What does a CFO do in a small business?

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Business Advisory
Partner & Consultant
March 21, 2023
minute read

How a Chief Financial Officer can grow your business

If you’re the owner of a small business, then chances are that hiring a full-time CFO isn’t on your list of priorities. There’s no doubt that securing your company’s financial health is of paramount importance, but a CFO role is often only considered for large enterprises and nationwide businesses. With comparatively fewer resources at your disposal, you might think a bookkeeper or accountant will do the job — so what’s the role of a CFO in a small business? 

To answer that question, it’s important to define a vision for the future of your business. Do you see yourself growing in complexity and potentially expanding your array of services and products?  Or perhaps you have already grown exponentially and you’re struggling to get a clear view of the true financial picture of your business?   

If growth and clarity are what you’re after, then hiring a CFO, even as a small business owner (in fact, especially in that instance), could be a significant step in the right direction.

In this guide, we’ll explain what a CFO can do for your small business. We’ll explore:

  • The responsibilities of the CFO
  • The six benefits of hiring a CFO for your small business

If you’d like to hire a full-time or part-time CFO to get your commercial financial strategy on track, Liston Newton’s virtual CFO services for small businesses are a great place to start.

What is a Chief Financial Officer?

The CFO is the head of a company’s accounting and financial operations. But they’re responsible for more than just collating financial data and basic cash management. CFO responsibilities include:

  • Revealing and resolving the company’s financial challenges
  • Creating a future-focused financial planning strategy
  • Refining operations through ongoing financial analysis

As high-level executives, CFOs use their deep financial expertise to weigh in on major business decisions like growth strategies, cost-saving measures, and mergers and acquisitions. They optimise your business with superior financial technology. And, critically, they ensure your business meets its regulatory obligations. All of this they do with a finance and accounting team at their back.

These services may be beyond the concerns of your small or medium-sized business. But think of it like this:

The CFO’s role is to assist the business shareholders or the CEO (Chief Executive Officer) in defining and implementing a feasible and practical financial strategy to meet long-term goals.

Look at it like that, and you’ll see that a CFO's strategic financial expertise would greatly benefit all small businesses looking to grow and develop.


The duties of a CFO at a small business

The primary purpose of the CFO’s role is to develop a robust financial strategy for your business. Let’s take a closer look at a CFO’s specific responsibilities.

Financial reporting

The CFO is responsible for creating timely and accurate financial records so that shareholders can fairly assess the state of the business. Depending on the size of the business, these reports must also be submitted to Australian regulatory financial institutions.

A small to medium business such as yours may not need such stringent record keeping, and the services of a bookkeeper or controller could do that. But having your small business’s records attested to by a CFO will earn you significant credibility if you seek capital in the future, either from banks, government initiatives or venture capitalists.

Financial forecasting

This is where the expertise of a CFO truly comes into play. With data (financial and otherwise) from across the business at their fingertips, the CFO analysis broader external trends such as market changes, competitor efforts and government initiatives to predict your financial future. 

The CFO can discern how your existing financial strategy will play out in the context of your market, industry and even the country at large. They can also model alternative financial strategies so you and your small business’s shareholders can remain adaptive and competitive.

For a small business, having an expert you can touch base with, even part-time, for cash flow projections or to plot out your future can be a critical advantage.


What kind of CFO do you need?

Do you need a controller, or a fractional or part-time CFO?

If you’re thinking about your business’s future, that in itself is a good sign you’re ready to sign on a CFO. But what kind of CFO do you need, and how can you be completely sure they’ll meet the expectations we’ve set here? Our financial specialists have stepped out everything you need to know about why and when to hire a CFO.

How much income is your business making?
  • $1-$5 million: you need a financial controller
  • $5-$30 million: you need a fractional CFO
  • > $30 million: you need a full-time CFO


Improving business liquidity

An essential and critical skill that any successful business needs is the ability to pay its debts promptly and in full. It’s not just a matter of keeping yourself in good standing with your creditors — proving that you can keep on top of your debts will earn you the credibility and experience to secure more funding to grow your business.

Through diligent financial planning, the CFO ensures that the business has the funds it needs to keep its debts in check. As a small business owner, you might be the one in charge of this task — and no doubt you’re already aware of how mentally taxing and time-draining it can be. That’s why having even a fractional CFO you can turn to occasionally would be a boon.

Maximising ROI

This, ultimately, is the root goal of financial advisory: spend the least to earn the most. While the CFO is the head of the financial department, their executive position gives them access to every aspect of the business. It’s their duty to understand how every department functions, and why they operate that way. 

Their birds-eye view of the business allows the CFO to identify process inefficiencies, unnecessary expenditures, and opportunities for optimisation. They synthesise those insights into actionable strategies to refine the business.

You may find that your business is small enough to keep it running efficiently on your own. But that’s not necessarily true — the nature of blind spots is that you’re, well, blind to them. Having a dedicated CFO will be necessary as you begin to enact your vision for growth.


Want to know more about our CFO services?

A 90-minute strategy session gives you a clear plan for business growth.

  • Get a better understanding of your business
  • We generate a detailed report from your strategy session
  • Understand your priorities and next steps


Take your small business to the next level with a virtual CFO

Here’s the key takeaway: the role of a CFO can be just as valuable to ambitious, growth-focused small businesses as they are for large corporations. 

Let’s not beat around the bush — the cost of an experienced CFO may be a decisive factor in your ability to hire one. But with virtual and fractional services available, cost is not as impenetrable a barrier as it once was. There are other considerations, too, and we’ll happily talk you through how to find the right CFO for your business.

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