As someone who runs a CPA firm, you've undoubtedly familiar with the heartbreaking statistic that over 50% of all businesses do not make it to their fifth year. The tragedy is that many of these businesses could have enjoyed a long and happy life if they had someone to provide them with rock-solid advice on how to steer their entrepreneurial ship in the right direction.
This means the sky's the limit for CPA firms that also offer CFO consulting. By adding this invaluable service, you can help enterprises avoid the dangers that threaten to snuff them out before they have a chance to realize their full potential.
Here are four of those pitfalls:
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ToggleLack of Clear Focus
A lot of business owners do not know how crucial it is to have clear business goals. Consequently, their companies drift aimlessly with no clear direction.
Enterprises that lose focus struggle to keep their heads above water, rapidly lose investor attention, and fail to take full advantage of business opportunities. Competitors with a tighter focus can quickly swoop in, stealing market share in a nanosecond.
Moreover, many business owners make decisions based on gut instincts instead of relying on the expert guidance of a trusted business advisor. Or they spend their days endlessly putting out fires rather than focusing on boosting profitability, never realizing how they are leading their company to the edge of financial ruin with their excessive attention on the trivial.
All-too-many companies wait to build strategies until their companies are off the ground instead of formulating them at the outset. Without a well-defined strategy and meaningful metrics, they will not be able to gauge progress, which can cause their enterprise to stagnate. As someone offering outsourced CFO services, you will be able to get entrepreneurs to keep their eye on the prize, including creating measurable objectives that will help them steer their companies to ever-greater profits.
With the keen insights you can offer, you will be able to get your client to step back and see the big picture instead of focusing on all the minute details that get in the way of making mission-critical decisions. Clients will come to rely on you as the forward-looking confidante that got them to overcome the tunnel vision that limited possibilities to a fraction of what they could be.
Problems with Scaling Their Business
Most small businesses do not want to remain tiny forever. Instead, they would love to spread their wings so that they can realize their full potential. However, there can be significant barriers to moving to the next evolutionary stage, making scaling up risky.
By offering fractional CFO services, you will be able to gather and analyze data on your client's business to make sure it is ready to expand. That way, you can help them avoid the danger of premature scaling, ensuring that the company has not only the capacity to grow but also the capacity to sustain that growth.
A common pitfall for businesses attempting to scale is plummeting margins as they grow revenue beyond a certain point. That is because systems and strategies must become more advanced as a company expands. If they do not become more sophisticated to meet changing needs, the enterprise will not be able to scale effectively.
As an outsourced CFO, you will be able to help companies achieve sustainable growth by retooling the processes companies use to deliver value to their customers. With the keen expertise you bring to the table, entrepreneurs will be able to transcend old ways of doing things so they can grow their businesses to unimaginable new heights. You will be there with them every step of the way as you deliver the expert advice, they need to launch exciting new products, open new markets, and deal with an ever-increasing regulatory landscape.
Not Being Able to Decipher Financial Reports
What is the point of having financial reports if a business owner has no way to interpret them? While CPAs help businesses by creating financial documents such as profit and loss statements and statements of cash flows, much of their focus is on keeping an enterprise legally compliant instead of offering strategic advice. This leaves business owners to decipher an arcane and mysterious language on their own.
As an individual offering fractional CFO services, you will be able to translate these reports into actionable insights, adding much-needed clarity to something previously incomprehensible. This is not only incredibly rewarding but potentially lucrative!
Burn Out Due to Working Harder Instead of Smarter
Many business owners put in incredibly long hours. While this is acceptable in the short term, it is a recipe for burnout in the long term.
A fractional CFO firm can help an entrepreneur escape the nightmarish roller coaster of an unsustainable workload by providing insights that can help them work smarter, not harder. By offering outsourced CFO services, you can help business operators find ways to boost cash flow without having to spend every waking moment of their day running their businesses.
That way, they can reduce their work hours, so they are no longer exhausted to the point where their physical and psychological health is at risk. Because this is a service so many entrepreneurs desperately crave, an outsourced CFO agency that has a proven track record of liberating business owners from working too much has the potential to generate robust revenue.
How Offering Outsourced CFO Services Can Unlock Greater Profits
Business owners unable to overcome these three challenges could end up watching their entrepreneurial dream crash and burn. That is where you come in. As the owner of a fractional CFO firm, you will be able to offer companies the experience and expertise of a high-end financial advisor without the in-house cost of a full-time CFO.
While the assistance traditional CPAs provide is essential for any growing enterprise, expanding on these basic offerings by offering outsourced CFO services can generate long-term recurring revenue for you. As a fractional CFO, clients will see you as an indispensable complement to their company's team.
Being a trusted consultant in financial matters can be so much more rewarding than merely providing basic accounting services. When you expand your services beyond basic bookkeeping, you will no longer focus on the past like most accounting firms do. Instead, you will be helping companies to boldly peer into the future so they can chart a course that maximizes the chances for success.
At The Expert CFO, we have years of experience helping individuals and accounting & bookkeeping firms unlock unlimited earning potential by creating their own CFO consulting businesses. Contact us today to learn more about how The Expert CFO can help you start a CFO consulting firm or add CFO advisory services to your existing firm.
