You’re running a small but growing company, and you’re ready to take your business to the next level. You’ve built up a strong customer base and you’ve begun diversifying your markets and revenue sources. Or you’ve started planning to open a new location or add more personnel. Regardless, you’re at that critical inflection point where it’s time to upgrade your approach to accounting and finance for the future of your business.

Historically, when businesses reached a certain point in their growth, they transitioned directly from part-time bookkeeping help (often provided by an executive assistant or office manager) to hiring a full-time controller or CFO to oversee accounting, finance and operations.

The only alternative to this approach in most cases was to hold on and move the bookkeeping person into a full-time role to cover the higher volume of accounting work. But doing this only increases capacity – it does not increase the sophistication or capabilities supporting your accounting.

In the last five years, a new option has rapidly developed which provides business owners with a powerful new and flexible approach: hiring an outsourced, fractional CFO to work alongside you in building your business.

Here are 5 benefits to evaluate when considering whether or not your business would gain strategic value from investing in an outsourced CFO:

1. Gain higher-level expertise earlier in the life of your business.

Under the traditional model, your accounting and finance needs would be addressed in a lockstep progression based, fundamentally, upon the size of your budget. You begin with a bookkeeper simply because that’s what you can afford. Then you move up to an accounting manager, followed perhaps by hiring a controller, and then investing in a full-time CFO. This means that the most critical expertise is not accessible until very late in the growth cycle of your business. By contrast, fractional CFO services allow you to gain access to a seasoned CFO expert even in the very early days of your business.

2. Avoid building a team that is oversized or poorly configured.

In addition to delaying access to the most highly qualified talent, taking a traditional route also puts new constraints on your costs and flexibility. If you hired a bookkeeper last year who has proven to be a reliable and loyal employee, what do you do when you’re ready to hire an accounting manager? Chances are the bookkeeper is not qualified to progress into the more expansive role – and you may not really need two people on the accounting team just yet – but you probably don’t want to just suddenly lay off the bookkeeper.

So, most likely, you keep the one and add the other. Take this approach all the way up to the CFO level and now you have a team of five or six people when perhaps two or three would suffice. Alternately, you risk damaging your company culture and employee morale by laying off various lower-level positions over time to help fund the next position you need. Compare this with the outsourced CFO approach, which allows you to purchase just as much or as little leadership as you need – and that you can adjust up or down at any time.

3. Avoid problems tomorrow by engaging an outsourced CFO today.

As a business owner, you know about all of the resources you could benefit from as you grow your company. And you also know that even if you could benefit from many of them, you can’t afford most of them so you might as well just put it aside. It’s like the old adage that you just know you could make a million dollars, if only you had a million dollars to invest in the first place!

Therefore, as a CEO, you’re used to denying yourself resources you can’t afford. A CFO is a perfect example – it sounds like a luxury and so you delay even considering one for years. But a CFO is one of the most critical talent investments you can make, in part because having one at the table can help you make better decisions today. The fractional approach enables you to engage an outsourced CFO now, when you need one, in time to avoid mistakes or overcome challenges proactively.

4. Move your accounting strategy beyond just compliance.

For so many small businesses, accounting equates to one thing – taxes. Preparing and filing taxes, keeping accurate books in accordance with the IRS code and making sure you haven’t missed any filing deadlines or legal obligations – these are the things that most small business owners worry about when they think of accounting.

And yet, the reality is that accounting’s primary purpose is to guide you and give you a clear picture of your financial position. An outsourced CFO can help you turn accounting from a compliance-only function into a strategic management tool that helps you make better decisions for the future.

5. Plan for growth proactively with an expert to guide you.

In addition to helping you migrate your accounting systems and strategies to encompass both compliance and management, an outsourced CFO can also guide you to make better business decisions.

Are you preparing to apply for bank financing? Your outsourced CFO can help you prepare for optimal success, and advise you on negotiating or evaluating offers. Are you considering whether or not to invest in new equipment or sign a lease for an expanded office or commercial space? Your outsourced CFO can run multiple what-if scenarios and give you the hard data you need to make the right decision. Whatever your business goals, an outsourced CFO can serve as an essential strategic resource to help you grow your business today.

When you consider these five advantages, it becomes clear that most (if not all) growing businesses would truly benefit from engaging with an outsourced CFO today.

Learn more about how Haines & Lagerquist CPAs can help your business through the firm’s Outsourced CFO services, delivered by an award-winning CPA and business advisor with proven expertise serving growing businesses.

Image Credit: ter-burg (Flickr @ Creative Commons)