All small business owners know and understand the importance of having strong financial advice and oversight – but hiring a full-time Chief Financial Officer (CFO) may not be within your budget. That's where a fractional CFO comes in. They provide the expertise you need at a fraction of the cost, giving you access to high-level financial guidance without the overhead of a full-time hire.
Finding the right fractional CFO for your business is key. With many individuals and firms offering these services, it’s essential to ask the right questions to ensure you choose someone who truly understands your needs and has the expertise to drive your business forward.
Here are some of the top questions to ask a fractional CFO before making your hiring decision:
“Have You Ever Worked Full-Time as a CFO?”
A fractional CFO is much more than a bookkeeper, accountant, or even a controller – they need to bring a breadth of experience to the table. One of the most important questions to ask is whether they have ever worked as a full-time CFO. While many firms and individuals may offer fractional CFO services, their experience could be limited.
A person who has held a full-time CFO role will have the strategic, financial, and leadership skills that come from navigating a variety of complex business challenges over time. They’ve been through high-stakes decision-making, managed complex financial structures, and have likely navigated a number of market shifts. This experience can’t be taught in a training class, boiled down to standard operating procedures, or learned on the job while they are supporting your company.
“Can You Tell Me About Your Experience Working with Lenders to Secure Debt Financing?”
Whether you're looking to expand, manage cash flow, or whether a financial crisis, having access to capital can make all the difference. A good fractional CFO should be skilled at working with lenders to secure debt financing, whether through traditional loans, lines of credit, or alternative funding sources.
Ask them to share their experience in this area. How have they helped other businesses secure financing? Do they have a network of lenders they regularly work with? The right CFO should not only have knowledge of the best options for your business but also be able to craft a strategy for obtaining the best possible terms. This skill can be a game-changer if your business needs access to capital for growth or operations.
“What Key Performance Indicators (KPIs) Should I Be Using in My Business?”
KPIs are the benchmarks that allow you to track the health and success of your business. A skilled fractional CFO will know how to select the right KPIs for your company, whether they’re industry-standard metrics or more specific to your business model.
Even if the candidate doesn’t have experience in your specific industry, they should be able to ask insightful questions about your business and then propose KPIs that will give you actionable insights. Their ability to quickly understand the big picture for your business and tailor KPIs that help you make informed decisions is a clear sign of their strategic financial capabilities.
“How Will You Utilize Your Experience to Help Me with My Business?”
Ask about their specific experience with your business needs. Whether it's financial reporting, budgeting, strategic analysis, or navigating business growth, ask them how they can tailor their services to fit your company's unique situation. The right fractional CFO should be willing to listen closely to your goals and challenges and propose solutions that align with your vision.
For example, if you are a startup looking to scale, inquire about their experience helping businesses in your stage grow sustainably. If your company is in a niche industry, ask how they plan to get up to speed with your financial nuances. The more detailed and specific their answers, the more confident you can be in their ability to support your business.
“Do We Know Anyone in Common?”
The last suggestion is to find out if you and your fractional CFO candidate know anyone in common. Referrals and personal connections can offer invaluable insight into a potential fractional CFO's abilities and character. Try to find out if you have any mutual contacts, especially those who have worked with the CFO in a business capacity. After the interview, reach out to these people to ask about their experiences working with the candidate.
When you get feedback from someone who has firsthand experience with a CFO, you gain a clearer understanding of their strengths, weaknesses, and overall approach. You can learn whether they are proactive in their decision-making, how they handle challenges, and if their communication style aligns with your business culture.
Finding the right fractional CFO is crucial for the long-term success of your business. You will undoubtedly ask several other questions related to your business and situation, but if you can get good answers to these questions, you are on your way to finding the best fractional CFO to help make a lasting impact on your business!
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