Freelancers are businesses, there’s no getting around this simple fact. They’re small businesses of one, but each and every freelancer has the same fundamental obligations and responsibilities as companies as large as those in the Fortune 500. Financial reporting, tracking, client satisfaction are considerations for freelancers and big businesses alike.
Taking on these responsibilities is hard, time consuming work. Getting stuck into the details can take hours per week, and your business’ success depends on your ability to stay on top of it all. All this means that unfortunately, many freelancers don’t get paid for all the hours that they spend working. Time spent taking care of housekeeping or business management or other non-billable work, while necessary, is time spent not making any money.
This is why many freelancers who reach a point of development in their careers, where they feel like they need to grow, expand, streamline or simply need to squeeze more billable hours out of the day, tend to gravitate to people who can help take care of these tasks for them. A virtual executive assistant, a CPA, bookkeeper or business advisor, or the most sophisticated of these offerings: a part-time or fractional CFO.
What do part-time CFO’s do?
The most important way a part-time CFO can help a freelancer is giving them back their time. Taking pressure off the freelancers time by taking responsibility for a wide range of different aspects of business finances and strategic vision.
Not only does this mean the freelancer can spend more time on billable work, but also that they now have a sounding board for business decisions, an experienced mind on their numbers to help make decisions. Freelancers that have reached the stage where they have a need for fractional CFO services tend to be established, experienced freelancers with consistent revenues who need help to take the next step.
Bookkeeping and Taxes
One of the things that most freelancers struggle the most with starting out is keeping accurate, up-to-date financial records. Successful freelancers often figure this out, but it is still time consuming and requires consistent diligence to make sure your records are accurate.
Taxes are a whole other matter. Freelancer taxes can get notoriously complicated if you want to fully capture your income, eligible write-offs and total tax liability. Depending on the nature of your freelancing, you may be receiving payments from a variety of different sources on multiple platforms, of varying sizes and frequencies.
Now, taxes and bookkeeping aren’t necessarily services you’d expect a full-time CFO to provide. However, because this is such an area of need for freelancers and small businesses, many if not most fractional-CFO service providers will provide some kind of accounting and tax assistance. Fractional-CFO’s often work with CPA’s to complete your tax filings.
Business Planning is a crucial area of need for freelancers that so often goes neglected. While it is true that not all freelancers need a business plan (for instance, a freelance photographer taking side-gigs for supplemental income probably doesn’t), every freelancer can benefit from laying out their business goals in a clear concise way and creating a dynamic strategy to achieve them. Moreover, if you are looking to grow, expand and thrive as a freelancer, a solid business plan quickly becomes a necessity.
This is where a CFO service provider can come in handy. If you are a freelancer at a stage of business development that a fractional-CFO has become necessary, chances are that your business is fairly complex and building a business plan may be a more intensive exercise than if you were a smaller business making less money.
Your fractional CFO would work hand-in-hand with you, enshrining business objectives and priorities, helping you with financial analysis and projections, fleshing out marketing and sales strategies and generally making use of their expertise to help you make informed business decisions and set realistic objectives and goals.
Business Growth and Scaling
Knowing when and how to expand and grow is a major decision for any business small or large, and a large amount of consideration needs to be given no matter the size of the business. Growth or expansion for freelancers can be particularly challenging as often they cannot scale their businesses in the same way that larger corporations can, or as easily.
When it comes to growth, funding is a chief concern, and businesses that cannot get funding, cannot grow. This is where a fractional CFO can leverage industry connections, or help you develop them in the first place. Negotiating debt arrangements and managing and maintaining relationships with banks, lenders and investors are things that a CFO service provider is able to handle on a freelancer’s behalf. Leveraging those relationships into obtaining business loans or other growth financing comes much easier afterwards.
A More Sophisticated Approach
Fundamentally, a CFO Service provider can spend more time, more resources, and leverage more expertise, to handle a part of running your business that, while critical, many freelancers find extremely time consuming. Businesses that achieve a certain level of complexity benefit enormously from a more sophisticated approach to business finance and strategy.
For freelancers looking for a deeper, more intensive analysis of the complexities of their businesses, or for freelancers looking to optimize their time and speed up their business growth, a CFO service might be for you. While many fractional-CFO services out there explicitly target small to medium sized businesses, Noumena has a designed solution built for freelancers. Check out our CFO-Grow Service to learn more!
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