The Importance of Financial Insights for the Small Business Owner

Recently I have been talking to owners of fast growing small businesses to understand a number of things:

  1. At what point of their growth should they hire a CFO
  2. If they are small enough not to have a CFO, do they hire external help (a virtual CFO) for financial insights & decision making
  3. How deep do small business owners get into the numbers of their business
  4. In the absence of a CFO, can a software tool to some extent bridge the gap, and provide actionable insights and aid decision making?
  5. What are the top 3 financial metrics/KPIs that a small business owner should track?
  6. Are there good and affordable financial intelligence tools available to serve this segment?
  7. If such tools are available, do business owners think it is important for them to invest in them?
  8. How much would they pay for such software?

I have had interesting responses. A fellow entrepreneur was trying to get deep into numbers, and had created an impressive, if somewhat complex, reporting mechanism on excel. However, the discipline to create the reports on time was sadly lacking. Another business owner told me that he understood his business well and didn’t need tools to give him insights. He did appear to struggle with managing his monthly cash-flows though. A third business owner told me that his forte was technology, and that he had no time or interest to get into financial nitty gritties. To my argument that the business won’t run itself, he had no satisfactory answer.

One common observation was that they had not come across an affordable & simple tool. Most were expensive, complicated or just did not fit their needs.

They also opined that they wouldn’t mind paying for a financial analysis tool that could provide them insights in an easy to understand manner.

I want to hear from more people. What do you think? How would you answer the 8 questions above? Please leave your response to one or more of these questions as a comment to this post.

I might also follow this up with a larger survey. I am sure the insights will benefit us all.