Small and midsize businesses (SMBs) are navigating extraordinary volatility right now. You see it in the stock market charts, the news headlines, and the announcements of new and shifting tariffs. If your company has a CFO, you can turn to them for guidance and leadership during this time. If you don’t, you may be facing significant challenges, including limited cash runway or just having more questions than answers about what to do next.
Fortunately, you do have an option to gain the wisdom and leadership of an experienced CFO without the full-time price tag—by hiring a fractional CFO. Indeed, fractional CFOs can be the best choice for companies like yours trying to navigate economic uncertainty.
Decisive Leadership When You Need It, Minus the Overhead
Unlike a full-time CFO, who is a permanent employee, or a consultant, who typically focuses on specific, short-term projects, a fractional CFO offers ongoing strategic finance leadership on a part-time basis, tailored to the specific needs of the business.
Fractional CFOs foster resilience by the very nature of their working model. Because they work on a part-time or contract basis, there’s no full-time salary, benefits, recruiting fees or long-term commitment. During a downturn, they can step up quickly and build a strategy to navigate the path forward, providing tangible next steps and peace of mind.
In times of economic uncertainty, fractional CFOs bring:
- Balance: It’s tempting to focus on the pressures of the day, but balancing defensive measures with aggressive tactics is essential to stay the course for long-term growth during periods of volatility. A fractional CFO will help you create this crucial balance.
- Flexibility: A fractional CFO will build agility into your operations to help you adapt to rapid shifts in the market, protecting your assets while ensuring liquidity to make adjustments and investments.
- Confidence: Few people can discern and deliver economic and financial market facts like a CFO, making them a highly valuable partner for an SMB CEO in a crisis. A good CFO can also deliver pragmatic, level-headed context and communication to executives, employees and stakeholders.
How Fractional CFOs Reduce Risk and Strengthen Resilience
Fractional CFOs act as a core player on your team to stabilize the business and set the stage for future growth. Here are core CFO activities that help build resilience for your company.
Cash Planning and Preservation
Optimizing your working capital is a fast and inexpensive way to ensure stability and gain leverage over an unpredictable environment. Your fractional CFO may start by performing a burn rate analysis if it hasn’t been done recently, and from there, they’ll look to shorten your cash conversion cycle to improve your cash flow position and make sure you can meet your obligations well into the future.
Your CFO can also validate alternative funding methods in the form of government loans, private equity and other sources in the event you need it.
When your capital isn’t tied up, a CFO can help you decide when to tap into it to make investments in software, automation or discounted assets to build future advantage.
Process and Operations Optimization
Making your operations more efficient is one way to manage uncertainty. Your fractional CFO will work to improve reporting and controls within your financial operations so that they can identify areas of risk and inefficiency within your business processes and supply chain.
They may seek to renegotiate contracts to accelerate accounts receivable or implement payment plans to help manage your cash flow while preserving your relationships with your vendors and suppliers. They may also look to consolidate services as a way to save costs.
Strategic Oversight and Planning
During times of uncertainty, fractional CFOs should help you get ahead of what’s to come. By ramping up your predictive analytics and forecasting capabilities, you can start conducting scenario planning to model the impacts of varying factors—such as rate changes or geopolitical events—and test out solutions. You can also use this technique to spot potential beneficial opportunities that may emerge.
With these insights, your fractional CFO can then recommend adjustments, including cutting costs or making strategic investments.
Cost Efficiency Without Sacrificing Long-Term Growth
During economic volatility or downturns, companies can and should turn to cost optimization strategies. A seasoned CFO may be the person you need in the room to help you make tough but necessary calls.
Importantly, they can also make sure your cuts don’t restrict your business down the line. We’ve learned that the most aggressive cost-cutters during the Great Recession had the lowest chance of leading the competition after the downturn—but businesses that boldly invested didn’t do much better. A fractional CFO with proven experience can guide you in striking the right balance.
Revenue and Supply Chain Diversification
Resilient businesses don’t put all their eggs in one basket. A fractional CFO can assist in identifying and evaluating new markets, product lines, income streams and partners to help reduce your risk exposure. This is particularly important during economic downturns when traditional revenue streams may be disrupted. By exploring new opportunities, businesses can reduce their reliance on any single source of income.
Stand Up to Economic Headwinds: Partner With a Paro CFO
When the economic landscape starts to shift, the key is to act swiftly. Paro’s proprietary, custom matching technology connects you with best-fit finance experts from the top 2% of the talent pool.
CFOs in Paro’s network have 15 years of experience on average, with many boasting tenures at the Big Four and Fortune 500 firms. Our robust vetting process ensures they have the skills needed to do the job, collaborate, and communicate with clarity and empathy.
With cost-effective access to high-level finance talent, Paro levels the playing field, enabling SMBs to compete more effectively and thrive, even in challenging times. Book your consultation to explore our fractional CFO services today.
