The dilemma of picking the right sized ‘truck’ for your business.

I want you to imagine you are running a small/medium widget business and need to move some cargo.

Let’s say that your cargo requirements vary from month to month. Let’s also say that whilst your cargo volumes are relatively modest at present, you aspire for your company to ‘one day’ be making and moving much more.

Now remember, you’re a widget maker not a truck expert, so, you need to research trucks. For a start, there are so many types it’s overwhelming; tipper trucks, refrigerated trucks, tanker trucks and general freight trucks.

You chose the one that is fit for purpose for the widget industry.

The little truck is cheapest and will fit most of your cargo, most of the time.

The medium truck will fit all your cargo for now plus some, but you will probably outgrow it (you hope) in the next few years.

The big truck makes a statement. It tells everyone you have ‘made it’. It will fit all your cargo needs when you have ‘made it’, but until then it would only be carrying around a few pallets. Buying the ‘Big Dog’ truck now, will also most likely send you broke.

The dilemma is:  Which truck do you need now? Which one will you need ‘one day’ in the future? Which one would you like?  Which one can you actually afford?

The cost of driving around in an under-utilised or half full truck are significant. That is just wasted money. The costs and disruption of selling your old trucks and buying new ones as your needs go up and down are also significant. Also, the costs of leaving cargo behind because it does not fit might lose you a customer, so the lifetime cost of that could be huge as well.

Now let’s use this same analogy and say each of these 3 trucks is a Chief Financial Officer (CFO).

It’s the same dilemma, you’re a widget-maker, not a CFO expert.

A virtual CFO is like having the flexibility of being able to put your cargo pallets onto the right truck, as and when you need to and being able to depend on them to deliver the goods on time. You can see from above, that it is much more efficient than trying to run your own truck and much less hassle.

Sure, one day when your business becomes reliable, predictable and sustainable you might decide to invest in your own fit for purpose truck, but until then you are much better off focusing on your clients needs and growing your business to reach that scale.

And when you reach that scale, you might need to invest in a full-time internal CFO also.


This article was written by David Dillon, who is the President of the Virtual CFO Association.

The Virtual CFO Association is an elite peer network, advocating and promoting the emerging Virtual CFO sector within the accounting profession. Collectively the association currently has almost 600 years of industry experience, with highly qualified and experienced specialists spread across more than 20 industry verticals.