There is a gap in the financial services industry, offering an incredible opportunity for those bold enough to take it. Starting a CFO firm enables you to offer a variety of financial services to a wide range of clients. You can significantly increase your earning potential, become an expert in your field, and build a repertoire of loyal clients. Keep reading to learn 10 compelling reasons why you should consider starting a CFO firm.
1. Clients now desire advisory type services to help run their business.
In 2020, CPA.com conducted a survey that found that 29% of clients need advisory and consulting. The same survey also found that 68% of clients desire strategic consulting from their CPA firm and 41% of clients want their CPA firm to manage their financial operations.
Starting a CFO firm would help meet these needs and provide a more satisfactory experience for clients. There is potential revenue on the table because clients spend 43% more on average when they use advisory services.
2. Very few traditional CPA firms are providing businesses what they truly need.
Current advisors are not providing their clients with what they need. The existing system is broken, and traditional tax CPA firms cannot get the job done. There is a major difference in how a tax CPA does bookkeeping compared to how your CFO firm will do bookkeeping.
Typically, tax CPA firms only do enough bookkeeping to file the business’ tax return. This work is done when the firm has time and meets the minimum standards for accuracy and quality. With a CFO firm, you can offer your clients a better experience that prioritizes their business, including:
- Timely and accurate bookkeeping
- Monthly financial statements created and sent to the client
- Comprehensive reviews of monthly financial statements
- Transparency and insight for the client when it comes to their numbers and results
3. Potential clients are unlimited and in industries of all types.
There are many potential clients that could benefit from the services of a CFO firm. Deloitte’s “Connected Small Business US” publication identified small and medium sized businesses (SMBs) as significant drivers of economic growth, job creation, and innovation. About 29 million businesses in the US have fewer than 500 employees, representing 99.7% of all US businesses and almost half of the total private sector employment. The possibilities for clients are endless, especially if you think outside the box and identify potential gaps in existing offerings.
4. You can focus on a niche and become an expert.
With a CFO firm, you can carve out a niche and become an expert in your field. Pursuing a single niche or identifying a few niches enables you to focus your efforts and gain a deep knowledge of an industry. Establishing a niche can help set you apart from other firms and attract potential clients who need a partner that understands their business. While this process takes time, it also provides you with greater experience and increased revenue opportunities as you specialize.
5. CFO firms can typically charge higher fees for advisory services.
On average, a CFO firm can charge higher fees for their services than a traditional CPA firm. This is especially true if you specialize in an industry. A CPA firm usually charges a flat fee for their services, such as filing a tax return on an annual basis. A CFO firm typically charges recurring fees for ongoing services, greatly increasing their earning potential. For example, a CFO firm may charge $2,500 per month for their services whereas a tax CPA might charge $1,200 per year to file a corporate tax return.
To generate substantial revenue, traditional CPA firms must build up a large book of tax clients. CFO consulting firms can generate recurring revenue and do not need as many clients to produce the same amount of revenue. You have the potential to quickly build your business because you do not have to rely on a large roster of clients to be profitable.
6. Revenue for a CFO firm is typically recurring in nature.
CPAs provide a valuable service, but their work is condensed into a “busy season.” They work extremely hard to earn as much revenue as possible in a short period. For the rest of the year, they are left scrambling to generate additional revenue. On top of ever-changing tax laws, long hours can easily lead to burnout for CPAs. A CFO firm offers services that are relevant year-round. Hourly rates for CFO firms are substantial and revenue is recurring.
7. You can offer more services and have multiple streams of income.
Many CPA firms find it impossible to grow into a seven-figure firm because they are limited in the services they provide. Traditional accounting firms offer bookkeeping, income tax return preparation, and basic payroll processing services. With a CFO firm, you can create multiple income streams and offer services including:
- Full cycle accounting
- CFO services (forecasting and budgeting)
- HR and people advisory services
- Unique tax strategies
- And more
You can start by offering a single service and add on other services as you grow. You can build your business at a rate that is comfortable for you and avoid overextending yourself and your team.
8. You can work remotely from anywhere in the world.
Virtual services are on the rise, and clients are more comfortable sharing data with remote workers and contractors. With virtual CFO services, businesses can conveniently access the support they need. Best of all, you are not limited to a specific location. Consultants with a CFO firm have the flexibility to work from home or travel and work. This flexibility can also cut down on overhead costs like leasing office space.
9. A CFO firm is a prime acquisition candidate for a larger firm.
If you want to grow a CFO firm and sell it, you already have the perfect exit strategy. CFO firms can command premium pricing, generate recurring revenue, specialize in a niche, and scale up to seven figures. These factors make CFO firms the ideal candidate to be acquired by another CFO firm or a traditional CPA firm that wants to grow its advisory practice.
10. Have a rewarding career working with all types of clients.
When you start your own CFO firm, you can do fulfilling work as you help clients grow their businesses. You will be trusted to provide sound financial insight and work with clients that see the value in your services. You might be surprised by how many words of appreciation you receive and how eager clients are to pay their invoices on time.
You are also able to work with businesses of all sizes and interact with some truly wonderful people. You can become a part of their team and work with them to achieve common goals. This all adds up to a feeling of accomplishment and serving a purpose.
Learn more about starting your own CFO firm.
Are you interested in starting your own CFO firm? Our team is ready to provide the experience and expertise needed to support your goals. We can help you build your CFO firm and unlock unlimited income potential. Contact us today to learn more.