Running a business is difficult. Yet thousands of Americans start new businesses each year--even in slow economies. Many of these business owners are savvy when it comes to hiring, marketing and administration. But many of them don't know the difference between receivables and receipts and mergers and markups. Hiring a full-time staff member to handle the financial aspect can be costly. And most businesses are small. According to the U.S. Small Business Administration, more than 78 percent of all businesses have less than 10 employees.
Often small business owners would wait until the end of the year then take a big box of receipts to an accountant in hopes that he or she could figure out the taxes and balance sheet. But in recent years many businesses--large and small--have turned to virtual chief financial officers. These are contract employees that work offsite and manage the company's finances. Companies are finding many advantages to this way of handling their business affairs.
1. Cost. Hiring a full time chief financial officer, even someone straight out of college, will cost an average of $35,000 a year without adding in benefits, vacation time and sick days. A CFO will usually be on a monthly contract for a fraction of the salary. And you don't have to pay benefits!
2. Expertise. Business laws are changing all the time. You may be processing transactions of keeping books in a way that violates local or state laws. Virtual CFOs stay abreast of changes in business law and can keep you out of hot water.
3. Time. If you are handling your own financial records, you may spend hours balancing the books. This is time you could be spending doing something else like selling your product.
4. Stress. You may sail through much of the year not worrying too much about your bottom line. But when tax season rolls around, you sweat it out while your accountant sifts through your records in hopes of keeping you from paying a huge amount to Uncle Sam. By having a virtual CFO working for you throughout the year, you will have a clear picture of where your business stands not only with Uncle Sam but in terms of profits.
When starting a business, many owners fail to plan. This is where a virtual CFO can help a business owner the most. Solid financial planning and strategies are crucial to a business' survival. A virtual CFO will assist in making this important process.
Qualities of a Great Virtual CFO
You may be tempted to hire a student studying finance or your cousin who "had some accounting classes in college." But would you hire someone who had a few classes in biology in college to do surgery?
The person you trust with your company finances should:
1. Have an educational background that reflects their expertise. Look for candidates with degrees in finance, business administration, accounting or something similar.
2. Have work experience in finance. This could be with a major corporation or working as a virtual CFO with other small businesses.
3. If possible, have experience working with your particular type of business. This is not an absolute requirement but would be a plus.
Where do you find a virtual CFO?
Many freelance services such as http://www.elance.com and http://www.guru.com have candidates. But you can also search online using Google or Yahoo. Put "virtual CFO" in the search box and you will be directed to the websites of several companies. Read the website carefully and then send an email asking for a quote.
Before you decide, interview the candidates on the telephone. Give them a chance to talk about their experience. Ask questions. Remember this is the person who will be handling your business finances--basically your livelihood. No question should be too tough or uncomfortable. You can also use an online background check service to make sure they have no red flags on their record.
If you are new business, hire a virtual CFO now to help you plan your financial strategy for success. If you have been in business for a while, you need to find candidates now to make sure your business is financially healthy. A virtual CFO can help you manage and grow your business at any stage.
Often small business owners would wait until the end of the year then take a big box of receipts to an accountant in hopes that he or she could figure out the taxes and balance sheet. But in recent years many businesses--large and small--have turned to virtual chief financial officers. These are contract employees that work offsite and manage the company's finances. Companies are finding many advantages to this way of handling their business affairs.
1. Cost. Hiring a full time chief financial officer, even someone straight out of college, will cost an average of $35,000 a year without adding in benefits, vacation time and sick days. A CFO will usually be on a monthly contract for a fraction of the salary. And you don't have to pay benefits!
2. Expertise. Business laws are changing all the time. You may be processing transactions of keeping books in a way that violates local or state laws. Virtual CFOs stay abreast of changes in business law and can keep you out of hot water.
3. Time. If you are handling your own financial records, you may spend hours balancing the books. This is time you could be spending doing something else like selling your product.
4. Stress. You may sail through much of the year not worrying too much about your bottom line. But when tax season rolls around, you sweat it out while your accountant sifts through your records in hopes of keeping you from paying a huge amount to Uncle Sam. By having a virtual CFO working for you throughout the year, you will have a clear picture of where your business stands not only with Uncle Sam but in terms of profits.
When starting a business, many owners fail to plan. This is where a virtual CFO can help a business owner the most. Solid financial planning and strategies are crucial to a business' survival. A virtual CFO will assist in making this important process.
Qualities of a Great Virtual CFO
You may be tempted to hire a student studying finance or your cousin who "had some accounting classes in college." But would you hire someone who had a few classes in biology in college to do surgery?
The person you trust with your company finances should:
1. Have an educational background that reflects their expertise. Look for candidates with degrees in finance, business administration, accounting or something similar.
2. Have work experience in finance. This could be with a major corporation or working as a virtual CFO with other small businesses.
3. If possible, have experience working with your particular type of business. This is not an absolute requirement but would be a plus.
Where do you find a virtual CFO?
Many freelance services such as http://www.elance.com and http://www.guru.com have candidates. But you can also search online using Google or Yahoo. Put "virtual CFO" in the search box and you will be directed to the websites of several companies. Read the website carefully and then send an email asking for a quote.
Before you decide, interview the candidates on the telephone. Give them a chance to talk about their experience. Ask questions. Remember this is the person who will be handling your business finances--basically your livelihood. No question should be too tough or uncomfortable. You can also use an online background check service to make sure they have no red flags on their record.
If you are new business, hire a virtual CFO now to help you plan your financial strategy for success. If you have been in business for a while, you need to find candidates now to make sure your business is financially healthy. A virtual CFO can help you manage and grow your business at any stage.