Statistics show that eight out of ten businesses will fail due to financial mismanagement.
The structure of your firm's financial foundation is the heart of the business. Meaning the firm cannot receive enough oxygen to support its growth and continuous operation if its finances are not in order and clearly understood.
Therefore, what do you do when you need exceptional financial support, strategies, and solutions? When you need a strategic plan that will bridge that gap between where you are and where you desire to be, who do you call?
In this episode, I will show why a bookkeeper and tax accountant can't help with this and how a virtual CFO can.
I recently spoke with a consultant who expressed her frustration with her financials. She said, "Octavia, I recently reviewed my P&L, and my net profit looks terrific, but that large amount is not in my bank account PLUS I'm worried about my upcoming tax bill. I asked my bookkeeper about this because I thought something has got to be wrong. However, she assured me that my finances are correct! But how could this be?"
This is a perfect example of how working with just a bookkeeper can be confusing. Please hear me clearly; I am NOT suggesting that you do not need a bookkeeper. Bookkeeping is essential. But bookkeeping alone will not position you to make strategic business decisions that will exponentially grow your firm.
In this example, the bookkeeper, unfortunately, could not explain why her net profit and bank balance don't match and why they never will.
During last week's live stream, I explained several reasons why this occur.
The truth is as a consulting firm grows and becomes more complex; the management of its finances will become challenging. No longer will day-to-day bookkeeping be enough to support the growth trajectory.
When you factor in planning, pricing, taxes, hiring, expanding, technology, partnering, and more, the financial matters behind these decisions can make or break the firm.
At a certain level in your firm's growth, you will need a financial advisor that can expertly combine and capitalize on all the moving parts of your firm.
The ideal expert that can help you leverage your firm's daily operations to scale faster, smarter, and consistently is a chief financial officer. However, hiring a CFO as an employee for most consultants can be expensive!
Fortunately, innovations in technology have made it possible to hire a CFO at half the cost by partnering with a virtual CFO.
What Is A Virtual CFO?
A virtual CFO works remotely with you and your team to deliver financial insight, oversight, and foresight that a traditional CFO would. A virtual CFO is an effective way for consultants to receive reliable financial support without the cost and commitment of a full-time CFO.
Why Your Consulting Firm Needs A Virtual CFO
Your Firm Is Becoming More Complex
When you are operating as a one-man-or-woman consultant, your finances are probably simple and easily managed.
Your firm will become more complex as you add employees, suppliers, vendors, contracts, and other components.
If the growth of your business has reached a point where a bookkeeper alone doesn't seem to be a satisfactory financial solution, it is time to hire a virtual CFO.
No matter the complexity of your firm, a virtual CFO has probably seen it or something similar before and can advise you accordingly.
Your Firm Feels Like A Cash Draining Machine
At some stage in the growth of the firm, you will experience an uncomfortable financial situation.
This could result from earning revenue but never having enough cash flow to cover your monthly expenses or invest in the firm's growth.
During these uncomfortable financial situations, you need to understand the why behind what it is taking place.
A virtual CFO will help you uncover the why behind your financial challenges and provide you with the expertise to repair and prevent the challenges from occurring in the future.
You Need Proactive Growth Support
Your needs as a business earning north of $300K in annual gross revenue will change day-by-day.
You will begin to need someone that can proactively take an introspective look at all financial aspects of your firm on an ongoing basis and identify how to grow exponentially.
A virtual CFO can help you navigate excellently through different growth stages to achieve your ultimate objective.
You Don't Understand Your Finances
Often, consultants will receive financial reports, and even though they reviewed them, they are not sure how to use that information. Remember my example above?
For many, a Balance Sheet and Cash Flow Statement looks like a piece of paper with numbers on them. And for a Profit & Loss Statement, they only look at the revenue earned and net profit. Then there are those consultants that make daily business decisions based on their bank balance.
Understanding your finances is key to positioning your firm to say yes to profits!
And let's be clear, saying yes to profits is NOT about that Net Profit at the bottom of your P&L. That number is often misleading.
Please understand that if you don't know your numbers, you don't know your business.
A virtual CFO will build a solid financial foundation for your firm and help you maintain financial clarity and control.
How to Get Started with a Virtual CFO
To begin working with a virtual CFO, you want to conduct competitive research, speak with previous and current clients, and for SYTP, schedule a complimentary Discovery Session.
Your goal is to ensure that they have a proven track record for helping consultants grow.
Here at SYTP, we have several videos and written testimonies. Our current and previous clients rave about the services and support. On average, over 90% of our clients grow between 30% and 350% within 12-months and save over 60% on their taxes.
As a virtual CFO, my mission is to help my clients become fiscally responsible million-dollar CEO and eliminate money worries FOREVER while beating the IRS tax game! YES!!
CEO Next Best Steps
If you truly desire to change the financial trajectory of your firm for the better, hire a virtual CFO ASAP!
If you desire the ultimate financial confidence and peace of mind, a virtual CFO will help you achieve it!
The RIGHT virtual CFO will be a game-changer for consultants who desire to exceed their business goals and objectives.
If you would like a glimpse into how a virtual CFO can help you, schedule a 15-minute chat with me.
If you have questions or comments, please leave those below. Also, please mark your calendar to join me live next Monday at 12 pm est.