In addition to trying to find the right time to create these new positions in your company, the accounting and finance tasks are sometimes the most confusing and least understood by business owners. Why? Because business owners have never worked in those types of jobs and they are usually focused on making and then keeping promises made to their customers.

Hiring a Chief Financial Officer, or CFO, is one of the most important decisions a CEO or business owner can make. The CFO usually becomes one of their most trusted advisors and plays a critical role in the success of the firm. Knowing when to hire a CFO can be a challenge, but here are a few signs that you need to bring a finance executive on board, even if it is on a part-time or contract basis.

1. You can’t sleep at night.

I know a lot of entrepreneurs and business owners, and I have found one common theme for them losing sleep: the anxiety that comes from not knowing. One of these business owners saw his bank account declining, but he did not understand why. He experienced great anxiety over not knowing what the real problem was so that he could fix it. When he learned that several of his customers were delinquent with payment, he started making phone calls and turned the cash situation around within a few short days.

Even if entrepreneurs have problems, they can usually still sleep. They always lose sleep when they experience anxiety over the unknown in their business. A CFO will become the champion for measuring every critical element of a business, and they will work with the CEO or business owner to solve problems as they arise.

2. You are confused by mixed signals about performance.

Have you ever thought your accountant, who just told you that you lost $20,000 last month, was crazy? After all, you checked your bank account this morning and it had balance of $50,000. If these or other indicators of your business performance conflict, it may be time to hire a finance executive to put all of this information into context, analyze it, and summarize the financial position of the company in terms of the past, present, and future. A CFO will understand all aspects of your business — not just the numbers. The CFO is usually one of the leaders in any company that breaks-down organizational silos and operates from a holistic and results-based perspective.

3. You realize the accounting and finance functions needs to be a competitive advantage, not a necessary evil, of your business.

Accounting and finance are an overhead expense that does not add revenue or profit to the company, right? After all, the only reason you bother to track this information is so that you don’t get in trouble with the IRS, right? Business owners and entrepreneurs frequently feel this way, but nothing could be further from the truth. When structured and functioning correctly this area of the business can be one of the firm’s greatest competitive advantages.

For example, empowered with the right data, an entrepreneur recently made a very wise business move that went against the grain of accepted management practices for his industry. The result — he saved his company a lot of time, resources, and, most importantly, cash flow because he used the information from his accounting and finance department to make the right strategic decision. Many of his competitors, however, did not know their numbers and they have suffered significantly from their poor decisions.

4. You struggle to understand and plan for the future.

In his article, Difference Between CFO and Controller, Ben Paramore explains that CFOs are focused on planning, modeling, forecasting, and preparing for the future. Sure, a good CFO understands the past and the present, but those are only tools to steer the company in the best direction moving forward. If you ever plan to ask a bank or an investor for money, these parties will expect you to project your profit and loss, balance sheet, and statement of cash flows into the future to determine how much cash you will need from them, what it will be used for, and when they might anticipate getting their money (and hopefully a nice return) back. Your CFO should anticipate this and help you guide your business in the best direction possible.

With the option for start-up and emerging businesses to hire a part-time CFO, having a CFO has become more realistic for most businesses. Bringing the right CFO into your business will likely be one of the best decisions you make.

After five years in business, Zalmi Duchman needed help. On top of trying to grow his food delivery service in the Surfside, Fla., area, he was handling all of the reconciliation, payroll, projections and other financial matters.

Overwhelmed, Duchman decided to hire a chief financial officer in early August. But the decision wasn’t easy. “I still don’t know when I’ll give him the login to my bank information,” he says.

Figuring out whether to hire a CFO can be tough, especially because it’s not a position that generates revenue, says Ren Carlton, founder of Dynamic Advisory Solutions, a Troy, Mich.-based CFO and business consulting firm, and author of Profitpreneurship–Creating a Business That Produces Outstanding Financial Results. However, an entrepreneur’s ineffectiveness at trying to do it all is where a CFO can return on investment.

Are you ready for a CFO? Carlton gives these telltale signs:

• You’re regularly getting financial “surprises” in the form of bank notices, tax penalties, or unusual financial statements.
• You regularly feel overwhelmed by the financial demands of your business.
• You’re not keeping good records and not tracking expenses because you don’t have time to do so.
• You’re not looking at planning, regulatory or tax changes.

As for Duchman, he is committed to working with his CFO for six months. After that, if he has passed off banking and payroll activities to his CFO and identified that he brings value (they have started addressing changes they will make when the healthcare reform bill goes into effect in 2014, for example), Duchman will consider his hire a success.

As the Board drilled a little further into this, he said he really didn’t have timely monthly financials he trusted. Bingo. At that moment he aligned himself with, in my own experience, the majority of small business owners who have financial statements that are late and lousy — they’re completely useless as tools to manage a business. At the worst, they’re just wrong — actually presenting a business owner with a mistaken picture of where he is.

Again, in my experience coaching business owners, the first thing we generally find is that the financials are lousy. Most owners pay attention to the things they know — the core business — and don’t pay much attention to the financials because they don’t themselves have a finance background. Generally, they use their financials once a year (or perhaps quarterly) to figure out how much to pay in taxes.

Another member at the table said, “You need to get that fixed immediately. My company is in serious financial trouble today because I didn’t realize a year ago that my financial statements were faulty. I didn’t realize that each month’s apparent profit was offset by costs being charged to prior months that hadn’t been closed. I thought I was recovering, and in fact I was digging a deeper hole.”

The Boston-based company had sales growth in the double digits for the past few years, when revenue fell flat last fall. Now, thanks to the part-time CFO’s guidance, the company is stable with revenue down 20% to 30%, but profitability higher than in the previous months, he says.

If we hadn’t had this service, “we would still be struggling,” Mr. Lovata says.

Some small-business owners in need of accounting help to balance their books and guide them out of a financial black hole are renting CFOs rather than hiring them. The strategy comes at a time when the deep recession has forced small companies to look for money-saving alternatives that can yield good returns yet avoid substantial overhead costs.

“They’re looking for ways to streamline and be efficient as they can,” says Glenn Dunlap, a co-founder of Milestone Advisors LLC, a small-business consulting firm in Indianapolis that provides CFO services.

The average annual salary for a full-time CFO in a small- to medium-size businesses ranges from $94,250 to $175,750, according to a 2009 Salary Guide by Robert Half International Inc., a Menlo Park, Calif., staffing services firm that serves the accounting and finance fields. Renting one can be significantly cheaper.

B2B CFO Partners LLC, a Phoenix, Ariz., firm that has over 100 CFOs-for-rent, charges at least $300 to $400 per month for the service. The company has doubled the number of small- to mid-size business clients to 650 since 2007, says Jerry L. Mills, founder and chief executive.

Business owners often want such a service when their company’s finances are getting more complex and need someone with more financial expertise, says Germain Böer, professor of management and director of the Owen Entrepreneurship Center at Vanderbilt University in Nashville.

Still, he cautions that some small businesses that have simple financial structures or are completely self-financed may find renting a CFO not so useful. But “if you have a loan in the bank or an outside investor, something like this is well worth considering,” he says.

These CFOs have a bigger role than accountants, who mainly keep track of the company’s books. They work with business owners to manage their accounting and finance departments, connect them with business sources that can help them grow and provide financial data to help make strategic long-term or day-to-day decisions. Many are certified public accountants.

The payment structure varies. Some are on project-oriented deals, such as developing financial projections, assisting with raising capital or completing a business plan. Some are on-going in nature and can be based on an hourly or flat monthly fee.

Concerns regarding privacy from such consultants can easily be mitigated by nondisclosure agreements, experts say. Mr. Mills suggests that small businesses interview at least three CFO candidates, assess the quality of the firm they work for and avoid long-term contracts, if possible.

Some business owners turn to CFOs to establish proper bookkeeping systems. Ruthann P. Lacey, owner of a law practice in Tucker, Ga., brought in a part-time CFO in October. Before, an office manager handled bookkeeping while she also turned to her husband for ad-hoc financial and tax-preparation advice. “I didn’t really know what the big picture was,” she says. “I only knew we made payroll every month.”

Upon the advice of her rented CFO, she installed QuickBooks software, hired an accountant and sorted out the company’s accounts-receivable system, billing those customers who owed the company.

Ms. Lacey also began reviewing monthly reports about cash flow and profitability that’s making it easier for her to make hiring decisions or put more into the marketing budget. She says she’s quite happy paying the rented CFO’s $185 per-hour rate about 15 to 20 hours per month, because she can’t afford a full-time executive. “This is something I should have done a long time ago,” she says.

Entrepreneur Bob Compton, founder and chief executive of Vontoo Inc., an Indianapolis-based voice-messaging company, says he has rented CFOs for six companies he has started or been a lead investor in. “To hire a CFO in the early-going is a waste of money,” Mr. Compton says. “It’s much better to invest that money in engineers and sales people.”

For Vontoo, he pays $5,000 a month for the CFO’s strategic advice, bookkeeping services and accounting expertise. “It’s a tremendous cost-saving,” he says.

A company outsider can also help deliver a reality check. Re.Source Partners Asset Management Inc., a reseller of technology products in Detroit, has used cash to fuel growth since 2001 but is now using a line of credit for the first time, and needed help managing the new financing. In 2007, Mike Loria, the company vice president, brought in a part-time CFO who advised the company to rein in aggressive plans for growth and prepare for flat sales this year of about $9 million.

The CFO is more objective and “someone who can prevent us from making any bad decisions,” Mr. Loria says. “It has really given us a level of confidence that we did not have in decision making.”

http://www.sbaconsulting.com/research/cfo-latimes-4-18-11.pdf

You should start with reading my post What is a Rogue CFO? as it will tell you more about why the term “Rogue CFO” speaks to several of the points about why I’m a go getter CFO, others are desk jockeys.

Here’s the general idea -

1. Rogue CFO is a 1-man show.  I am the Rogue CFO, me, Chris Benjamin.  I don’t outsource the job on any level.  You’re paying for my time, not a random person with unknown experience.

2. Next to zero overhead = affordable rates.  I never encourage any company to compete based on price.  I also don’t encourage clients to spend more than they have to.  If you end up paying as much or more for an interim CFO as you would a full time one, you’ve defeated the purpose.  I don’t come cheap, you pay for quality.  I also don’t charge lawyer rates.

3. Focus.  I work with early & growth stage companies in specific industries.  I add value when a company is within 1 year of an IPO on either side.  Other CFO’s will take anyone who pays money.  I don’t.  If we aren’t going to be a good fit, I’ll tell you so.  I’m selective about who I work with, and not out for a money grab.

4. Availability.  Other CFO firms still follow the traditional 9-5, Monday to Friday schedule.  Not the Rogue CFO.  Email me on a Sunday at 3pm? Chances are you’ll hear back within an hour.  Emergency project needs to get done?  I’m here for you.  I limit my client base so I can be flexible and available on demand, days, evenings, weekend.  I’m here to help you grow your company, and while I may only be an interim CFO, I treat each client as the most important person in my world.

5. Virtual.  I work on a virtual basis.  My clients are around the world.  India, China, Costa Rica, Canada.  The list goes on. You may ask “how does that work?”.  It’s a longer answer than is appropriate for this post, but with publicly traded companies succeeding using a virtual, outsourced CFO, it obviously works.  I’m happy to discuss with you all the techniques and why it works well.

Sound good?  Great, send an email.  I’m always up for a discussion if I can help you grow your company, fill a need, save the day.  If it doesn’t sound good, that’s okay.  Like I’ve always said the Rogue CFO isn’t for everyone.  Some companies like the traditional suit & tie CFO who comes in and puts in their 8 hours.  Below are some of my competitors to help you out.

Tatum LLC

B2B CFO

CFOWise

The Brenner Group

And plenty of generic, unemployed CFO’s who threw up a simple template site (I’ve visited all the competitors, several have the exact same website cut & paste with the contact info changed.)  If anything, stay away from these.

Learn all about how I help growing companies in this video post.

From my About Page: The term “rogue” may be used to describe an independently-minded person; one who rejects conventional rules of conduct in favor of following personal values.

It doesn’t mean I’m a renegade CFO gone wild with no regard for the rules.  It does mean I reject the conventional rules of companies hiring a full time CFO, a one trick pony.  I bring years of experience, a stellar education, and most important exposure to multiple industries and business sizes.   I’ve worked with venture capitalists, angel investors, retail level stories, publicly traded high tech companies.  I’ve been involved in mergers & acquisitions, reverse mergers, pipe investments, working with the Securities and Exchange Commission and Internal Revenue Service.  If it falls under the CFO umbrella, I’ve done it.  And I bring all this experience to my clients.  As a Rogue CFO.

If that makes sense to you, I’m glad you found me and I look forward to talking.  If you are shaking your head in disagreement, there’s plenty of other companies willing to charge you lots more, wear a suit and tie, and regurgitate the same buzz words and repurpose the same reports for you that they do all their clients.