to decisions. It means going beyond just considering where you have been and forecasting where you’re headed, using financial modeling to consider and assess different scenarios.
The importance of taking a forward-looking, predictive view of data cannot be overstated in the current climate; the ability to stay agile and pivot as your environment evolves can mean the difference between thriving and merely surviving. Witness how leading organizations like Wal-Mart, Target, and Netflix didn’t accurately foresee the combination of inflation and eased COVID restrictions would impact consumer demand for their products and services.
To scale your business profitability, you need the experience and guidance of a fractional CFO.
How Can a Fractional CFO Help Grow Your Company?
Whether your goal is to grow tenfold, achieve Series B funding, build the value of your company so you can be acquired, or secure guidance to determine your next move, there are key financial elements needed before you’re able to uncover the best opportunities for success. Integrating a CFO’s unique perspective, expertise, and insights into your business plans will maximize those opportunities through:
What Questions Can a Fractional CFO Answer?
As you and your team guide your business forward on a path to increased revenue and improved profitability, you’ll have questions that are tough to answer without CFO-level insights.
With a skilled, experienced fractional CFO working closely with your in-house leadership team, you’ll gain the insights to answer key questions like these with confidence:
- Are we agile enough to leverage a strong financial foundation and act quickly in the face of opportunity or risk? Agile companies have been shown to outperform their less-agile peers on important financial metrics. For instance, agile companies realize an average of 16 percent growth in EBITDA (earnings before interest, tax, depreciation, and amortization) vs. 6 percent for non-agile companies, according to an Accenture report.
- If we expand into new geographic markets, what new tax and accounting issues will we face?
- How can we make sure we’re capitalizing on the right growth opportunities?
- At what point in our company’s growth journey should we pursue another fundraising round?
- Are we deploying our existing capital effectively?
- Should we consider a strategic alliance or joint venture to fuel our growth or open the door to new markets?
- How do I change tax partners mid-season to better capitalize on opportunities for growth and savings?
How Can a Simple Startup Fractional CFO Help?
Growth-minded companies turn to Simple Startup for fractional CFO services that help reinforce their financial foundations, transform their fiscal strategies, and scale their business.
Our fractional CFOs dive deep into your business, becoming fully immersed so we can understand your goals and strategies, then provide customized support that matches your unique needs. We bring the combination of proven strategies, experience across many different environments, and a fresh perspective on the drivers that can propel your business forward.
From strategic financial planning and reporting to KPI management and analysis, board preparation and oversight, tax advisory, and services that help you build shareholder value, a Simple Startup fractional CFO is a cost-effective resource that can accelerate your growth and get you ready for the next stage in your journey.
Schedule a call to learn how Simple Startup’s fractional CFO services can provide the finance support and insights you need to take your business to the next level.