62. Does Your CFO Firm Need a Financial Analyst?

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Should your firm's first hire be another fractional cfo or should you hire a financial analyst? My name is Michael King and this is the CFO Report where I talk about starting, scaling and optimizing fractional CFO services. Today I'm talking to one of my inner circle clients who's at that point in his firm that he can't handle any more client work. He's interested in hiring somebody to help.

Him out, but he's not sure if.

He should get someone like a financial.

Analyst to help with the backend work.

Or if he should hire somebody like another fractional CFO that can do more client facing work. In today's episode, I walk him through two different types of business models and help him evaluate which one is right for his firm. Where did he land? Let's find out.

Yeah, so one of the things I did a little while back is I built an org chart for my company, but not the org chart I'm at today. I built the org chart that I might have three to five years from now.

Love it.

And started just saying, okay, well my name's on that box. My name's on that box. My name, you know, counting how many boxes have my name on them today. And started the exercise of figuring out, okay, which boxes do I want to start getting rid of in what order? And I'm at the point where I think I'm ready to bring in either a CFO or a financial analyst. And I guess I'm trying to figure out do I need somebody who's more client facing or. Or am I better off building up the back office so that way I can handle more clients. And I'm kind of, you know, teeter.

Tottering on that one. The answer is it depends. So I'll tell you what we do at KFE and then I'm going to tell you what a friend of mine does. They're different. I'll tell you which one. You figure out which one's right for you. And there might be some other variety that other people can suggest as well. For us, the FP and A that we do is pretty simple. What we found for the SMB space for the types of businesses we like to serve, there's not a ton of deep analytics that, that go into it where that's like a job for someone to just do that. I'm from lower Alabama. We like to keep things simple, right? We're doing cash flow forecasts, we're doing projections, those kinds of things. It doesn't require like a ton of financial modeling where they're looking to raise multiple rounds. They've got convertible notes and there's all these equity considerations and cap tables that have to go into it. That's not the client that we serve. And that's why we don't serve that client, by the way, because it's. It starts adding complexity and layers to it. And again, Alabama right. I like things simple when it comes.

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For us, the FP and a function, it's not that complex. So we don't have an analyst doing that kind of work. We've just processed it out and made it super simple for the CFOs to be able to do. It's not super simple, but it's not like a full time job where you need an analyst right now. The benefits of that is the CFO then is in the weeds on understanding the financials and what's going on. They're better connected with the clients and where they're at. But I have a good friend that's got a firm here in Dallas and she uses that back office financial analyst role and she uses that a to free up her CFOs so they can handle more clients. But she also uses that to build her bench strength. So like that's kind of the entry level role into her firm. Is that like junior analyst. And then the analysts hand off their work to the CFO and the CFO delivers it to the client. To me, that's too many layers, too many people, too many opportunities for things to fall through the cracks, too many opportunities for communications to break down. But that's just me. So you could do it either way. What I want you to think about is as you look at that like org chart, is that in alignment with the kind and size of team that you want. Want, you know, so if you're thinking about like analysts, do you want to manage analysts, do you want to. Is that like something that fulfills you and that you like doing and developing an analyst into more of a strategist kind of role? Maybe it is. But if you're not that kind of person, you're like, actually I don't want to deal with a junior analyst and have to teach them the fundamentals of fpa, then maybe that's not the right structure for you. Good point.

Appreciate it.

If I were you, knowing what I know about what you're trying to do, regardless of which model you want to go with, I feel like my next hire would be another cfo.

Yeah, I'm not big enough yet where I can teach and train. Like I'm already teaching and training a controller. So to have multiple people that I'm teaching and training and mentoring, I don't have the capacity right now. I need some people can just come in and knock it out. You know, maybe I start with the CFO and then when I have more capacity, I come back through and. And fill out that other layer.

Yeah.

Now listen, I'm going to give you an unrelated or a related word of warning that you didn't ask for. I want to make sure you're putting processes and procedures in place. Now I didn't and it ended up hiring ended up being a nightmare and we burn out some really good people and ran some, some good folks off and almost lost.

I don't have all the processes done, but I'm building the binder.

I'm assuming there's something in the binder.

Oh, there's quite a lot in the binder.

All right, good.

That's it for this week's episode of the CFO Report.

Before I sign off today, I want.

To just say thank you. My team and I are so grateful for those of you listen, every single week, it's our honor and our pleasure to be able to serve you on your journey. So just wanted to take a moment to say thank you this week for. For coming back here every single week and allowing us to speak into you. I can't wait to see you here next week, my friends.

We'll see you.