Facing the World of Finance as a Small Business Owner: 5 Common Roadblocks

Being a small business owner is rewarding, but it also comes with its fair share of challenges, especially when managing finances and building a financial strategy.

While you’re excited to get your business going—navigating the complexities of accounting and financial management might not be your forte. This becomes especially daunting when you are juggling all the other tasks required to keep your business on track while knowing that addressing financial challenges early on is crucial for the long-term success of your venture. 

Luckily, that's where a fractional CFO can step in and help you. A fractional CFO provides the same high-level financial experience as a traditional CFO but works on a part-time contract—making them a cost-effective option for small businesses and startups. Moreover, fractional CFO’s offer flexible schedules and personalized knowledge that is unique to your business.

In order to really understand what a fractional CFO brings to the table, here are 5 common financial roadblocks business owners run into, and how a fractional CFO helps to mitigate these challenges by offering the experience and guidance needed for your business to thrive. 

1. Managing Cash Flow 

One of the biggest hurdles for small businesses is managing cash flow effectively, which can lead to serious consequences when discrepancies arise.

How do cash flow problems occur in the first place? There are several reasons, some of which may be in your control, while others aren’t. For instance, a delayed payment from a client, an unexpected expense, or even seasonal fluctuations in revenue can affect cash flow. Things become especially difficult if you notice cash coming in won’t cover cash going out. 

The good news? You don’t have to be an expert when it comes to navigating these challenges. A fractional CFO can give you the gift of time by helping you to identify and predict difficulties in cash flow before they happen, so that you are more prepared when sudden expenses arise. If an unexpected expense does catch you off guard and you find yourself in crisis mode—a fractional CFO guides you through next steps on how to prioritize payments and navigate the issue. Beyond this, they also provide an ongoing analysis of revenue and expenses, helping you allocate funds and make improvements in your spending so that your business can run smoothly. 

2. Uncertainty with Reporting 

Being able to monitor your financial performance is one thing; knowing how to produce timely and accurate reports is another. Having the right reports is crucial when it comes to dealing with investors, lenders, stakeholders, and regulatory bodies—and could be the make or break when it comes to securing important business investments. You may find that you don’t know where to start when it comes to creating detailed and professional financial reports and statements. 

Fortunately, this is where a fractional CFO can step in. They help by preparing essential financial statements, analyzing KPIs (key performance indicators), and ensuring all reporting adheres to accounting standards. At the end of the day, financial transparency isn’t something you want to overlook, so it’s crucial that your reports are accurate as your company continues to grow. 

3. Looking at the Long Term 

While the start of any new business venture is exciting, you might also find yourself overwhelmed when thinking about the future—especially given the inevitable unknowns when it comes to capital, expenses, and overall financial health of your business. This is where strategic planning comes in, developing long-term financial strategies and goals. However, this is difficult to do without expert financial insight and can be time consuming. 

A fractional CFO eases your anxiety by developing financial forecasts and budgets, ensuring you get the best return on investment and providing you with clarity as you look to expand your business in the future. Long term financial planning helps ensure sustainability and growth, prepare for risks, and guides crucial decision making, especially when it comes to resource allocation. Not only that, having strategic, long-term plans in place also helps you appear more confident to stakeholders, as well as informing and justifying your own decisions going forward. 

4.  Access to Funds

Starting a small business means you will likely find yourself needing extra capital. Maybe you want to expand, purchase new supplies or equipment, or hire more staff. Unfortunately, sales profit doesn’t always cover the funds required for these developments, which is why you might need to investigate securing extra funding. Navigating options for funding isn’t always straightforward. You may find yourself questioning the best option, on top of being unsure of what steps you need to take to secure the funds needed. 

The good news is that a fractional CFO takes this off your plate. For instance, they can explore different sources of capital and help you evaluate each option ensuring you make the best choice for your business. Further, they can set up the required financial documents or business plans needed to secure loans or investments. A fractional CFO can also navigate the complexities of an agreement and negotiate the terms of funding to ensure you’re making the best financial decision for your business. 

5. The Complexity of Taxes 

Tax obligations are daunting, especially as a small business owner facing multiple different sources of tax—anywhere from income to sales to payroll. This can be especially difficult for ecommerce businesses who are dealing with international shipments and sales. 

Fortunately, if you feel like you don’t have the time or expertise to navigate the world of taxes or worry you might risk a penalty from making a mistake, a fractional CFO can help. A fractional CFO can ensure you are filing your taxes on time and accurately, as well as ensure you mitigate tax-related risks and optimize your outcomes. For instance, taking advantage of eligible deductions and credits, managing tax liabilities, reporting, and providing ongoing support on tax related matters throughout the year. 

If you find yourself lost when it comes to the financial complexities of your business, know that there is help available—and it doesn’t have to cost a fortune! To learn more about how Guildstreet can help your business thrive, reach out to us today. 

Written by Hannah Lemiski

Do you need help making your business thrive?

Contact us at info@guildstreet.ca or at 403-807-2075