Are you measuring the right key performance indicators and watching the right metrics? Do you have the time and resources to focus on the financial functions your business needs for success? Only large corporations with dedicated teams and copious resources can achieve financial insight, right?
Wrong.
Small business owners and CEOs hear a lot of advice and opinions, especially when it comes to finances. While your colleagues and mentors mean well, business leaders can get stuck following the wrong advice or missing out on important business intelligence.
With CFO advisory services for your small business, you can get the right answers to the right questions. Best of all, financial consulting services are cost effective, helping your bottom line. Keep reading to learn more about the top insights and deliverables a CFO advisory service can provide for your small business.
Cash Position
CFO advisory services can provide a wide range of data and insights into four broad metric categories: cash, profit, growth, and market share. However, the most valuable insights often differ by organization, business needs, and goals. Cash management is one of the most popular insights provided by financial consultants, and you can drill down to find the data that is most relevant for you.
If you want to be successful, you have to understand your business’ cash position. Cash management goes far beyond taking note of your balance in the bank, which is a relatively easy task. CFO advisory services go ever further to help identify how quickly you are spending your cash and how long it is likely to last. These two insights require a great deal of data and a complete understanding of the variables involved in cash management.
Your CFO consultant can provide cash flow projects to help understand your future cash positions, plan for potential cash shortfalls, and prepare for unforeseen crises. All of these data can be used to make decisions on when to pay your bills and which bills to pay as well as how to maintain the cash necessary to operate your business.
Profitability Analysis
If your version of a profitability analysis involves only your profit and loss statement, you are missing out. Your business’ net income on a P&L is not enough to provide true visibility into your profitability. CFO advisory services can be customized for your business, including how payments and investments are made.
A SaaS business that collects payments on a recurring basis through subscriptions has to make significant upfront investments in sales and marketing to see a return. If the business is spending too much upfront to acquire customers, they will never be profitable.
A CFO consultant can provide key insights into the cost to acquire a customer, customer lifetime value, and your ratio of LTV/CAC. For many small business leaders, there are simply not enough hours in the day to accomplish this, but many investors will require this information before investing. By relying on CFO advisory services, you can gain the data and insights you need without spending your own time.
Budget
Without a budget, your business lacks the financial roadmap necessary to reach profitability and your goals. A solid budget is a must-have for any business, including small businesses, startups, and nonprofit organizations. By organizing your goals for growth on paper, you can critically consider what is required to reach your goals.
If your team is not on the same page and working towards a common goal through your budget, CFO advisory services are a must. Your consultants can take the time to develop a clear and comprehensive budget, including individual team goals, checkmarks, and more. Your budget can be used as a tool to hold department heads and various teams accountable, ensuring no department falls behind.
Drivers of Growth
Simply identify your value drivers is not enough, though. CFO advisory services can also help you properly monitor your drivers of growth, putting the right systems in place. You can understand the best course of action when milestones are hit and gain insight into how your growth drivers impact your revenue.
Current Projects
Initiatives and projects often run alongside the daily operations of an organization. Whether your current initiatives are the brainchild of the CEO, your clients, or your community, they should be closely evaluated. Going off a gut feeling or chasing after an idea you like is not enough to justify the investment of time and resources.
With CFO advisory services, you can gain insight into the performance of your initiatives, including progress and how your resources are being used. Your CFO consultant can provide clear data on new programs, including correlation between various factors and how the project will impact your revenue. This information is crucial to determining which initiatives to continue and which to sunset.
How to Use KPIs to Effectively Run Your Business
Knowing which KPIs to pay attention to is a great start, and these deliverables from CFO advisory services offer a solid foundation. However, you must be able to produce your financial insights on a consistent basis, including monthly, weekly, and yearly reports, in order to effectively use this data. Once information is collected, it must also be packaged and presented in a way that informs business leaders and stakeholders.
CFO advisory services do much more than crunch the numbers for your organization. Your financial consultant can help identify which metrics to track, how to properly measure them, and how to use that data to run your business. Contact us today to learn how financial insights typically reserved for large corporations can be accessible to your small business, startup, or nonprofit.
