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Part-time and fractional CFOs for startups: everything you need to knowPart-time and fractional CFOs for startups: everything you need to knowPart-time and fractional CFOs for startups: everything you need to know

Part-time and fractional CFOs for startups: everything you need to know

Understand what part-time or fractional CFOs are and do, and see if this is the right time to hire these finance professionals for your startup

Early-stage startups can have big boys or big girls challenges – from fundraising from venture capital investors to needing a solid strategy to generate financial efficiency and extend their runway.

In these cases, and in the many other challenges that will still arise for your baby turned adult, it would be pretty cool to have the help of a Chief Financial Officer (CFO). That's the most senior finance professional there is, focused on solving the most critical problems or finding the most critical solutions that can take your startup to its next milestones.

But having such a professional on your team comes at a cost, and you know that pretty well. That's why many startup founders are eyeing part-time CFOs, also called fractional CFOs. They are the same CFOs. But they work only at specific times to achieve specific goals, focusing on ultimate efficiency.

Remote work has only made this on-demand alternative even more accessible. In a recent McKinsey survey, 40% of American workers will be self-employed by 2025. In Future Insight, from Brazil, 18% of employers consider it likely to recruit on-demand leaders as early as 2023.

Are you considering a part-time or fractional CFO? Before hitting the hammer, here's everything you need to know about part-time or fractional CFOs:

  • What is a part-time or fractional CFO?
  • What does a part-time or fractional CFO do?
  • What are some part-time or fractional CFO services?
  • What are the benefits of a part-time or fractional CFO?
  • Is a part-time or fractional CFO worth it? Should I hire it?
  • When to hire a fractional or part-time CFO?
  • What do you look for in a part-time or fractional CFO for your startup?
  • How to find and hire a part-time or fractional CFO for your startup?
  • How much does a part-time or fractional CFO cost?

What is a part-time or fractional CFO?

Let's start with the ABCs. Or rather, with the CFOs. A Chief Financial Officer (CFO) is the most senior executive when it comes to the financial management of a company. A good CFO ensures that your startup has a solid and effective financial strategy, aligned with your company's goals.

A part-time/fractional CFO works the same way but on a part-time basis. In other words, you have a fixed-hour contract to solve a specific project or challenge in the finance area.

The distribution of this workload can be arranged, ranging from full-time for a short period to a few hours over several weeks.

Your startup needs to take into account both its business objectives and its resources at this very moment, from software to member count, to define the number of hours it will demand from a part-time/fractional CFO.

What does a part-time or fractional CFO do?

A part-time/fractional CFO can do everything a full-time Chief Financial Officer or CFO can do. The difference is that your contract will determine a certain time to work on a certain challenge or project. (And let's remember that this contract can always be renewed, depending on the interest of both parties.)

The smaller the company, the more practical the CFO. But ideally, the rest of the team deals with accounting, treasury, financial analysis, financial planning, financial modeling and forecasting, financial reporting, risk management, and financial compliance.

Meanwhile, the CFO is responsible for leading the long-term strategy. And because of that, the CFO can also have a closer look at legal aspects, payroll, and even products and operations.

Another function of the CFO or CFO is to communicate effectively with the other executives of the company and even with external investors about the finances of the startup, ensuring that the company's fundamentals are solid and aligned with the objectives.

What are some part-time or fractional CFO services?

  • (Re)design the business plan, including its financial planning, based on business insights such as a feasibility analysis;
  • Work to find financial efficiency in the operation of the business, both by optimizing cost and margin or increasing revenue generation;
  • Deploy budget planning and strategic allocation of resources, including assembling the financial team;
  • Build the strategy and support the fundraising process (closing a round with venture capital investors);
  • Evolve risk management, governance, controls, and reports;
  • Work on an M&A project.

What are the benefits of a part-time or fractional CFO?

  • Quickly hire the right person to solve a certain problem or develop a specific project;
  • Seniorize your startup's financial team, with the right expertise at the right time;
  • Have access to the knowledge and experience of an executive with years in the market, bringing long-term benefits to your current team;
  • Ensure faster adaptation and more financial efficiency by a well-planned hiring of a fraction of an executive with an extensive background;
  • As a founder, you can focus on other business challenges – such as product or service development, customer acquisition, or market expansion.

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Is a part-time or fractional CFO worth it? Should I hire it?

As always, there is no one-size-fits-all answer for every startup. Even so, some variables should always be evaluated when deciding whether or not to bring a part-time/fractional CFO to your startup:

1. Analyze your demand

Does the business have a strong need for a senior finance professional? If not, the business will fail to take full advantage of the budgetary efficiencies it can have with a part-time/fractional CFO.

You will have a greater gain if you already need a CFO to solve tasks that only a professional of this level can take on. If you realize that your startup just needed an accountant, for example, it's better to focus on this type of professional and leave CFOs for later, part-time or not.

2. Analyze your investment allocation

Does the timing of your startup justify investing part of your already tight budget in this type of professional? Even if it justifies itself, does your business really have the money to keep this professional for the time necessary to meet your objectives?

3. Analyze your attractiveness

There are the right professionals for certain challenges, and the world of fractional jobs is made up of experienced professionals precisely because you don't need to invest in training them for these challenges.

Is your business really able to attract the necessary profile of part-time/fractional CFO for your startup?

Working on your value props can be a good homework assignment not only to attract the best talent but also to face the lack of budget that we mentioned a little while ago. We are talking about offers such as purpose, brand, challenge, work model, and compensation.

Remember that, in the beginning, the founders are the startup. They must work to share the mission and make the first hires. Who knows, maybe you can find the right person because they admire the purpose of your startup or they're excited about the challenge you proposed to them.

4. Analyze your conviction

Do you have conviction about who to bring to this position, or would you like to test before creating a deeper and lasting relationship? Testing or not, could this person have space in the business for years to come or will it definitely be a temporary position?

It is important that you have your expectations well-defined and aligned before looking for a part-time/fractional CFO. For example, there's no point in wanting a professional who can later join your company's staff but hiring a part-time/fractional CFO who definitely doesn't want to work for years and years for the same company.

When is the right time to hire a fractional or part-time CFO?

For each stage of a startup, a part-time/fractional CFO can act in different ways. As we have mentioned previously, this professional can act from structuring the financial team to supporting fundraising.

Even so, remember to consider the potential constraints on demand, investment allocation, attractiveness, and conviction that we just mentioned.

What do you look for in a part-time or fractional CFO for your startup?

Let's say you've already approved your demand, investment allocation, attractiveness, and conviction. To go with a part-time/fractional CFO, it is important to consider:

  • Their past experiences, considering the technical background, industry, and business growth stages they have experienced;
  • Motivation to contribute to the business (after all, they will be a senior professional that works together with the founders);
  • Fit with your startup culture (same).

How to find and hire a part-time or fractional CFO for your startup?

You can spend hours looking for professionals on LinkedIn (and not paying attention to other areas of your startup in the process).

Another option is to rely on subscription platforms that connect executives available to work on-demand to companies, such as Chiefs.Group.

Around here, we have more than 1,200 talents, approximately 20% of which are part-time/fractional CFOs. We understand your business and your challenge to find the best professional on the base in just one week, ready to start working.

How much does a part-time or fractional CFO cost?

The cost depends on the context and challenge of the business but is basically made up of the seniority and workload of that professional.

The on-demand hiring model can generate up to 80% savings for a startup when compared to CLT. In addition to flexible working hours, there are also other costs that are not incorporated, such as equipment, benefits, paid vacations, etc.

Stay tuned

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