If you want to pursue a growth strategy for your company, you need someone who sees capital as the means to grow an organization. While business growth dynamics can be complex, strategic capital allocation leads to new opportunities for innovative business growth.
Many CFOs approach the role from a budgetary or cash flow mindset which is an essential component of the job. An equally critical skillset is the ability to free up capital to drive business growth. However, with so much on their plates, many CFOs and their associates don’t have time to change their approach drastically – to have even more impact. With outsourced CFO services, you can get the help you need and use it as a springboard to drive profit, revenue growth, and the capacity for your business to think outside the box. Overall, you’ll start combatting your obstacles to business growth with a new Growth CFO perspective.
Often, the factors limiting business growth boil down to a CFO possibly misunderstanding their role in an organization. A CFO, be they in-house or outsourced isn’t just an accountant but a brand’s representative most in control of allocating resources and changing a company’s direction for the future.
CFO Vs. CPA
CPAs, or Certified Public Accountants, tend to focus more on balance sheets compliance while CFOs prioritize financial strategy. CPAs market themselves as financial strategists – which, in some cases, rings true – however, their primary role is not a strategy. Instead, CPAs often use budget cuts to implement strategies, while CFOs use revenue growth and profit engineering.
A Growth CFO, by contrast, should have experience in corporate finance, know how to utilize business finance for growth, assess financial risk, budget, and create a business growth model. When you hire someone for a Growth CFO role, you want them to break business barriers and create a framework for financial direction using the latest data and technology for business growth.
Many CFOs have backgrounds in CPA work, gaining the accounting experience upfront and translating it to a CFO’s leadership role. But if you’re making the space for a CFO in your organization, you won’t see fast-track business growth and would profit more from utilizing CPA services for accounting and tax compliance while hiring an actual outsourced Growth CFO.
What is a Fractional CFO?
As CPAs, you can hire CFOs on a contractional basis for their accounting and operational expertise. We refer to this position as a fractional CFO. Typically, fractional CFOs work for startup and scale-up companies, leveraging their experience but most are not business growth or succession experts. Fractional CFOs present a great way to get the accounting and operational foundation in place.
What is Incremental Cash Flow?
To better understand the value of a Growth CFO, you should understand your business’ incremental cash flow. This refers to the company’s additional operating cash flow for taking on a new project. When positive, this means your brand’s revenue will increase from the venture. When you see positive incremental cash flow, it’s a sign that you should invest in a project, as you’ll make more than the initial and recurring costs.
Focus on the initial outlay, revenue generated from the project, terminal cost or value, and the scope and timing of the project as well as the timing of cash inflows and outflows. If your company can only afford to take on one new project, but you have a few in front of you, you can calculate the incremental cash flow and determine which task is worth more.
How to Make a Business Expansion Plan?
To hire the right CFO or train one for the job, you should understand a little more about what goes into a business expansion plan. Having a sense of where your company can improve will give your candidates a greater handle on what their role might look like.
A business expansion plan should consist of the following elements, in order:
- Executive summary: This concise statement will offer an accurate overview of your company, your expansion, and what the road to achieving that vision looks like. Briefly highlight growth targets, projected operating costs, funding needs, and your marketing approach.
- What you offer: Highlight what makes you unique. What value do you offer that others don’t? What are your apparent strengths? Use this opportunity to reiterate your value proposition, including a list of services.
- Executive management team: Determine who you need to oversee your expansion. Ultimately, this is why you want a CFO in the first place, as they will make development their priority. Still, profitable growth is everyone’s business, so it’s critical to familiarize yourself.
- Expansion plan: Make a detailed proposal outlining your goals and what you need to reach them. Does your expansion include a new service or new team members? Describe that all here. Ensure you hit some targets like how you will support the growth and how many more staff members you need and pay attention to key performance indicators. Lastly, pay attention to key performance indicators.
- Marketing analysis: Identify and learn from your competitors who already exist in your area of expansion. What makes them successful? See why the industry responds well to them and emulate their strategy to the best of your ability.
- Marketing strategy: Your marketing strategy should incorporate the above elements seamlessly. Now that you realize some of the obstacles in the way of expansion, you can tackle them more easily. Even if the plan starts abstractly, it’s crucial to have this outline so you can get at development directly.
- Financial flight plan: Perform the what-if scenarios analysis to figure out the best path to achieve your objectives. This establishes sales and operational requirements as well as ensures sufficient cash to protect the downside.
You can utilize this information to run your strategy or interview the right CFO, getting a better sense of how they understand the process. Ask them about their business growth system and what they perceive to be your brand’s strengths and limits to financial growth. Growth CFOs are unbiased and focused on results, so they’ll have no trouble being direct about your business.
Final Thoughts: Virtual CFO Services
When you need CFO outcomes, the options are hiring a traditional full-time CFO, a fractional accounting and operational CFO, or engaging a Growth CFO. Growth CFOs work side by side with your CEO, tailoring business goals with a clear flight plan to outcomes and will catapult your brand into greater relevance. This includes financial clarity and confidence when making decisions. Investing in a Growth CFO grants you a new landscape of opportunity that your business cannot afford to miss.
How Foresight CFO Is Different from Other Outsourced CFO Services
Our experienced Growth CFO team at Foresight CFO has worked collaboratively with hundreds of CEOs worldwide to bring meaningful financial insight that clarifies their strategic direction. Schedule a 25-minute discovery call with me, and we will discuss you & your business, what you want, and what is getting in the way.