Future-focused financial strategy and sound financial management for small businesses is something that should be top-of-mind for budding entrepreneurs and long-standing mum-and-dad businesses alike. It’s an all-too-common story that I’ve seen with my own eyes and heard from colleagues within the industry, where mismanagement of a business’s finances (from cash flow to tax obligations) leads to its downfall. It doesn’t take a Virtual Chief Financial Officer (CFO) to know that, but it may take one to figure it out for your business before it’s too late.

In the same way, a mechanic looks under the hood of a car to inspect the engine, a Virtual CFO or an Outsourced CFO does the same when reviewing a business’s finances and operations from the lens of an expert business adviser.

Official reports from the 2020 Small Business Count from the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) states there were 2,314,647 small businesses, 56,835 medium businesses, and 4,271 businesses in Australia as of 2020. With a 15.2% jump in registrations for small businesses over the past financial year, it is important to understand what steps new organisations can take to manage the financial direction and strategy of their newly found career, and how an Outsourced CFO in Sydney can help.

When a typical person hears the word “Chief Financial Officer” or ‘CFO”, one may think of a high- flying, highly paid executive of a Big 4 bank, a major telecommunications company, or even an international tech company. In essence, it’s not something a typical small business owner may think about in the first instance, but if you find yourself asking questions such as:

  • Are my financial figures accurate?
  • Can I afford to hire more people?
  • What can I do to increase revenue?
  • How do I take my business to the next level?
  • I need help with setting a long-term plan for my business.

When you own a small business, you’re probably aware of the concept of hiring an accountant to prepare your taxes or dealing with a lender or finance broker to enquire and obtain financing. However, for many small business owners, a Virtual CFO service may seem excessive, especially if having a full-time CFO on board isn’t something you'd consider financially.

In today’s reality, a Virtual CFO may be one of the most valuable assets to a small firm because it eliminates the need for additional staff while still providing all the benefits of someone with that level of financial skill. A virtual CFO will most likely have the answers you need, as a fully qualified (CA or CPA) accountant, business consultant, and adviser who can put you in the best position to succeed.

Even if they may not have all the answers, their extensive, validated professional network will provide you access to individuals who can help you structure, secure, and grow your business.

I believe Virtual CFO services are a commodity to small businesses. I would advocate that government support is needed in the form of education, grants, and resources for small businesses to set themselves up for success. If there was a mandatory requirement for small businesses owners to have a Virtual CFO in their business for the first 12months, we would see a big drop in the number of small businesses that fail.

Philip Khao is a Chartered Accountant (CA), Virtual CFO, and Director at Solve Accounting with many years of accounting and business services experience at global accounting firms and multinational corporations.