Small businesses often feel the pressure to hire high-level financial talent as they grow. The title "CFO" carries prestige, implying that your company has "made it" and now merits strategic financial oversight. However, many small businesses don’t need a full-time CFO. What they often do need is better accounting, reporting, and financial insights—something that’s more about improving the foundation than hiring someone to sit in the executive chair.

Here’s why most small businesses are shopping for the wrong thing when they think they need a CFO and how good accounting and FP&A (financial planning and analysis) work might solve the real problem.

1. Do You Really Need a CFO?

Small businesses typically don’t require the high-level strategic work that a full-time CFO performs, such as:

• Long-term fundraising strategy

• M&A transaction support

• Complex financial modeling for stakeholders

Instead, most small businesses need someone to ensure their day-to-day finances are clean, organized, and insightful. If you’re struggling with understanding profitability, managing cash flow, or making decisions based on financial data, your real need is for:

• Accurate bookkeeping

• Streamlined reporting

• Actionable financial insights

Hiring a CFO to solve these problems often results in overpaying for a role that spends most of its time cleaning up the basics.

2. FP&A Is the Missing Link (But It’s Misunderstood)

When businesses think about improving their financial operations, they often jump straight to the idea of hiring someone for "financial planning and analysis" (FP&A). However, FP&A is misunderstood. Most people think it involves complex forecasting, market analysis, and dashboards galore. While that’s part of it, the best FP&A work for small businesses actually comes from building on strong accounting practices.

FP&A at its core should answer:

• Where is the business today?

• Where is it going?

• What needs to change to get there?

These questions can’t be answered without clean, accurate financial data—a product of good accounting.

3. Good FP&A Is Really Just Great Accounting Plus Insight

Here’s the truth: most of what people think of as FP&A is just great accounting with a layer of analysis. Let’s break it down:

1. Great Accounting:

• Accurate accrual-based financials

• Regular reconciliations

• Clear categorizations of revenue and expenses

Without accurate financial data, your FP&A work will be riddled with errors. Garbage in, garbage out.

2. Basic Financial Analysis:

• Recognizing trends in key metrics (e.g., margins, expenses)

• Evaluating cash flow to avoid bottlenecks

• Identifying areas to cut costs or invest

This level of insight can often be achieved by leveraging your existing accounting system with basic tools like Excel or QuickBooks reports.

3. Strategic Manipulation and Insights:

Once the basics are done, good FP&A is about pulling together existing financial data to make better decisions. For example:

• Adjusting forecasts based on historical performance trends

• Creating what-if scenarios to evaluate opportunities

• Highlighting metrics that are critical to your specific business model

This is not "rocket science" work requiring a CFO—it’s an extension of accounting combined with a strategic mindset.

4. The Cost of Hiring the Wrong Role

Hiring a CFO prematurely can be a costly mistake for a small business. You’re likely to spend six figures on someone who spends their time cleaning up data and performing tasks that a well-structured accounting team could handle.

Instead, focus on the foundational work:

• Invest in better bookkeeping and processes.

• Leverage fractional or project-based FP&A support to build forecasting and insights.

• Use accounting tools and technology to generate better reports.

This approach ensures that you’re solving the real problem—not just adding an expensive title to your team.

5. Start With the Basics, Build for the Future

Small businesses thrive when their financial foundation is rock-solid. Before you shop for a CFO, ask yourself:

• Is my accounting system clean and reliable?

• Do I know my P&L and cash flow inside and out?

• Can I make decisions based on the financial information I currently have?

If the answer is "no," focus on building great accounting practices and layering on FP&A work as needed.

Conclusion: Don’t Shop for Prestige, Shop for Practicality

Most small businesses don’t need a CFO—they need clarity, insights, and better financial management. Instead of focusing on titles, focus on the work: clean accounting, insightful FP&A, and actionable reporting.

By solving the foundational issues first, you’ll position your business for long-term financial success without over-investing in roles you don’t need. In the end, the right solution is often more practical—and far less expensive—than you think.