Self-employed CFOs: Offering Part-time Service Leads to New Careers
At a certain age and after years of experience, many chief financial officers (CFOs) start wondering: is this all there is? Finding themselves ‘locked in’ a corner office and stereotyped as the company’s ‘financial guy’, they often look ahead at 10-15 years of more of the same.
The CFO’s frustration may be caused by obstacles to further career advancement. Other times they feel that they are giving up too much and want a richer, more independent life. Many CFOs would love to run their own company, but can’t see how their skill set leads logically in that direction. Others, having met many of their professional goals, would like to sit back and simplify their business life, but are not ready for retirement.
CFOs seldom think of working for themselves, having grown into a role of the ‘right-hand man’. Their natural instinct is to work in support of company effort and they tend to get satisfaction from giving counsel and working for the improvement of the team.
While it would seem logical for a CFO to ride out the end of his or her career with the large organisation the CFO matured in, it is not necessarily the best choice. Financial objectives, lifestyle changes, and a re-energised career can all be achieved by the CFO after leaving his traditional role with the larger company.
All of the goals implied above can be met while working independently as a part-time CFO for medium-sized companies.
Found nearly everywhere, smaller companies are at the heartbeat of our society. Everyday, entrepreneurs struggle and succeed to provide the services and deliver the products communities run on. They do it despite their limitations, size and sophistication. Often these companies provide enviable lives for their owners, while creating jobs and greatly adding to the local economy.
At the same time, they often suffer from a lack of financial organisation and knowledge. They work intuitively, without strategic thinking and long term planning. They can often foresee opportunity, but don’t have the senior management capability to do the work necessary to seize it. Their revenues and growth potential are limited. Many times they don’t know what they need to prosper. They befuddle their bankers when they seek funding and confound their CPA firm at tax time. Many times, the owners, working without the guidance of a qualified and experienced CFO, don’t perceive their situation correctly and can’t make the changes that would be hugely beneficial.
Most owners of medium-sized companies don’t have any idea of how a qualified CFO could enhance the operation of their company. But even if they did, these companies cannot afford the US$150-300,000 salary necessary to attract a full-time CFO away from a major firm.
There are numerous ways a part-time CFO can help medium-sized business clients with operational improvements that will in turn impact the bottom line. A few common ones include:
It is important for the CFO to think of themselves as a permanent member of the client company’s team and to strongly encourage the client to think likewise. A continuous part-time relationship is the basis of the client receiving the long-term benefit of an on-staff CFO. It allows the CFO the opportunity to grow into a valuable part of the client business and provides the CFO with the income opportunity he needs. It is a danger to see the relationship as a short-term consulting assignment or project. To guard against this perception, the CFO should clearly present themselves as seeking a long-term relationship.
Bringing together the experience the CFO has to offer with financial constraints of the medium-sized business owner is the key. For example, an experienced CFO working in the eastern USA can structure part-time services to a medium-sized company so that they are at their client’s office two days per month. The CFO can also work at their home office another half day per month and give unlimited telephone support throughout the month. For this he can expect a retainer of US$48,000.
Most medium-sized companies can easily afford this level of support considering the benefit returned. The part time CFO should easily find three to five clients within a 45-mile radius, allowing them to develop a workload that meets the desired income and lifestyle objectives.
Once established, many part-time CFOs find that there are more new business opportunities than time to service them. They often opt to bring in a younger associate to handle some accounts directly or work behind the scenes. This can be beneficial in several ways, including a boost to potential income. Having a junior associate can also create a sense of ‘The Firm’, which can provide support for the CFO during busy times or extended vacation periods. It may also allow the CFO the satisfaction of ‘mentoring’, as well as providing an outlet for shoptalk and mutual growth.
CFOs considering the prospect of becoming a part-time CFO should consider all aspects of the situation. Do they have the personality, the experience, the financial strength, the incentive, and the entrepreneurial bent required? It’s fair to say that any qualified CFO can become a successful part-time CFO, but it’s equally true that only some will enjoy the process and finally succeed. So before charging forward, here are a few questions to ask yourself:
Some folks truly enjoy their day at the office. They like the culture, the environment, the travel, the interaction with their staff and the prestige of their title. If this sounds like you, maybe it’s not a good idea to make the change.
Whether you are seeking an active semi-retirement, or looking to forge a new career, becoming a part-time CFO means you’ll soon be self-funding and working on your own. Do you have the discipline to work productively and full-time to achieve success? Do you mind betting some of your savings that you will succeed and prosper? Are you confident that you can deliver a valuable service? Do you really want to work for yourself?
If you haven’t come out of your office for six months, except for trips to the bathroom, this might not be the move for you. Starting a business isn’t about keeping records, reading trade journals and setting up systems. It’s about networking, asking for help, using the phone, and having a continuing curiosity about where your next lead will come from. It’s about reaching out to others, not being in the office.
Starting up as a part-time CFO does not have a high cost of entry. You can work out of your home office and there’s only one salary to pay – yours. You’ve already got a laptop and a car. Some business cards, stationery, a brochure, and a web site will start you off and running. Still, you have to meet your existing expenses. Also, you may feel more comfortable working from a small office away from your home. There could be some clubs and associations to join and some entertainment expense. When you start out, you should feel comfortable spending money to build your business. You need to be determined, not desperate.
Your job as a part-time CFO will be to take your decades of experience and vast financial knowledge and apply them quickly and intuitively in a new situation. To do so, you must listen well and ask the right questions. When you sit down with a prospective client for the first time, you are more likely to know why they need you than they do. But to convince the prospect that you can be of help, you must first lead the conversation to where they are familiar and comfortable. If you can get them to talk about their company, its goals and its shortcomings, you will be more than half way there.
One can become a part-time CFO working alone. For some that’s the right decision; for others it’s not. New companies are emerging that serve to bring CFO entrepreneurs together under one umbrella. While you can work independently in your own territory, you are part of a greater whole and you have the implied credibility of a regional or national organisation. Such organisations, such as CFO Connect, may offer the beginning part-time CFO a quicker start up, training on new business development skills, financial tools, a portfolio of experience to draw from, counsel and support, and a sense of fellowship with other like-minded CFOs. Today, there are a handful of these organisations, but the concept is likely to grow as the part-time CFO concept grows.
If you are right for the role of part-time CFO, it can be a life-changing experience. For many of us, our career has meant 12-hour days, significant time commuting, long travel periods away from home, large staff to manage, and constant pressure to perform. Swimming in the surf is a great way to become a good swimmer, but after a while some time on the beach is welcomed. As a part-time CFO, you can gain control of your workload, get to know your family again, improve your health and get back in shape, and spend some time on other areas of interest. In short, you can become your own person.