How Quickly Do I See a Return on Investment from Investing in an Outsourced CFO?
An understandable question to understand before you invest in an outsourced CFO is:
How quickly do you get a return on investment on an outsourced CFO?
After all, you would want to reap the benefits of what you’ll pay for.
The reality of an outsourced CFO is much of the benefits are subjective compared to other business-related services that are potentially more easily quantifiable. Take, for instance, the case of marketing services: if you invest $10,000 and it helps you generate 100 leads and these convert to $100,000 in revenue, then that’s very quantifiable. If you invest $10 to buy a share and that later goes for $20, that’s again quantifiable with easy calculations of your gains.
An outsourced CFO, however, there are elements that vary on a case-to-case scenario. With all these in mind, for sure you’re still wondering how you can maximise your return on investment with an outsourced CFO. The best way to demonstrate the speed of the return on investment is through the three steps below:
First Step: Speed of Movement
We value speed of movement, for example, if you started today, we will send you what we need from you the next day to start the work immediately. As simple as it sounds, the quicker your team moves, the quicker, too, that you would get to your desired destination- and that destination translates to process improvement of your business.
Second Step: Visibility which simply means Reporting and Analysis
To succeed in business, we believe you need to focus on three core areas:
- Sales and marketing
- Gross profit
- Working capital
To optimise these areas, we must understand them and the other elements of finance and operations through Reporting and Analysis.
Third Step: Knowledge becomes Power and Focus
After providing you with Visibility, Reporting and Analysis, we will have discussions to establish what we need to focus on. For example, we point to a problem in one area, but you think that’s not really an issue. Or you see an opportunity in one aspect, but we don’t see the potential of that. We need to hear each other’s perspectives and look together on the facts and figures and what they imply, and after the conversations and even healthy debates, we need to be on the same page moving forward to a shared direction.
To further emphasize, it's an education cycle of understanding the information from the Reporting and Analysis and taking the next decisive steps. It is about establishing where the core elements are, and putting our ideas to practical test going to the final step.
Fourth Step: Implementation of the Plans
To improve the problem we detected, or in further maximising the potential that we saw in your business we must put plans into action.
We will continue the cycle until the objective of an outsourced CFO is achieved as defined by the management and owners of the business. This includes reducing our involvement overtime because we have implemented systems and processes to achieve these objectives including training of team members.
Final Point – The Dollars and it’s Your Call!
We won’t skirt around the issue of dollars and return on investment so we will attempt here. On average an outsourced CFO will be between $25K - $70K investment a year. If you are turning over $5M a year, you only need to find a 1% improvement in your business to over $50,000 investment. But the reality is, you will ultimately determine whether you receive value or not.
