Small businesses — from startup to $20 million — face challenges when it comes to hiring accounting and finance staff.

In addition to the budget-breaking cost of an in-house finance team, it’s not easy to find, train and manage the right people within the day-to-day of a growing business. Not to mention the fact that a full-time team likely wouldn’t have enough work to keep themselves busy with a business of that size. That’s why outsourcing has become popular across industries: small businesses can leverage the expertise of bookkeepers, tax preparers and planners, as well as CPAs and financial advisors, at a fraction of the cost.

The advisory role — often referred to as outsourced or fractional CFO services — fills a particularly essential need, providing business owners with a strategic partner to help make financial decisions about their short-, medium- and long-term future at a lower price-point than a full-time Chief Financial officer (which averages $229,000 per year not including vacations, bonuses and other benefits).

That’s why businesses between the $3-$20-million revenue mark consider outsourcing the position. Oftentimes these services include a la carte options such as taxes, accounting, payroll, and coding of transactions (essentially bookkeeping), depending on whether the business already has some of these functions in-house.

Three things to look for when hiring a cannabis CFO

There are a variety of ways to access outsourced or fractional financial services, whether it’s hiring an individual, using a freelance match-making service or working with a dedicated team.

1. Do they provide forward-looking advice?Cannabis companies face unique challenges. Every business could benefit from cash flow forecasting, but in cannabis, where profits are extra tight, a CFO needs to be able to help strategic planning: weighing the cost-benefit of investments, strategizing to manage overhead and boost sales, and ensure the business stays disciplined as it grows.
2. Are they involved in the industry?In an industry like cannabis, where regulatory shifts are always on the horizon, you want a CFO is staying on top of policy — both federal and local. That means they’ll have the necessary insight to help you plan with those changes in mind, as well as to think about what could happen as a result of all these shifts within your business.Beyond policy, a CFO should be able to help businesses with other industry-specific challenges, like securing merchant services for dispensaries and establishing banking relationships, which is significantly tougher for cannabis businesses to do, in light of current federal policy.
3. Do they ask strategic questions?A good CFO never tells you what to do. They get to know your business through in-depth questions, identify the non-financial drivers to monitor and improve, and then help you navigate the best path with the information that you have.

When is it time to hire a fractional cannabis CFO?

If you find your business is getting to a point where you’re making decisions but don’t understand the financial impact or don’t know what risks may be out there — especially if you’re in a growth phase — hiring a fractional CFO will help guide you on the financial side and still fit within your budget.

The cannabis industry is at an inflection point. There are so many areas where strategic planning isn’t a nice-to-have, it’s a must-have. As regulations shift, it will be essential to have a financial partner who can help businesses pivot quickly and adopt new technologies that become available to the industry as we move forward with policy progress at the federal level.