When I established my first firm more than a decade ago, I recall hearing some owners of private companies say they did not need Fractional CFO help because they were making money hand over fist. Those were the days of the Texas shale boom. They viewed a CFO’s contribution as limited to “cutting costs” and providing bookkeeping and accounting services. Being the passionate business owner I am, I cited examples of how a CFO has significantly more to offer like strategic planning, portfolio analysis, M&A, digitalization, risk management, etc.…but that was brushed aside.
Little did we know that this last decade would arguably be more volatile than previous. I can’t believe I am saying this now, but I recently heard this response again! As I care and believe in the value of our Fractional CFO Services, I want to share my thoughts with you.
My experience working as a Fractional CFO and business advisor to private companies serving healthcare and energy markets is I offer many services IN ADDITION TO cutting costs (or, by implication…cutting jobs). In fact, the most “in-demand” services have nothing to do with cutting costs. Many businesses have ongoing strategic efforts to identify and evaluate opportunities to diversify their legacy businesses. Take The Healthcare CFO for example – for several years it was an orphan practice within The Energy CFO’s service portfolio until there was enough critical mass to warrant a new company. A lot goes into these efforts before they start making investments, including testing prototypes, running scenario planning, resources planning, building budgets, running forecasts, and identifying sources of cash to fund these investments. In some cases, companies are considering strategic transactions (acquisitions of companies and/or technologies) or developing new services and related intellectual property.
These companies are also looking for ways to embrace digitalization using new technologies and process automation to free up their dedicated workforce to take on more responsibilities – including diversifying and growing new businesses. Companies are investing in helping employees expand their data skills and digital mindset. They also explore and test new partnerships with service providers and less traditional business models. The CFO is often in the middle of these initiatives and/or leading them because a lot of data and data know-how sits in the finance and accounting space.
We also spend a great deal of time scanning for risks in our business and the industry with the goal of managing these risks. The uncertainties businesses face never cease; this is an area of ongoing attention. Gone are the days when healthcare was considered immune to economic cycles. The implications of these uncertainties are vast – changing and/or adopting new business processes or technologies, looking to finance to help build business intelligence, and CFOs routinely use data visualizations to help leadership understand and process financial and operational insights and speed up decision making.
Another area (maybe less visible) is the owners of these companies also have investment goals. And when I use the term owners – it's not just venture capital or private equity. We serve doctors, other medical and healthcare professionals, and startup company founders. Behind the C-suite doors, we analyze the life cycle of their ongoing investments in people, intellectual property, technology, and/or R&D like – adding new employees or new service lines, how long it takes to break even cash-wise, we look at how profitability and cash flow varies by resources, and what their expected returns will be in months and years. Also, we focus on their growth, cash flow, and equity targets. And we spend time on governance and thinking about scaling.
If you are wondering why I have not mentioned bookkeeping and accounting services, the answer is pretty simple. We encourage our Fractional CFO clients to seek more cost-effective solutions than paying CFO prices for bookkeeping and monthly accounting work. This type of work is known in the industry as Client Accounting Services. We know several reliable and cost-effective accounting resources and commonly help our clients find help when they need it. In fact, some of the larger clients we have helped on the energy side of our business have saved enough money compared to their prior arrangement that the difference pays for a significant portion of their annual investment in our Fractional CFO Services (not all – but a good chunk). That’s a real win for clients.
In summary, Fractional CFOs offer more value to business owners than simply cutting costs and providing bookkeeping and accounti
ng services. If you are ready to unlock your company’s potential, complete our short Consultation Form on our Contact Us webpage to schedule a 30-minute consultation to explore how our Fractional CFO Services could add value to your company.