If launching a successful startup is like climbing a mountain, then scaling your business is when things get a little steeper and more treacherous. For first-time founders, it can be daunting to tackle that ascent alone — especially when cash management, forecasting, and investor relations become complex, nuanced, and critical for growth.
But as any novice mountain climber will tell you, navigating your way to the top is made easier with an experienced guide by your side. A Chief Financial Officer (CFO) can act as your Sherpa, plotting a path over difficult terrain and helping you avoid potential pitfalls.
However, not every startup has the resources to hire a full-time CFO, which is why fractional CFOs have become a popular alternative. You get all the experience of a salaried CFO for a fraction of the time (and a fraction of the cost). Win-win.
In this article, we draw you a roadmap for how to find a fractional CFO, including where to look, what to ask, and how to structure the engagement.
As the name suggests, a fractional CFO is a part-time appointment who splits their time (into “fractions”) across several clients. They’re typically contractors or consultants working in a strategic, project-based role, as opposed to employees with a broad remit.
While the lines are a little blurry when it comes to fractional and part-time CFOs (and titles and tasks often overlap), they can be broken down into two distinct roles:
Sometimes, the need for expert financial guidance is right there in black and white. Other times, you’ll feel it in your gut. Either way, if the following scenarios are familiar to you, it might be time to hire a fractional CFO.
Want to read more? We delve a bit deeper into this topic here: When do you need a CFO?
Drawing up a shortlist of potential CFO candidates should always start with recommendations from your network.
Of course, if you want to broaden your search further, you can also look at the following options:
Positioning oneself as a “fractional” CFO is a relatively recent phenomenon. Especially after the pandemic, with the rise of remote and hybrid working.
However, simply Googling “fractional CFO” is too broad and will leave you with thousands of results to sift through. Instead, narrow your search to include your niche or industry.
Searching for, say, a “SaaS fractional CFO,” will return candidates who understand the intricacies of the role (i.e., being available for a fraction of the time and cost to oversee a specific challenge or project) and the challenges of scaling in your industry.
Many freelance fractional CFOs also have their own websites, portfolios, and testimonials to help you whittle down your choices.
Instead of posting to LinkedIn and asking for recommendations, turn to the search bar and compile a list of worthy candidates yourself.
Type “fractional CFO” and then click on “All filters” to tweak your search to meet your requirements. Add industry-specific keywords like “SaaS” or “manufacturing” along with the services you need help with, like “fundraising” or “forecasting”. You can also filter by location, school, and language.
Pro tip: Add 1st and 2nd-degree connections to make breaking the ice easier.
There are several online platforms and marketplaces bursting with CFO talent . The following websites list fractional CFOs, complete with ratings and reviews is just a starting point for your research:
If you’d prefer to take the stress out of searching, you could outsource to a company that provides fractional CFO services. Firms like CFO Hub, CFO Share, and Preferred CFO offer ready-made finance teams as a cost-effective alternative to hiring an in-house candidate.
Listening to your favourite startup podcasts or attending online or in-person events can introduce you to various fractional-friendly CFOs. This can give you an idea of their experience, expertise, and values before you’ve even engaged with them.
Once you’ve narrowed down your shortlist to a few preferred candidates, there are several questions you should consider asking to make sure your fractional CFO is the right fit.
1. How much experience do you have as a fractional CFO? Not every CFO has worked “fractionally”, and if they’re new to juggling several clients and projects at the same time, it could result in delays or missed deadlines. Ideally, look for someone who can point to several successful fractional CFO projects.
2. Are you a full-time fractional CFO, or are your fractional services a side hustle? Similar to the above, you’ll want to ensure the candidate can dedicate enough time to your project. If they offer their services on the side of a full-time career, your business may not get the attention and outcome it deserves.
3. Do you have experience in our niche or industry? While CFO skills can be applied to various sectors, specific industry experience can be a huge advantage. For example, if you’re an e-commerce startup, working with a CFO who’s previously scaled e-commerce businesses can help you avoid errors and grow faster.
4. Do you have a background with various funding stages? Each stage of growth, from seed to Series B and beyond, comes with its own challenges, expectations, and decisions. An experienced fractional CFO can step in at any stage to manage cash burn, build scalable systems for growth, and prepare for further fundraising.
5. Do you have knowledge of our systems and tools? Understanding your business’s financial tech stack can help simplify reporting, forecasting, and decision-making from day one. This means your fractional CFO can access the numbers and data they need to deliver insights and results, without an initial learning curve.
Hiring a fractional CFO can range anywhere from £150/hour to project work which could start from £10,000, depending on the scope of work, expected outcomes, and where you’re hiring (London vs the rest of the UK). This is still significantly less than hiring a full-time CFO, which can run to £150,000 to £200,000 a year (before benefits, bonuses, and equity).
So, when it comes to calculating costs, the first thing to decide is how you want to structure the engagement. Here are some of the pricing models used by fractional CFOs, the best fit for each, and the associated fees:
*Note that high-profile projects or the need for specialisms, such as mergers, acquisitions, or exits, may command higher fees.
Working with a fractional CFO can move the needle with strategic financial knowledge and expertise, helping you pursue growth without the high costs of a full-time hire.
However, while a CFO can give you insight, you still need oversight. Our award-winning cash savings platform gives you — and your incoming CFO — clarity and control as you scale.
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