Leana van der Merwe: Good morning to wherever our listeners are in the world today, and thank you very much for joining us for today’s CFO Club Podcast. My name is Leana van der Merwe, and I’m a technical specialist at CIBA and the CFO Club. Today, we’re very excited to talk about a vibrant, exciting topic with Sara Daw, who is the group CEO at the CFO Center. We are thrilled to welcome Sara to the CFO Club Podcast.

Sara is a business owner and the group CEO of the CFO Center and the Liberty Group, an organization operating in 17 countries. It is the global number one provider of fractional and part-time C-suite portfolio professionals to entrepreneurial, owner-managed, mid-tier businesses, and larger organizations. Today, we want to dive into the concept of the fractional CFO, which has been gaining traction, especially among small and medium entities. Sara has extensive knowledge and experience in this area from both a South African and international point of view.

Sara, welcome to the CFO Club Podcast. Thank you so much for taking the time to join us today. We’d love for you to share your initial thoughts on the fractional CFO and tell us a little more about your organization.

 

Sara Daw: Oh, thank you very much for having me. It’s great to be here and to spend some time sharing information about fractional CFOs with your listeners.

So, as you mentioned, I’m the group CEO of the CFO Center Group. We’ve been running since 2001 and have expanded the fractional CFO concept into 17 countries, including the UK, South Africa, Australia, North America, parts of Asia, and Europe. I’m also the CEO of the Liberty Group, which offers fractional C-suite services in other disciplines beyond finance, such as marketing, people, and sales. We started with CFOs, but from 2011 onwards, we realized this model could work in other areas as well. Fractional CFO is our longest-established business.

 

Leana: Wow, that’s fascinating, especially since you’ve been in South Africa since 2010. That’s 14 years! Could you explain to our listeners the concept of a fractional CFO? Many people may still not fully understand how it differs from a full-time CFO, particularly in terms of responsibilities and impact.

 

Sara: Absolutely. The term “fractional” or “part-time” CFO refers to businesses that don’t need, want, or can’t afford a full-time CFO but still recognize they need that skill set, either on an ongoing basis or for specific situations. Growing entrepreneurial organizations, for instance, often can’t afford a full-time C-suite role, and their needs wouldn’t justify a full-time CFO either. They likely wouldn’t be able to attract one because the role wouldn’t be full-time.

Back in 2001, I decided to go self-employed, offering my services as a CFO on a portfolio basis to growing organizations. I worked with between 3 to 7 clients, organizing my time so each client felt like I was their full-time CFO, even though I wasn’t. I might work one day a week with one company and two days a month with another, providing the exact time they needed without them having to pay for more.

The fractional CFO model allows these organizations to access high-level financial expertise when needed. We focus on doing the strategic and high-impact work, while also building finance teams within the businesses to manage the day-to-day tasks.

 

Leana: That really sounds like a win-win situation. The fractional CFO gets to choose their clients and schedule, and businesses that can’t yet afford a full-time CFO still get the specialized skills they need. You mentioned something on LinkedIn about the identity crisis that can come from transitioning from corporate life to portfolio work. Could you share more about that?

 

Sara: Yes, that’s a great point! When I transitioned 25 years ago, fractional CFOs were a very new concept. All my peers were in corporate roles, and it was seen as the only path. I felt a sense of inferiority initially because I didn’t have the “big brand” backing me anymore.

But over time, I realized that the value I was bringing to the businesses I worked with was far more rewarding. I was helping entrepreneurs grow their companies, and I found that incredibly fulfilling. Now, this shift is becoming more mainstream. In 2022, there were about 2,000 fractional leaders on LinkedIn. Today, there are well over 115,000. It’s a growing career choice, especially for those who want more flexibility, freedom, and variety in their work.

However, it’s not without its challenges. You need a financial runway, the ability to market yourself, and a good network. Building a client base takes time, but once you have it, it can be incredibly rewarding.

 

Leana: That’s a really important point. Transitioning to fractional work requires different skills, like networking and marketing. You also mentioned managing a portfolio of clients. How do you prioritize your time and resources to make sure each client gets what they need without becoming overcommitted?

 

Sara: It’s definitely a balancing act. The key is making sure every client feels like they’re your only client. Even though they know you have other clients, it’s about giving them the assurance that you’re available when they need you.

It’s crucial to onboard clients one at a time, allowing a few months to really understand their needs before taking on another. Communication is essential. I always let my clients know they can call me outside of scheduled hours if something comes up. It’s important to have that understanding with all clients.

And finally, I make sure to schedule downtime for reflection and planning. It’s not sustainable to move from one client to another without a break. Creating headspace between client work is key to ensuring I’m giving each client the attention they deserve.

 

Leana: That’s excellent advice. Communication and planning seem to be the foundation of success in this model. I’d also like to ask you, Sara, what are the key financial challenges that small and mid-sized companies face, and how can a fractional CFO help them overcome these?

 

Sara: Small and mid-sized businesses often struggle with getting reliable financial reports, putting the right controls in place, and maximizing profit and cash flow. These businesses don’t usually have the internal resources to address these issues.

A fractional CFO can come in and design a finance function that supports the business’s strategic goals. They can ensure the company has accurate, timely financial information to make informed decisions, and they can help the business secure the funding it needs for growth.

Fractional CFOs also bring credibility to these businesses. Investors and banks feel more confident when they know there’s a seasoned professional overseeing the financial side of things. For many entrepreneurs, having someone they can rely on for financial strategy allows them to focus on what they do best.

 

Leana: That’s very insightful. Would you say fractional CFOs also fit into larger organizations, or is it more for small and medium businesses?

 

Sara: Absolutely, fractional CFOs can also benefit large organizations. In fact, I see many group CFOs in large corporates struggling to keep up with the pressures they’re under, from digital transformation to sustainability issues. They might find themselves saying, “If only there were two of me!”

Fractional CFOs with experience in corporate roles can step in to take on specific projects, mentor new CFOs, or provide specialist skills. This allows the group CFO to focus on higher-level strategy while the fractional CFO manages the day-to-day or project-specific tasks.

 

Leana: It’s exciting to hear that this model is scalable for larger organizations too. Do you have any success stories you could share, where a fractional CFO made a significant impact on a business?

 

Sara: Yes, definitely! One early client of mine was a technology company that was turning over £10 million but had no financial reporting. I helped them identify that one of their business lines was losing money, which they hadn’t realized. We closed that stream and ramped up the other two, leading to significant growth. That business is now operating in 40 countries.

Another example is a luxury car transportation company. We were able to increase their purchase price by £5 million during a sale by getting involved in the due diligence process. That was a big win for the business owner.

 

Leana: Those are fantastic examples of the real impact a fractional CFO can have. Lastly, you’ve written a best-selling book called Strategy and Leadership as Service: How the Access Economy Meets the C-Suite. Could you tell us a bit about it?

 

Sara: Yes, the book explores the concept of psychological ownership in the context of fractional services. Essentially, it explains how fractional leaders can feel like they “belong” to the organizations they serve, even though they’re not full-time employees. It’s about building strong, intimate relationships where both the CFO and the business owner feel invested in each other’s success. The book serves as a guide for business owners and fractional leaders to make this model work effectively.

 

Leana: Thank you so much, Sara. This has been incredibly insightful. I’m sure our listeners have learned a lot about the value of fractional CFOs and how they can transform businesses. Thank you again for joining us today, and to our listeners, if you’re interested in exploring the fractional CFO model, get in touch with us at the CFO Club. We’ll be happy to assist you.

 

Sara: Thank you for having me, Leana. It’s been a pleasure.

 

Leana: Have a beautiful day, everyone!