Most entrepreneurs consider financial management as a nightmare. Let’s face it – running a business is hard. As an entrepreneur you are often faced with the daunting task of hiring, marketing, administration, and operations. Elon Musk once said that as an entrepreneur, you get the distillation of all the worst problems in your company. This is especially true when you are dealing with rapid growth, cash flow issues, or preparing to raise capital.
While some founders handle finances on their own, there comes a point where basic book-keeping, and accounting are not enough. As an entrepreneur, you are looking for intelligent information, and valuable insights that can guide your decision-making.
Hiring a full-time CFO is usually expensive. In most cases it costs about $250,000 per year plus options and benefits. But in most cases, all you need is a fractional CFO who works on a contract basis. Such fractional CFOs bring years of experience to the table at a fraction of the cost.
Fractional CFOs provide founders with financial leadership that your business needs at a fraction of the cost. If you are unsure whether a hiring a fractional CFO is the right choice for you, here are five key signs that indicate it’s time to bring in the experts:
#1: Rapid Business Growth
It is the dream of every entrepreneur to have a business that grows fast. However, when it happens to fast, financial systems often can’t keep up. There is this Chinese Rule of 3 and 10, which says that systems break every time you hit 3s and 10s – At 10, 30, 100, 300 and so on. This applies to finance as well. When financial management doesn’t scale with growth, companies risk poor financial decisions, cashflow issues, and other inefficiencies.
For example, a fast-growing SaaS startup that tripes its revenue may be faced with high operating costs, high receivables and unclear cash visibility.
Here is how hiring a fractional CFO helps
- Creating flexible financial models that balances growth and stability
- Setting up financial processes and systems that scale with the business
- Improving pricing strategies to improve profit margins
# 2: Cash Flow Challenges
Profitability and cash flow are two different things. It doesn’t take an MBA from Harvard to understand this. A company having a revenue of $5 million can struggle to make payroll if customers don’t pay on time. Similarly, if your business needs ongoing investment in capital expenditure, your cash flows are going to struggle as well.
While there are several reasons that could contribute to such cash flow challenges, some common culprits are: slow payments, high levels of inventory and high capex. Many tech startups for instance invest heavily in customer acquisition costs. But they fail to track how long it takes to recover these costs. This combined with high churn, and low retention rates is a start-up killer.
Here is how hiring a fractional CFO helps
- Implementing a rolling 13-week cash flow that monitors cash flows, and predicts cash needs
- Optimizing expenses to prevent unnecessary spends
- Improving working capital cycles to ensure better cash flows
Instead of a reactive approach to cash shortage, hiring a fractional cfo can help you implement a proactive approach to manage liquidity
# 3: Financial Needs Extend Beyond Bookkeeping
Most businesses start with a basic bookkeeper. However, as operations grow, basic reports such as balance sheets and income statements are no longer enough. This is especially true if your business has different pricing models, has multiple geographies/currencies and so on.
In most of such cases, you need more than basic accounting – you need financial analysis for decision making. This is when there is a clear need to move from emotional and gut-driven decision making to informed decision making.
For example, if you are a tech company making more than $2 million, you will need detailed analytics such as:
- Unit economics to ensure pricing aligns with profitability goals
- Manage and monitor unbilled revenues and deferred revenues
- Plan for cost efficiencies across your company
A normal accountant is not enough to handle these complexities. This is where the focus moves from ‘accounting’ to ‘finance’.
Here is how hiring a fractional CFO helps
- Advanced financial reporting giving insights into margins, profitability and other trends
- Scalability planning helping you prepare for new markets, acquisitions and growth
# 4: Preparing for Investment or Sale
If you’re planning to raise capital or sell your business, being ready from a finance view point is very critical. Companies should prepare for a diligence well in advance, because the lack of preparation is often considered as red-flag.
This process entails having clear financial records, free from errors and inconsistencies. It also needs a strong financial model showing potential for growth, profitability and cash generation. Having clear metrics and a strong model would also help in a data-driven valuation that could go a long way in the transaction.
Many companies struggle because they don’t have clean accounting records. Accounting is usually considered as a back-office function, and is not given the importance it deserves. Lack of clean financial statements makes the diligence process a nightmare. Not having a good financial model with clear assumptions, to back your growth plan and the business narrative makes valuations hard to justify.
Here is how hiring a fractional CFO helps
- Prepares for diligence well ahead of time
- Helps build investor-friendly, clean and simple financial models
- Takes a proactive approach, rather than a reactive approach
# 5: You Are Spending Too Much Time on Finances
As a founder, your job is sales, growth, hiring and a host of other things – not getting lost in a pile of spreadsheets. If you see yourselves spending hours together on reviewing financial reports, compliance, worrying about cash flows, then it is time to hire a fractional CFO.
It is also time to delegate these tasks to the experts, so that you can focus what you do best! This is also a signal that you need to start making decisions based on data, rather than on instinct.
If you constantly spend sleepless nights worrying about finances, cash flows, budgets, its high time that you hire a fractional CFO.
Here is how hiring a fractional CFO helps reclaim your time
- Handles all financial strategy and reporting so that it gives you more time
- Manages cash flows proactively, rather than reactively so that you never run out of cash
- Helps with investors so that the fund raising process becomes seamless
Many founders wait too long to bring in a CFO because they think they can handle finances themselves. This is wrong. Every hour spent on financial management is an hour not spent growing your business.
The Hidden Costs of Not Having a CFO
Most founders think that they do not need a CFO until its too late. They are deep in financial trouble. But the problem is – by then, they’ve already lost money, time, or both.
Another common mistake that I see founders make is that they think a bookkeeper or accountant is enough. A book keeper can only record transactions, and report them. Some of them can handle compliance, tax filings, and basic reporting. Most book keepers don’t provide the strategic financial leadership. This is a must for any growing business, because it feeds the founders with much needed financial information, that is essential for taking informed decisions.
Running a business is hard. Things keep changing every other week in most companies. As a founder, your job is to navigate your company in the best interests of all the stakeholders. For this you need to take quick decisions.
Without a CFO, you could end up taking reactive decisions instead of proactive decisions. Moreover, for each decision, you need to weigh the financial impact. Someone needs to do a quick “What-if” scenario and advise you on the financial impact of the decisions that you are taking.
Many founders that I have worked with scramble to fix cash flow issues only when month-end payroll and rent is due. They realize that their pricing is wrong only when the income statement starts bleeding. They rush to clean up their books only when investors seek financial reports.
All this put together leads to lost time, wasted resources, and avoidable stress.
Why Waiting Costs You More
One of the most common reasons that I see founders say is that hiring a fractional CFO is an expensive affair. Some founders may think that it is too early. What I have realized in my two decades of working with founders all over the globe is that not hiring a CFO has far too many implicit costs that hiring one. Imagine having clarity on decisions early on in your business. What better decisions could you have made. What mistakes could you have avoided, and what costs could you have saved?
Here’s what happens when businesses delay hiring a CFO:
- You miss critical financial red flags. This usually leads to expensive mistakes.
- Sometimes you operate without proper cost controls, causing wasted spending.
- You often scale without a clear plan, resulting in profitability struggles.
- You don’t track unit economics, leading to pricing that erodes margins.
- The Company goes into fundraising unprepared, which delays or even kills deals.
Hiring a fractional CFO isn’t just about fixing problems. It is about preventing them in the long-term.
How a Fractional CFO Pays for Itself
Some founders see hiring a fractional CFO as an expense. Let me ask you something – what is the cost of not hiring? What is the cost of taking poor decisions? How many sleepless nights would you have if you run out of cash? In reality, hiring a fractional CFO is an investment that delivers ROI quickly.
A fractional CFO pays for themselves by:
- Improving cash flow management – never worry about paying salaries or running out of cash flow ever again!
- Identifying potential revenue and profit leakages.
- Optimizing your pricing strategies, resulting in better profits and better cash flows
- Guiding smart hiring decisions, so that your headcount grows sustainably.
Instead of wondering if you can afford a CFO, the question you need to ask yourself is “Can you afford NOT to have one?”
What Happens When You Start Working with a Fractional CFO?
Here’s what working with a CFO typically looks like:
1. Diagnosis Stage: The first thing that happens when you hire a fractional CFO is diagnosis. Think of this going to a lab for a test report, or getting a CT scan done. Usually, this stage involves discussion with the teams, looking at financial statements, reviewing policies and procedures, and coming up with a diagnosis report. This report gives the gaps that are currently prevelant in the company that have a financial bearing.
Many founders think they know their numbers. That is until they go through this process and uncover hidden inefficiencies.
2. Building a Plan: Once the financial gaps have been identified, the next step is to understand the priorities and aligning them with the goals of your company. If you are looking for a fundraise soon, then there are certain matters that would need immediate attention – financial model, data room, preparing for due diligence and so on. If you are looking to sell your company or go for an IPO, then the action steps and priorities will differ – the focus may shift on governance, transparency, and a process-driven culture.
The goal is to align finances with business goals so you can grow profitably, not just quickly.
3. Ongoing CFO Support: Once the priorities are clear, a fractional CFO works alongside you to implement changes. This includes:
- Regular financial updates
- Changes to processes, policies, and protocols
- Looking at “what-if” scenarios to support different growth challenges
- Investor readiness – either for raising capital or preparing for an exit
- Operational improvements to make the finance function “process-driven” rather than “people-driven”
Over time, this removes financial stress from your plate, giving you more time to focus on strategy, innovation, and leadership.
Let’s Build a Stronger, More Profitable Business Together
You didn’t start your company to spend your time buried in excel sheets. You started it to build something meaningful, to scale it, and to create meaningful impact.
I specialize in helping founders like you gain financial clarity, improve cash flow, and grow profitably – without the cost of a full-time CFO.
Here’s what you’ll get when you book a call with me:
- A free financial strategy session to identify key areas of improvement
- A clear roadmap to fix cash flow, profitability, and growth challenges
- Insights on how to scale sustainably without running out of money
This is not a sales call. It’s a real strategy session designed to help you take control of your company’s financial future.
Book a 1:1 CFO Strategy Call Today → https://calendly.com/kishore-dasaka/30-min-zoom
Let’s make sure your business is financially strong, scalable, and stress-free.
Don’t wait until financial challenges slow you down. Let us solve them now and position your company for long-term success.
