Why You Should Not Invest in an Outsourced CFO

Is an outsourced CFO what your business needs?

To help here are a list of reasons why you shouldn’t invest in an outsourced.

Reason # 1 You’re Having a Data Entry Challenge

A data entry challenge is a fancy way of saying you have a file of bills, invoices, and bank records you need to work on, and these tasks does not require an outsourced CFO to get the job done. You probably won’t get your best return on investment on an outsourced CFO doing these tasks.

You need a bookkeeper, an accounts person, somebody who can enter those transactions. We have always emphasized to business owners that it will be pointless to invest in an outsourced CFO if you have not yet accomplished your data entry work. Getting an outsourced CFO at this point would result in a horrific return on investment.

Reason #2 You Don’t Have Enough Human Capital at this Point

Your staff have their hands full with their own jobs and too stretched already. That may be a separate and good enough reason for you as a business owner to consider making a different investment than getting an outsourced CFO now.

The timing is not good for you to get an outsourced CFO when you do not have the right and adequate human resources at this point, and sufficient energy to take on a new undertaking. It’s may be best to pause the idea for a while, focus on overcoming your more basic challenges, and revisit the idea of getting an outsourced CFO when the circumstances are better.

Reason # 3 Your Business Is Not Big Enough…Yet

You may have been attracted to the idea of an outsourced CFO because you have seen advertisements for them on social media selling bookkeeping services where you get reporting and analysis. This may be all you need at this point in your business development.

An outsourced CFO is great for businesses who have reached a certain size - it is a process they can afford and can create enough opportunities to justify the investment. It makes sense for owners who have reached strides in scaling their businesses to want to have access to more comprehensive reports, KPIs, in-depth insights that they may not get from their own finance teams.

For early-stage businesses, the best bang for your buck may be an entry-level type of program for now (such as The Dynamic Boardroom).

Reason #4 You Are Not 100% Invested in the Process

We have discussed in another article and video why an outsourced CFO would fail within a business, and this is similar in many ways. You may be toying with the idea of an outsourced CFO because it is something you came across with, something you may fancy a bit, but deep down you are not fully invested in the process. If you are not fully convinced yet, not fully sold on the idea, or not completely determined yet to make it work for you, it may not be the best investment right now.

Summary:

The four reasons why you should not invest in an outsourced CFO for now and the time might not be now:

1. You need to catch up on your data entry first.
2. You may not have the adequate human resources or the capacity to get the work done.
3. Your business size may not yet justify the investment in an outsourced CFO.
4. You are not fully invested in the process to work with an outsourced CFO.

If those four factors do not apply to your business, it may be the right time to make the call because an outsourced CFO may be a great investment for your business!