As someone who has spent a few years in the world of accounting and finance, one thing is clear: every business, regardless of size, needs the financial discipline and strategic foresight that a CFO brings. The catch, however, is that not every business can afford to hire one.
As Warren Buffet once remarked, “Accounting is the language of business.” But hiring a CFO to interpret that language often comes at a cost that small and growing businesses in India find hard to justify.
So, the real question is: Can small businesses afford a CFO? And if not, what are the practical alternatives that still deliver the same value?
Why small businesses struggle with a full-time CFO ?
Hiring a CFO is a significant investment.
- High cost: A seasoned CFO in India can demand anywhere between ₹40-60 lakhs annually, not including bonuses and benefits. For a business clocking ₹10-20 crore turnover, that’s a major expense.
- Mismatch in needs: Early-stage businesses don’t always need 50 hours of CFO involvement every week. They may only need guidance during key moments, like fundraising, expansion, or cash flow management.
- Perception vs reality: Many founders see CFOs as “nice-to-have” until they’re stuck with delayed receivables, thin margins, or compliance penalties.
As one mid-sized SME owner (I don’t remember the name) once said: “We don’t need a Rolls Royce when a Maruti can get us to the same destination, at least for now.”
Alternatives that work for Indian businesses
The good news is that today’s business landscape offers multiple options to get CFO-level insights without burning a hole in the balance sheet.
- Virtual CFOs (vCFOs)
A vCFO is an experienced finance professional or firm that works on a retainer basis, offering the same strategic advice as a full-time CFO, but only when required.
I personally know a SaaS startup in Bengaluru that recently brought in a vCFO for 15 hours a month. The company got investor-ready financial models, cash burn tracking, and compliance checks - all for less than one-tenth of a CFO’s package.
This model works well for startups and SMEs that need brains, not necessarily bandwidth.
- Fractional CFO services
Unlike vCFOs, fractional CFOs act almost like an internal finance head but only dedicate a “fraction” of their time to your business.
This is ideal for companies preparing for a big milestone - fundraising, mergers, global expansion, and IPO readiness. Their focused input during these transitions can change the trajectory of a business.
As Benjamin Franklin rightly put it: “An investment in knowledge pays the best interest.” Hiring a fractional CFO is one such investment.
- Outsourced finance teams
Many small businesses outsource their entire finance function, from bookkeeping and payroll to MIS reporting and analytics. With cloud-based software like TallyPrime, this setup ensures accuracy and compliance without the overhead of a large in-house team.
- Upskilling accountants + External advisors
Sometimes the solution is not replacing but upgrading. A competent accountant with training in financial planning and analytics, coupled with quarterly advisory sessions from an external consultant, can bridge 70-80% of the CFO gap.
For SMEs that don’t plan rapid fundraising but want stronger controls and sharper insights, this is the most cost-effective path.
Which model fits best?
- Early-stage / bootstrapped startups: Upgraded accountants + outsourced finance support.
- Growth-stage / VC-backed businesses: vCFOs or fractional CFOs for strategic decision-making.
- Established SMEs with steady revenues: Outsourced finance with periodic advisory.
My final cents
Not every small business can afford a full-time CFO, but every business needs what a CFO delivers: clarity on numbers, foresight on cash flow, and discipline in financial decision-making.
The answer lies in flexible models - virtual, fractional, outsourced, or hybrid, that bring top-tier financial expertise within reach of Indian businesses.
After all, as the old saying goes: “Revenue is vanity, profit is sanity, but cash flow is reality.” And no matter your stage of business, having the right financial partner, even part-time, can make all the difference.
