Why Your Small Business Could Benefit from Working with a Fractional CFO – Jerome Oberlton, FinQuest

2020 was a year of change, pivot, and resilience for small businesses across the globe. Contactless, digital and virtual had become new go-to buzzwords for how business is now conducted. Companies offering products and services to small businesses have had to embrace that seismic shift as well. On today’s show, guest anchor Mark Collier, consultant for the UGA SBDC Dekalb, speaks with Jerome Oberlton, CEO of FinQuest Financial, about what these emerging trends mean for small businesses.

Transcription:

Mark Collier:
Welcome into ASBN, Jerome.

Jerome Oberlton:
Well, thank you Mark. It’s great to be here.

Mark Collier:
Listen, this economy we have today is very much different than what it was pre-2020. And as I said, it might lead in virtual contact lists and digital are now paramount in how businesses are operating. So share with me and for the viewers out here, what is specifically is a fractional CFO and what role do they play in a small business owner’s success?

Jerome Oberlton:
Well, a fractional CFO is really exactly what the term says. It’s a fraction of a CFO. Is a portion of a CFO who is allocated to a business where a business may not have the resources to hire a full-time CFO, but they still need that level of capability, that thought leadership. They need someone who’s going to come into the organization, help to align the finance, the strategy, look at where the organization is heading and get the organization moving in a position of profitability and growth. And that’s really what the role of a fractional CFO is.

Mark Collier:
Well, that’s a critical role. Every business has its own life cycle relating to whatever industry segment they’re in. So share for me what role does a fractional CFO play in the specific life cycle of a business?

Jerome Oberlton:
If you really look at a business life cycle from infancy to maturity, a fractional CFO is really seated right at the midpoint of the life cycle of a business. As a business begins to grow, as it begins to look at how are we going to take advantage of the market, and how are we going to do that with a growth project out and focus? That’s when you start to look at, well, I may need to bring in a person, an individual, a thought leader, who’s going to keep an eye toward market, but also make sure that we are controlling the growth profitability, our overhead costs and things of that nature. So they’re going to sit in the center of that life cycle of the business growth, not too early. You don’t want to bring them in too early in the life cycle of the business. But as you start to get into the later stages of your business, then you’re really looking at a full-time CFO versus a fractional.

Mark Collier:
And I know that growing and scaling is the goal of most small businesses. And most businesses when they start, they already have a standard accountant or CPA. So share for me, how does a fractional CFO differ from the standard CPA or accountant that most firms are already engaged in?

Jerome Oberlton:
As a business is starting to figure out where it wants to go it’s going to need a little bit more than an accountant. An accountant is really operational tactical, even in nature. A fractional CFO should be much more focused on the strategy of the business. They’re going to look at where’s the business trying to go, what goals are we trying to achieve and how are we trying to achieve those goals? And then they’re going to look at how do we align the organization, the finances, the financial structure of the organization to achieve that end goal.

Jerome Oberlton:
While accountant or CPA, a CPA may be much more focused on the tax structure of the organization. Your accountant may look at things like your financial planning and analysis. Your fractional CFO is going to look at the entire organization. So they’ve got to be able to have conversations at a C-level, with the other C-level members of the organization. They’ve got to be constantly thinking about how do we shift, how do we pivot the organization so that we can take advantage of new products, new services, introductions to new marketplaces and things of that nature.

Mark Collier:
Strategy is a big component of a successful business. I myself am a strong proponent of strategic planning on an annual basis for small businesses. So I see how a fractional CFO, you’ll kind of take that 20,000 foot level view and help business owners look at things from a strategic perspective. So that is very well received by most business owners, I’m sure. Let’s peel back a few more layers, so what value does a fractional CFO deliver to the business in terms of enhancing it’s bottom line?

Jerome Oberlton:
A fractional CFO is always going to be focused on both growth and controlling the overhead for the organization. So they’re looking at the expense profile. They’re looking at where are our sales, when do we need to bring in and hire new staff for the organization? So he’s going to be looking at all of those elements and components again, against the fundamental plan for the business and the goals of the business.

Jerome Oberlton:
Their fractional CFO is also going to be looking at the marketplace and figuring out within the market, when do we need to start to consider investments, onboarding potential angel investors or equity investors? When do we need to look at profiling our business in a way that creates additional capital for the organization? How do we leverage capital within our organization? So that fractional CFO is constantly thinking about the dollars in the sense of the organization and how to best leverage those dollars and cents.

Jerome Oberlton:
Again, the biggest value is a strategic value. It’s how do I think about the business from a financial perspective, but also from a fundamental business perspective? Where are we going as an organization? Where are we going as a business? And how do I have the right conversations, the right discussions with key business leaders so that we can properly position the company.

Mark Collier:
That is good information. It seems to me a fractional CFO is a key stakeholder in the growth and development of that business, which I view as a critical component. So, circling back to the life cycle of a business, where would you suggest that it is important to consider hiring fractional CFO? At what stage of the business do you think that would deliver the most value?

Jerome Oberlton:
So again, I think as the business begins a projectile of growth, they absolutely want to start to think about onboarding a fractional CFO. When a business is in it’s infancy, they can get along with a financial staff, with accountants and bookkeepers, so on and so forth. But when they need to start to align the elements of the business with the strategy, the goals and the objective of the business, that’s the point that they want to start thinking about a fractional CFO. When they’re talking about massive growth, then they really want to think about a fractional CFO.

Mark Collier:
That makes perfect sense. Makes perfect sense. So, drilling down even further, give me the top three things that a business should look for when interviewing and hiring potential fractional CFOs for their organizations.

Jerome Oberlton:
I would say number one, they want someone that’s going to fit within the culture of the organization. They want someone who is going to understand how to have the right conversations, the right dialogue throughout all tiers in all levels of the organization. Number two, you want someone who’s a visionary. Someone who has an eye to see where’s the organization today and how do we take it forward in the future, and can align that the rest of the organization around that vision.

Jerome Oberlton:
And then the third item is, and this one is key to me because I not only have a finance background, but also a technology background. They ought to understand technology in today’s economy. Because their financials, they want to make sure that those financials are taking advantage of costs, cutting costs, savings types of technology to help propel the business forward.

Mark Collier:
Well, as a consultant, one of my ongoing mantras is cost cutting, cost savings, cost avoidance, because anytime you achieve any type of cost savings that trickles right down to the bottom line. So if someone wants to reach out to you, Jerome, I’m sure they’ll be able to put the website, contact information at the bottom of the screen here if anyone wants to find out more about how a virtual CFO or a fractional CFO can help their business. Any last tips or tricks that you want to impart words of wisdom for business owners out here?

Jerome Oberlton:
I would probably say the biggest words of wisdom that I can give today under the current pandemic, is to make sure that you are looking at ways of getting business done more cost efficiently and not bring in a bunch of overhead costs. You can avoid that by bringing on people like fractional CFOs, who can still get that business done, get that work done and avoid some of the costs that you would otherwise incur if brought on full-time staff.

Mark Collier:
Jerome Oberlton, FinQuest financial CFO. This has been great information. I’m sure well received by business owners out there considering, or even learning about what a fractional CFO is. And hopefully you’ll come back to share more with us in the future.

Jerome Oberlton:
Thank you, Mark. It’s a pleasure.

Mark Collier:
All right.

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