It is hard to understand the value a Chief Financial Officer (CFO) can bring to your business. Especially if you have not yet worked with a good CFO before.
So, let’s start right there.
What makes a good CFO (one worth paying)?
You do not need to pay someone to tell you something you already know. A good CFO helps you translate the financial reports from your business into actionable information.
A CFO will help you spot trends (good or potentially bad if you don’t get ahead of them) in your expenses and revenues.
A good CFO can spend only a few minutes looking at your business financial reports and tell you if employees are stealing.
The right CFO will help you understand your most profitable goods and services and how to grow them.
Your CFO should NOT be limiting your access to information or making things more difficult to understand. Instead, a good CFO will make sure you understand everything and empower you to make more informed business decisions.
A good CFO knows what bankers, lenders, bonding companies, and others need to see to support your business growth.
In summary, a good CFO should empower you and your team.
Alright, now that we have a very basic idea of what a good CFO looks like, we can start talking about the cost of a good CFO.
What should I expect to pay a CFO?
Depending on where you are located, the complexity of your business, and the size of your company; you can expect to pay a full time CFO anywhere from $150,000 to $250,000 per year (or $12,500 to over $20,000 per month) in base salary plus benefits.
When you look at the cost of a full time CFO it can easily become overwhelming. That is a large expense for sure! It might even be more than you pay yourself.
Alternatively, an increasing number of business owners are choosing to hire a contract CFO. Sometimes referred to as a ‘Fractional CFO’ or something similar.
A Fractional CFO allows you to get the value and experience of a CFO at a fraction of the cost. The big limitation or downside is that you would effectively be ‘sharing’ the CFO with other businesses. However, the cost savings is normally worth it if you can find a good one.
When it comes to the cost of a Fractional CFO, you should expect to pay anywhere from $1,500 to $5,000 per month for a Fractional CFO (with no need to provide them benefits). This helps keep your costs down.
Compare the cost of a full time direct hire CFO to a Fractional CFO, and you can quickly see why this is becoming more common.
At the end of the day, the right CFO for you and your business will allow you to grow quicker and become more effective. As a result, the right CFO should pay for themselves based on the value they bring to your business. If they don’t, it’s probably not the right fit.
Finally; The real question to ask yourself is not ‘Can I afford a CFO?’ But rather, ‘Can I afford to NOT hire a CFO?’
