Do I need a CFO? · Section 4 of 4
Running the business
Has the business outgrown the way it's run?
1What it is
Cash, a forecast, and books you can trust are the plumbing. This section is everything the plumbing is for: knowing where the profit actually comes from, funding growth without signing terms you'll regret, keeping the numbers right as the business adds locations, products, and people, and putting a second brain on the decisions that move money.
It's also about the founder's own time. In most small businesses finance is owned by the owner by default — the invoicing, the chasing, the anxiety — which means the person who should be thinking about next year is reconciling last month. A CFO's real product isn't reports. It's the decisions you don't make, and the hours you get back.
2The signs you need help here
- You know gross margin overall but not by product, service, or customer — and prices haven't moved in years while costs have.
- You're planning to raise or borrow in the next 18 months without a model ready, or you'd have to look up your loan covenants.
- More than one entity, location, or currency; significant inventory or work in progress; managers who ask for numbers and can't get them.
- Nobody pressure-tests the numbers on a big decision, and 'can we afford it?' takes a week to answer or gets guessed.
- You spend more than five hours a week on finance admin, and if you took a month off the finances would slip.
3What a CFO does about it
- Builds margin by line — product, service, customer, channel — sets pricing rules, and finds break-even so growth doesn't quietly eat the margin.
- Owns the three-statement model lenders and investors ask for, sizes the ask, reads the terms, and keeps the bank relationship warm before the bad quarter.
- Consolidates entities and locations, gets inventory and revenue recognition right, and builds departmental reporting so managers own a number.
- Runs the monthly review, and puts a payback and a downside on every big decision before it's made.
- Takes ownership of the finance function — the close, the forecast, the review — so it runs without you, and is the one person to call.
4What you can do yourself this month
- Pick your three biggest customers and estimate the profit on each after the time and cost they consume. One will surprise you.
- Write down every loan, its rate, its covenants, and your headroom on each — on one page.
- Give each manager one number they own, and report it monthly, even by hand.
- Before the next big spend, write the payback period on one line. If you can't, that's the finding.
- Track your finance hours for two weeks and multiply by what your time is worth. That's the budget for help.
5Practice — 42 questions
Every question the quiz can ask about this. Answer each to see the CFO's read behind it and how your answer scores.
1.Do you know your gross margin?
2.Which customer or product makes you the most money after all costs?
3.When your costs rise, how quickly does your pricing respond?
4.Do you know what it costs to win a customer and what they're worth over time?
5.Have you ever found a product or customer that was losing money?
6.Where's your break-even?
7.Over the last two years, has your net margin gone up or down — and why?
8.How do you decide a discount?
9.Do you track overhead as a share of revenue?
10.Do you know your loan covenants and where you stand on them?
11.When a lender or investor asks for a model, what do you send?
12.Do you know what a dollar of debt costs you versus a dollar of equity?
13.Have you ever been surprised by a term in a financing document after signing?
14.How much of your growth is funded by profit versus outside money?
15.Do you have a line of credit or another backstop for a slow quarter?
16.Who talks to your bank or investors about the numbers?
17.How much of your own money is in the business?
18.How many entities, locations, or currencies?
19.Do you carry inventory or long projects (work in progress)?
20.How fast are you growing?
21.How many revenue streams or business lines?
22.Do managers in the business need numbers to run their areas?
23.Is a big move coming in the next year — an acquisition, a new location, a launch, an exit?
24.How many systems hold financial data — POS, billing, payroll, inventory, CRM?
25.Before a big decision — a hire, a lease, a price change — who pressure-tests the numbers?
26.On your last big spend, did you know the payback period?
27.Is there a monthly review of the numbers with someone who asks hard questions?
28.How confident are you in your pricing?
29.When did a number last change your mind?
30.Do you know which three metrics actually drive your profit?
31.How long does it take to answer 'can we afford it?'
32.Have you made a decision you'd have made differently with better numbers?
33.Is there a 'what if' model where you can change an assumption and see the effect?
34.How many hours a week do you spend on finance admin — invoices, bills, chasing numbers?
35.Who would you call with a finance question right now?
36.How do you feel when you open the financials?
37.Does your accountant give you advice, or just file?
38.If you took a month off, would the finances run?
39.Do you learn about problems from the numbers, or from a crisis?
40.What's stopped you from having a CFO so far?
41.How much of the monthly finance work is repeated by hand?
42.Is there someone in the business whose job includes 'the numbers'?