Most business owners think of a CFO in terms of how much he will cost. “Can I afford to hire a CFO”, they ask. But a good CFO should pay for himself many times over. Here are a few examples:
- Adding more than $100K in profit annually to a business that does $1M in revenue each year by analyzing sales and profit margin by service and customer. That’s $1M in value added over a 10 year period.
- Identifying $80K in costs that were not included in service cost and pricing. Simple changes in service pricing resulted in $80K in additional annual profit. For this business with $800K yearly revenue and 10% net margin, that was the same effect as doubling revenues immediately!
- Identifying annual repair and maintenance costs that are higher than the annual cost of a new piece of equipment. Result was $20K lower annual cost plus increased efficiency and higher customer satisfaction.
- Determining the annual cost of losing one experienced employee was $10K. Result was to design inexpensive incentives to retain key employees and reduce turnover which saved $20K in the first year alone and increased customer retention.
- Showed an overworked owner of several businesses that the business she wanted to expand had an actual per hour revenue of 1/3rd of one of the other businesses. Result was she invested her time in the more lucrative business which increased her net income by $100K annually and actually reduced the hours she worked.
These are all real examples of how a good CFO adds value to the business. So the real question is “How much am I losing by NOT hiring a CFO?” If your CFO is not adding value to your business then you may have the wrong CFO.
Having an experienced CFO used to be just for the big guys. But now small and mid-size businesses can get the same expertise with a Fractional CFO. If you’re tired of leaving money on the table, call an experienced Fractional CFO like Scott Abels at Precision CFO today.