Momentum Podcast: 335

You Don't Need a CFO

by Alex Charfen

Introduction

Yes, you need clean bookkeeping, and you need your profit and loss statement, and you should understand where the money and finances are in your business. But no, no matter what anybody tells you, 99% or more of the people listening to this podcast right now do not need a CFO.

Episode Description

I make the argument that 99% of companies don't need a CFO. Yes, you need clean bookkeeping, you need a profit and loss statement and you need to understand where the money and finances are in your business. But you don't need someone in a full-time finance position in your business. It's been proven over and over again that the best way to handle accounting and finance is to outsource. Don't let anyone talk you into a CFO because you just don't need it.

Full Audio Transcript

Yes, you need clean bookkeeping, and you need your profit and loss statement, and you should understand where the money and finances are in your business. But no, no matter what anybody tells you, 99% or more of the people listening to this podcast right now do not need a CFO.

This is a topic that comes up all the time, in my coaching groups, when I go out and speak, when I'm spending time around entrepreneurs. Sooner or later, the topic comes up from somebody saying, “Hey, I've been told I need a CFO. What do you think?” And I'll tell you 99% of the time my answer is, “You do not need a CFO.”

Here's the argument that often gets made. You've got a fast growth company, things are happening, you're growing the business, and a finance person will tell you you need to go out and hire either a CFO or a controller, or somebody who's going to sit in your office all day or work for you full-time if they work remotely, and handle your books, manage your finances. And the reality is, about less than 1% of companies out there actually need this.

The math proves it, in fact when you look at the companies in the United States that are out there, the ones that are in multiple million dollars and growing fast enough to even need a CFO are a tiny fraction of the percentage of businesses out there. But here's the problem: finance professionals, accountants, CFOs, controllers, they think every business needs someone who is resonant inside the business, taking care of your books and your finances.

Well, let me save you a ton of headaches, because here's what happens. If you're in a business where you don't have a full-time utilization of somebody who's in finance, a CFO, a controller, whoever it is that you hire, you end up with a person that's underutilized. Go listen to my podcast called Utilize Your Team or Else. Because when somebody's underutilized on your team they're gonna start messing around, making suggestions, trying to fix things that aren't broken, trying to consult with you in ways that you don't even really need them to.

And here's the fact. For most businesses out there, and I still make the argument, 99% or more don't need a CFO because here's what you need: you need to find a service, or somebody who's outsourced like we have in our organization, where we have an outsourced service called Consero, and what they do is they provide all of our finance and accounting needs.

They have a team in Indian and a team in the U.S. they prepare our books on a monthly basis, I get a profit and loss statement on a monthly basis, I log into a portal, I see everything I need, and here is the total amount of time every month I meet with somebody who would be in the CFO position. Are you ready for this? Thirty minutes a month. And I don't need any more.

Because reviewing the profit and loss statement, that's just looking at where your money is and understanding where you were compared to the month before. For somebody to do the bookkeeping in your business, that's actually just a task, it's a checklist, it's actually relatively simple. In most businesses, it's incredibly simple.

What happens so often in entrepreneurial companies is that as soon as you start growing, someone in accounting and finance tells you you need to go hire someone to help with the finance component, and it's typically someone who looks at a business and doesn't actually do any analysis, but instead says, “Oh, you have a two and a half million dollar business with no one in finance? You should fill that role immediately.”

Well today, the traditional org chart is out the window. You don't need to have each of the positions covered. There's a lot of businesses that are growing like crazy, and they don't have every position on a traditional org chart, including someone in finance. In fact, it's being proven over and over again today that the best way to handle accounting and finance is through outsourcing to somebody that, first, you don't have to pay full-time.

That is a huge money saver, which is funny because the CFO or person who's in finance telling you to spend the money on the person in finance isn't looking at the fact that their job is to actually save you money and help you not spend money, not help you spend more money on their services. So avoiding hiring this person, you're gonna avoid having a full-time team member.

But the biggest issue is, when you have an accountant around all the time, you just don't need it. Accountants aren't great business consultants for the most part, and I'm sorry to all the accounting and finance professionals out there, but let's be honest, those of you who know what I'm talking about even agree. I have clients that are CPAs, Brad Lee and ... Sorry, Brad Cobb and Ryan Lee, I always flip those ... Brand and Ryan will tell you not to hire a CFO because they're gonna band around your company just creating things for themselves to do.

And you might hear some outside noises, I've been inside all day, so I'm walking outside as I do this podcast, I'm combining the primal walk with a podcast even though electronics aren't allowed on the primal walk. I'm cheating a little.

And you don't want that person banging around your company looking for something to do, trying to utilize themselves. I had a consultant named Mason Ludlow, and Mason once told me about a finance department, he said, “You know, Alex, if you have somebody in finance in your office all day, you have somebody counting beans all day.” And I said, “Yeah?” And he said, “He who counts beans all day gets hungry.” And he's absolutely right.

Finance and accounting professionals want more and more money over time. They feel like they have more and more control over your business over time, and what really happens is they also start feeling like they are responsible for part of your success.

And here's the bottom line: other than a few very select business out there, like if you're doing advanced financing, or if you're factoring inventory and products, or if you have some type of loan structure that needs to be watched really closely, or if you are an intense finance-based organization, you may need somebody in a finance position, but other than that it is a role that can be outsourced and filled easily.

It is a checklist of services that you need that you don't have to have somebody in house to provide you, and other than the financial intelligence that any CFO or any finance person who's outsourced could give you, it's not a strategic role. In fact, it's the opposite. It is a tactical role that you're going to pay a strategic price for in most cases, and that just doesn't make sense.

So if you're an entrepreneur who's growing your business, spend your money elsewhere. Make sure ... That being said, make sure you have a service that is getting you clean books like clockwork every month, like I do. Not a month goes by that we don't have an update on our P&O, we have clarity around where every penny in the business is, we know exactly what's going on, so that we can make decisions and understand where we are financially moving forward.

Get a service where someone will sit down with you and tell you what you need to know. I sit down with our outsourced CFO for literally 30 minutes, they take me through our budget to actual, they take me through where we grew, where we had outliers, where there might be something I wanna understand, and it's a simple meeting that doesn't take a lot of time, doesn't feel like a lot of pressure. It's not my favorite meeting of the month other than the fact that I get to see how much money I made, but it does give me the intelligence I need.

I don't need to have that person around every day, every week, all the time, talking to me about finance. It's not even a fun conversation for most entrepreneurs. You bring this person into your business, you're gonna regret it. So make sure that you do have a service, make sure that you have the bases covered and that you're getting what you need. But let's be honest; the reality is you just don't need a CFO. Don't get sold by a finance person that this is a position that there's an urgency you bring into your business.

Now, when your business grows to 10s of millions, when there is a tremendous amount to look after, when you do have factory or inventory, or concerns around the financing that you're doing for clients, or the financing that you're doing around putting stuff on retail shelves, then maybe, maybe you need a controller. And eventually you'll move into a CFO or finance person. And if you have a business that you plan on going public, or raising funds around, or bringing in money around, then you might need those people also.

That's why I said 99% of businesses or more just don't need a CFO or a controller or a finance person in-house. You can find a service that will do your bookkeeping and everything else for you, and make certain that it all stays update.

Because here's the challenge if you do go out and hire one person. Now you have a liability, because your books are in the hands of a single human being. If something happens to them, the entire financial intelligence in your company goes away. If you have an issue with them, you're gonna have massive challenges.

So be safe. Find a service that has more than one person, that works with more than one business, that can do your books like clockwork, that understands what their role, and then also understands what your role is. You don't need to meet with them over and over again, you just need to get the information you need to grow your business, understand where your money is, and move forward.

And above all, you need clean books, clean financials, and an accurate P&O so you know how to move your company forward fast without any type of delay, and you have the financial intelligence you need. Don't let anyone talk you into a CFO, because you just don't need it.

If you're ready to grow your business faster, and you wanna know how we're helping companies go from six figures to seven figures, and from seven figures to eight figures and beyond, I'm holding a private web training, and I would love for you to attend from wherever you are in the world. In fact, it's next week, but we plan on holding it several times, so it doesn't matter when you're listening to this podcast, take a minute right now and go to alexcharfen.com, just my name, alexcharfen.com.

We've actually taken over that website and put a single page on there that will allow you to apply to attend this private training. Now, I want you to understand, it's application only. It is not for everyone. We are going to be sharing exactly how we're helping companies scale fast, grow teams, and helping entrepreneurs get the protection and support they need to build world-changing companies.

So go to www.Charfen.com, attend my private training with me, I will answer any questions you have, and let me show you exactly how the companies we're working with are building game-changing teams, doing the right things at the right time, and growing faster than just about any organizations out there. In fact, I think in the past 12 months we've coached some of the fastest-growing companies in the country, and the ING 500 list will prove that soon.

www.Charfen.com. Join me for this private web event where each person will have gone through an application process, and we will share exactly what we're doing to help companies explode.

Thank You For Listening!

I am truly grateful that you have chosen to spend your time listening to me and my podcast.

Please feel free to reach out if you have a question or feedback via our Contact Us page.

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With gratitude,

Alex

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