3 Ways Hiring a Fractional CFO Can Help with 2025’s Challenges
According to Fast Company, small business owners are facing the following challenges as they get ready for 2025:
1. Rising costs and inflation
2. Labor shortages and retention
3. Technology and cybersecurity
4. Adapting to shifting consumer behavior
5. Sustainability and social responsibility
6. Access to capital
While these challenges may not affect every small business in the same way, it is not unusual to struggle with at least several of these items. Small business owners are hard-working and creative and will find a lot of different ways to meet these challenges, however, there is one option that should not need to be overlooked: hiring a fractional CFO.
What is a fractional CFO?
A fractional CFO performs many of the duties of a regular CFO but is not a full-time employee of the organization. The fractional CFO typically has lots of experience as a CFO and can utilize that experience to meet the specific needs of each business being served. For example, one business may need help each month closing the accounting system and preparing financial reports, while another business may need help with strategic issues.
Each business receives the benefits of using a fractional CFO without having to pay for another full-time employee.
How can a fractional CFO help with challenges in 2025?
Most small business owners are not accountants and do not have experience working as a CFO. Business owners are responsible for operating their businesses, selling and delivering their products and services and keeping customers happy. In most cases, this is a full-time job and doing the accounting work for the business and solving financial problems often happens after hours or when an emergency arises.
Hiring a fractional CFO might not be the answer to all of these challenges businesses face, but it can help with some. Let’s look at three specific ways hiring a fractional CFO might be able to help.
Help with Rising Costs and Inflation
Inflation, which is defined as rising costs, has increased across almost all categories of costs over the last four years. In particular, small businesses have felt the brunt of this problem because they are small businesses. Smaller businesses often lack the buying power necessary to negotiate lower prices and their capital structures typically make it harder to absorb higher costs.
How can a fractional CFO help with this problem?
Well, hiring a fractional CFO means hiring a financial officer experienced with strategic planning and data analysis – two skills that are absolutely necessary for negotiating an inflationary environment.
Small business owners are busy running their businesses. They have operational work that needs to be done every day, and this often leaves very little time for strategic thinking or data analysis. When costs are going up, margins are shrinking, and profitability is going down. Partnering with a fractional CFO allows business owners to focus on running their business while a financial professional analyzes and manages costs.
Help with Labor Shortages and Retention
Labor shortages and retaining workers are also challenges that can be helped by hiring a fractional CFO. In a similar fashion to helping with inflationary costs, a fractional CFO’s strategic planning skills and data analysis capabilities can help with managing through periods of labor shortages and retaining a workforce. A fractional CFO can analyze current labor costs and benefits available to a business owner’s team and develop plans to improve these areas or to better communicate the benefits that are available to team members. A fractional CFO can also develop budgets and forecasts that help business owners find ways to offer employees more compensation and benefits.
Help with Access to Capital
Finally, hiring a fractional CFO can help a small business with access to capital challenges.
Fractional CFOs can help small business owners with their monthly close process and can develop and enhance the monthly financial reporting process. A fractional CFO can also help a business develop a financial budget and can help manage an organization’s strategic planning process. Doing these things helps business owners gain better financial information – and that helps decision making – but fine tuning this process also helps provide better information to banks and other capital funding sources.
Is it time for a fractional CFO?
If your business is struggling with these types of issues and if you are struggling to keep up with the process of running your company and maintaining the accounting system for your business, then it is time to consider hiring a fractional CFO.
Hiring a fractional CFO provides your company with access to a skilled financial professional, but without the full cost obligation.