As the entrepreneur of a small business in Denver, you need to chart your company’s journey to success. Consider that journey to be a cross-country road trip. You should be prepared to embark on an adventure with a map, an enthusiastic team, and a tank filled to the brim.
The trip begins well, but the route only gets more complex with unexpected roadblocks, detours, and (suspicious) opportunities for exploration. You’re compelled to take a break, wondering if someone (experienced and reliable) could help you navigate the dubious landscape.
This is where the services of a part-time Chief Financial Officer or CFO come in handy. Denver has a burgeoning entrepreneurial scene with wide scope for innovation and collaboration. In fact, Colorado itself is experiencing business growth that defies national trends (with a record-high number of business filings).
This also means the market is heated, and the competition is cut-throat. One area that acts as a scorecard for business growth is finance and accounting. In this article, we will discuss how a part-time CFO can bolster your startup’s finance area for consistent growth.
Who is a Part-Time CFO?
Also known as a fractional CFO, a part-time CFO is an outsourced Chief Financial Officer hired by startups for financial expertise. They are typically hired on a contractual or hourly basis to deliver top-quality financial leadership as and when needed.
These professionals are experts at improving and maintaining a business’ financial health. Their primary target is to ensure that your organization’s financial plan (both short and long-term) aligns well with future goals for expansion.
Common Roles and Responsibilities of a Part-Time CFO
Forbes Advisor ranked Colorado as the second-best business-friendly state in the US for 2023. The ranking is based on factors like low business formation fees, startup density, and access to restrictive industries. However, the corporate tax climate is not so favorable. With a long list of expenses to manage, it can get tough to hire a full-time CFO.
A part-time CFO in Denver can help you save money as you’re only paying for the services you need. Moreover, you get the freedom to focus on core competencies knowing that an expert is handling the finances.
So, what are the common responsibilities you can delegate to your fractional CFO?
- Getting your books or accounts in order
- Implementing growth systems that promise sustainable growth
- Exploring the reasons behind cash flow issues, cost overruns, etc. and suggesting strategies to overcome the problems
- Producing financial overcasts
- Keeping the business compliant with taxes
- Fundraising support
- Tracking crucial financial KPIs to measure team performance
- Preparing an annual business budget
- Developing pricing strategies
- Creating financial models
- Analyzing market trends
How a Part-Time CFO Can Benefit Your Small Business in Denver
Did you know that Colorado’s business landscape comprises 99.5% of small businesses? Most of them belong to the professional and IT services industry (given the scope for tech innovation in the state). Keeping up with competitors and cornering the market depends upon quick and growth-oriented financial decisions.
In case you’re confused, the following signs indicate it’s the right time to hire a fractional CFO in Denver –
- You’re unable to understand your company’s financial health. This includes its accounting books and financial reports.
- You’re finding it tough to keep your business afloat due to cash flow issues, problems with timely bill payments, etc.
- You’re on the verge of business expansion but need help budgeting for the challenger growth stages.
If you’re ready to avail the services of a part-time CFO, let’s see how they can help your business grow.
Big-Picture Business Insights
According to CFOshare, every budding startup requires more than an average fractional CFO; they need a complete finance department. This offers the assurance of a professional financial strategy that considers the big (growth) picture.
Reliable fractional CFO services will provide grounded guidance for not just growth but also business valuation. Through financial statements analysis, your part-time CFO will discover problem areas, spot trends, and suggest strategies to close the loopholes.
For instance – If a subscription-based company is seeing too many customers cancel their subscription, their fractional CFO can intervene. The expert will dig deep into the financial records, identify problem areas, and offer solutions to improve customer retention.
Focused Business Growth
They say an entrepreneur is expected to don many hats and play numerous roles. That sounds great on paper, but is it practical (or possible) to juggle too many items at once? Even if you could handle it for a while, there will come a point of saturation and exhaustion.
A top secret (hidden in plain sight) to business growth is to acknowledge you cannot do everything. One common area that is often monotonous and eats away at entrepreneurs’ time is accounting and bookkeeping.
You can delegate this responsibility to a fractional CFO and attend to growth areas like product upgrades and customer acquisition.
Strengthened Investor Relations
Every company owes much to its investors for establishing it and maintaining operational success. This makes investor relations (IR) an important aspect where complete transparency is maintained between the company and its stakeholders.
A solid integration of communication, finance, marketing, and regulatory compliance is needed for strategic IR. A fractional CFO will become the face of direct investor communications to help build transparency and trust.
Their responsibilities in this area will include –
- Understanding the shareholder base
- Reviewing the disclosure policy
- Developing an IR strategy that accounts for investor target and outreach
- Managing financial communications
- Maintaining compliance with regulatory requirements
- Providing investors with financial insights
A solid IR increases your business’ access to capital markets so you can acquire fresh capital when needed. It may also attract new investors with knowledge of better business angles and growth opportunities.
Access to an Expert Network
Besides their personal expertise and industry experience, fractional CFOs have a wide network of top-class professionals. These include tax advisors, attorneys, auditors, and so on. What could be better than the industry prowess of an expert network!
In case you need support with legal compliance, strategic tax planning, or solidifying relationships with regulatory authorities, a fractional CFO’s network proves beneficial.
As startups continue to grow in Colorado, the economy also grows, albeit, not at the same rate. While the economy is “averting recession,” it is expected that growth in the fourth quarter will be modest. With tough competition on the one hand and a sluggish economy on the other, you must choose your fractional CFO in Denver wisely.
Opt for services that promise a good mix of strategy and sensibility. Ensure they have sound knowledge of your industry and prior experience to support their claims. You can also ask different situational questions to assess whether they understand your business position.
Finally, let them answer potential areas for growth and improvement. The aim is to understand whether they have done independent research to identify gaps (preferably ones you haven’t). After hiring, define your needs clearly, set realistic goals, and establish regular check-ins to ensure smooth financial management.
Together, you can achieve major milestones and take your business to new levels of growth!