Today’s businesses face a complex economic landscape and a host of challenges as ever-evolving requirements and regulations coincide with shifting consumer needs and behaviors. Companies now realize that selecting the right experts is essential to remain relevant, compliant, and profitable — with particular significance given to filling the role of chief financial officer (CFO). If you choose wisely, a CFO has the potential to bring endless value to your organization, which is why outsourcing your CFO may be your best option.

In this article, we’ll explore how an outsourced CFO can help your business grow through professional, personalized expertise. In the articles to follow, we’ll dig even deeper into the role of an outsourced CFO within your business. 

What Is an Outsourced CFO?

An outsourced CFO is a professional outside of your organization who provides advice in the areas of finance, business, operations, and accounting. Outsourced CFOs can be full-time, part-time, or called in as-needed to support your company.

How an Outsourced CFO Can Support Growth

Many people only consider the importance of a CFO come tax time, but in reality, a good CFO will prove valuable throughout the year. Great CFOs offer input and guidance that go far beyond tax questions, such as in the following areas:

Determining Profitability

Before your business involves itself in a new initiative or activity, your CFO should step up to help you determine profitability. CFOs really shine when they’re given the opportunity to dig into the numbers and forecast the most likely outcomes.

With insight into how a new initiative is likely to impact your business financially, you’ll be empowered to make a wise decision to pursue it as-is, revamp the idea, or maybe put it aside to revisit again in the future.

For example, an outsourced CFO can help a growing women’s fashion brand make the right decision when met with the opportunity to expand into the teen fashion market. The CFO’s advice will go beyond industry research and consider the specifics of your brand’s audience, consumer sentiment, budget, and other important factors. 

Evaluating Pricing Strategy

Your pricing strategy plays a critical role in overall success — and it can even make or break your business. A CFO can help you optimize your pricing strategy, especially as your offerings evolve with time.

As demand for your products or services goes up, along with changes in overhead, you can always turn to your CFO for advice on raising or lowering your prices. They’ll crunch the numbers to give you the confidence you require to move forward or change course. 

Establishing Your Break-Even Point

Another important duty of a CFO is establishing the break-even point for initiatives and investments. The break-even point is that crucial point of balance where you’ve eliminated all losses, preparing you for the potential to make a profit.

Knowing where that break-even point is plays a crucial role in deciding if a project is worth pursuing, and it plays an even more important role in helping you determine your exit strategy. Your CFO will offer guidance that can help you evaluate opportunities, position yourself for gains, or cut your losses when the time comes.

Take a thriving home decor brand as an example. With a dozen brick-and-mortar locations already running profitably, the company may be interested in expanding to new parts of the region. An outsourced CFO can help the company determine if it’s the right place and the right time to move forward with a new location.

Assisting in Financial Considerations

Whether you’re thinking about expanding to a new location, purchasing a new piece of equipment, or hiring additional personnel, your CFO is the go-to resource before you make any decision that could impact your bottom line. Your CFO can walk you through the numbers to help you determine what your budget is for any activity. And they can offer input about whether or not it’s a good time to move forward with the idea.

Sometimes, taking on additional expenses is unavoidable. For instance, you might have to invest in new personnel in order to support a growing customer base. In that case, your CFO can help you set target salary ranges and even identify other areas where you can cut costs to make room in your budget for necessary additions.

Assisting in Mergers and Acquisitions

Properly approaching mergers and acquisitions (M&A) is critical to scaling a business. Your outsourced CFO can help steer your company as it faces M&A opportunities, guiding valuations, negotiations, and the intricate financial details associated with these activities.

Assisting in Setting Rates for Government Contracts

If you take on any government contracts, you know that setting competitive but lucrative rates is a never-ending challenge. Outsourced CFOs can bring major value to the table here thanks to their experience and unique insight.

Before you set rates at random or make a best guess, consult your CFO to get specific recommendations about how you should approach the contract at hand. By setting the right rates, you greatly increase your chance of securing a government contract, thereby fueling your business’ growth.

Many businesses can take advantage of government funding, if they have the right help on their side. For instance, any incorporated business with fewer than 500 employees can tap into Small Business Association (SBA) loans to help the company launch and expand. So, an emerging online tech startup could use SBA funds to unlock short- or long-term capital to hire more sales staff. 

Setting Up Accounting Practices

Your CFO can play a major role in guiding the setup of accounting practices by working closely with your business in order to minimize risk and maximize profit.

With the input of your outsourced CFO, you can move forward confidently knowing that nothing is being overlooked in your accounting department and that everything is being handled in an optimal manner. That puts money back in your pocket.

Take Your Business to the Next Level

Now that we’ve explored where an outsourced CFO can lend a hand, we’ll dig deeper in our next article into the biggest benefits that an outsourced CFO can bring to the table — like optimizing your pricing strategy so you’re poised for growth. 

Are you ready to get input from an expert? Contact Lagerquist Accounting and Advisory to experience the difference an outsourced CFO can make in your business.