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7 signs your business may need a CFO
Hiring a CFO could help you take your business to the next level and enjoy more profitability than ever before. So the question is, how do you know if you should hire a CFO? - photo by Troy Martin
Hiring a CFO can be a big decision, and the topic often brings up a conversation focused on business metrics and other data regarding the success of the company. Some business owners are hesitant to hire a CFO because they are worried about the expense of paying for the cost of the services.

But hiring a CFO at the right time can actually help by boosting the profits and success of your company. When you have up-to-date information about the financial standing of your company, it becomes easier to make well-informed decisions along the way. Here are a few signs that it might be the right time to hire a CFO:

1. Annual revenue

Low revenue doesnt justify the cost of a CFO, because your company doesnt bring in enough money to cover the expenses. As your revenue grows, it makes sense to hire an experienced professional to help you manage the cash flow. If you are nearing the level of $5 million to $8 million annually in revenue, then your financial management is complex enough to merit the assistance of a CFO.

2. Annual growth

Even if your revenue doesnt seem high enough to support the costs of a CFO, it might be beneficial to hire a CFO right now if you can see that the trajectory of the company is growing. If your company is growing by more than 20 to 25 percent each year, then you shouldnt wait to bring on a CFO.

3. Product complexity

A single-product business is fairly easy to manage, but it becomes much more complex when your company is selling multiple products. If your organization is getting more complex and you are sending a variety of products to many different locations, then you will likely find it beneficial to have a financial executive overseeing the organization.

4. Employee headcount

As a general rule of thumb, a business with more than 30 to 50 employees should probably hire a CFO. There are many compliance rules and laws that need to be considered once you reach the size of 50 employees, which is why this number is a good milestone to consider.

5. Company going public

If you are anticipating that your company is on track to go public, then a CFO can be very beneficial. Audits are required if a company is interested in initial public offerings (IPOs). Look for a CFO with experience in IPOs to help with this process.

6. Acquisition or merger

It can be complicated to merge two companies, so you should hire a CFO if your company is acquiring another company. The CFO can help with the transition to make it as smooth as possible.

7. Investors or venture capitalist

In the situation is where venture capitalists or any other type of investor is providing financial backing for your company, then you need to be able to provide information about the financial success of the company. In these situations, it can be very beneficial to have a CFO to manage the reporting and communication.

If you dont like the idea of hiring a full-time CFO, then you should consider the benefits of having access to a part-time financial professional instead. Outsourcing is a great way to handle these CFO responsibilities because you can benefit from the services that are available while saving money at the same time.
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