Getting a CFO / controller seems like a natural progression once the founders have taken the company to the point where it’s really time to get serious about the financial side of the house. It’s time to start managing the capital in place more effectively, and maybe even prepare for a round of funding.
The obvious next step: hire a CFO. Well, that’s typically the route a lot businesses go, but there is a better way. There is no need to hire a full time CFO – its expensive. Unless your turnover is over $20m you only need between 1 and 5 days a month of an experienced CFO’s time. A better mix of staff would be a part time bookkeeper who can increase to full time, and a part time CFO who can increase to full time as you grow and need more support.
By using a consultant, you gain flexibility. If you need 40 hours in one week of CFO time for a special project, you got it. The person isn’t burdened with routine accounting. If the next week you need 10 hours, then you get 10 hours. There is also the added benefit that hourly paid professionals typically work harder. They are there to do a job, and they are being paid to create specific deliverables. And better still, an experienced CFO who is working part time will usually implement improvements that more than cover their cost. Adding head count before the right time can be a large burden – recruitment costs, super, payroll tax, computer equipment, office space and training – every new employee costs over $15,000 to hire.
Lets look at the numbers of each alternative:
Hire a full time CFO / controller:
- Recruitment costs 15,000
- Cost of equipment and furniture 5,000
- Total upfront costs 20,000
- Annual salary 100,000+
- On costs (super, workers comp, payroll tax etc) 20,000
- Total annual costs 120,000
Hire a part time CFO and a part time bookkeeper:
- Recruitment cost $250
- Costs of equipment and furniture 2,500
- Total upfront costs 3,000
- Annual cost of CFO (3 days per month) 60,000
- Annual cost of bookkeeper (25 hours a week) 40,000
- On costs nil
- Total annual costs 100,000
So your saving $17,000 upfront costs and (at least) $20,000 annual costs – remember this is the minimum savings – you won’t find many quality CFOs for $100K a year – which means you are getting access to a much higher calibre CFO that will add a lot more value to your business – your CFO can focus exclusively on important value add issues.
Small companies thrive on creative, energetic people with fresh ideas. Finding a seasoned pro that still has the entrepreneurial zest is a difficult proposition.
When you hire a CFO that does this as a career means you are getting the best. Plus you increase the time you require from your CFO and bookkeeper as you grow at no upfront cost to you – you have 100% flexibility. If you want further proof go to our testimonials page and watch the video testimonials to hear it direct from some of our customers.