Business transitions are often lengthy, sometimes complicated, and you’ll require all the assistance you can get to actualize them. By definition, a business transition is where the ownership of your business changes. You can decide to sell it or hand it over to a member of your executive team or even a family member. No matter how you intend to go about the transition, it’s best to have a team you can rely on to help with the transition.
One of the crucial team members you’ll need is a Chief Financial Officer (CFO.) A CFO manages the current and future financial aspects of a company. They can either be your full-time or workers on a limited engagement, depending on your transition needs. When the hire is on a limited engagement they’re referred to as fractional or virtual CFOs. As a business owner, fractional CFOs can help make your business transition efficient and successful.
This article briefly gives insight into how fractional CFOs are of the essence in your transition. Look at the several ways they can help.
Boosting Chances Of Success
Every business owner wants to succeed in all their endeavors, big or small. The basic way of ensuring this success is by having the right personnel handling the required tasks. For example, by integrating virtual CFO services in your transition plan, you’re essentially placing your business’s transition in the way of success. The main reason that happens is fractional CFOs are gurus at making plans and will ensure the success of your business transition.
They’ll help you achieve your goal by first breaking down your transition process into smaller, manageable steps. They’ll then group them into phases, an order in which you’ll implement your business transition, which in most cases is based on priority. By executing your project in phases, you can gauge from the onset whether your current plan will work or not. If there are any hiccups, you’ll address them, even as your other operations are ongoing.
The problem that would occur by implementing your strategy at once is the likelihood that should the strategy fail, you might be forced to stop operations until you resolve the issue. But besides coming up with a good strategy, a fractional CFO will also set performance standards against which they’ll measure the success of your business transition. These standards keep you in check to ensure your transition remains a success in the long run.
Enhancing Decision Making
A business transition requires a lot of sound decision-making. The decisions you make at this juncture are crucial since they determine the success of your business. To make the right decisions, you need proper insight and guidance, which is where a CFO comes in.
In most cases, the success of your business transition is based on your finances. You might have a well-laid plan, but without proper financial planning, you’ll barely take off. A CFO has a lot of experience making major financial decisions. Therefore, they’re capable of making more informed financial projections for the transition and help estimate how much each transition phase will cost you.
With this insight, you’re better placed to make decisions. You’ll know which financial deal is ideal and one that isn’t. Suppose your business transition involves you selling a part or the whole business. You need to convince investors that your business is worth them risking their money. The fractional CFO will provide the necessary financial data to help convince investors to buy or show the business’s financial standing and future prospects.
Due to their expertise and experience, you’re likely to close a profitable deal for your business sale. Also, the new management team can use the financial insight from your CFO to better understand the business. With this insight, they can forge a way ahead to advance the business.
Reducing Costs
A business transition is an undertaking that consumes considerable resources. Therefore, it’s in the best interest of your business to reduce costs as much as possible during the transition period. A fractional CFO can help you reduce these costs in various ways.
First, a fractional CFO works part-time and can fulfill their responsibilities remotely. Also, you’ll pay them a one-off fee only when you need their services. With this arrangement, you won’t pay regular monthly salaries, give them allowances, or get insurance covers. Your expenses will reduce significantly, availing more money for your transition.
A CFO will also help reduce costs by advising you on your business transition’s best course of action. They’ll give this advice based on their vast experience on the subject matter, reducing the chances of them being wrong. Therefore, you’ll transition from the point of know-how rather than trial and error. You won’t waste money trying out several strategies to see which one works. This avails more money to fund other aspects of your transition.
Conclusion
Fractional CFOs play an important role in business transitions; the above discussion shows that. Hopefully, now you have a better understanding of how fractional CFOs can help during a transition. However, as you decide to hire a fractional CFO, it’s good to point out that not all fractional CFOs will offer you the values mentioned above. You’ll only enjoy them by working with a professional CFO. Therefore, please do your due diligence before entrusting them with all your business information and financial data.