To navigate the current financial landscape, more small and mid-sized businesses in Ottawa are looking to fractional CFOs as a potential solution.
To navigate the current financial landscape and the rising cost of doing business, an increasing number of small and mid-sized businesses in Ottawa are looking to fractional CFOs as a potential solution.
Laura Gray is the regional director for Ottawa, Eastern Ontario and Gatineau at The CFO Centre, a global company that has been in business since 2001 and is now one of the world’s largest providers of fractional CFO services. “Our client base is growing rapidly,” Gray told OBJ recently.
According to Gray, who joined the company a year ago when it hired its first Eastern Ontario regional director after operating in the nation’s capital for 12 years, interest in fractional CFOs is on the rise in Ottawa.
“Since I was put in this role, we’ve been growing (our client base) by 10 to 15 per cent every month,” she said. “It’s a little bit labile, but there hasn’t been any stagnation.”
Part of Gray’s role is to network and find clients who could benefit from the fractional CFO model. She said an overall increase in awareness locally is “unequivocally” at the centre of the upwards trend.
“We’ve had clients in Ottawa before, so it’s not as if this is the first time,” she said. “Because I’m here and developing those partnerships, my face is here doing all the business development and people are getting to know the business.”
The CFO Centre, which currently has three CFOs based in Eastern Ontario, caters primarily to small and mid-sized businesses rather than startups tight on cash. Locally, Gray said most of their clients are in tech — cleantech, medtech, SaaS — as well as manufacturing, construction and real estate. They also have clients in media, virtual reality and artificial intelligence.
In Ottawa, Gray said many of the businesses who approach them are looking at mergers and acquisitions, or seeking support raising capital to fund their next stage of growth. Others come to them when they’re in distress.
“We get businesses that manage to get to that point (of raising millions in revenue), before contacting us to say, ‘Oh my goodness, we need a fractional CFO,’” she said. “They manage to get hot and be very profitable without having a CFO in place. So when we come in, it’s going to pause any kind of stagnation that they’ve had. We’re going to mitigate that and get them to the next phase.”
What is a fractional CFO?
With budgets tight, especially for startups and small to mid-size businesses, the fractional CFO model allows companies to bring in an experienced professional on a contract or part-time basis, versus having someone in-house full-time.
Fractional CFOs tend to work with multiple companies at once, and the amount of time they dedicate to each client varies based on the business’s needs.
“As CFOs, we’re completely passionate about small and medium-sized businesses,” said Sylvie Le Bouthillier, one of the local CFOs with The CFO Centre who works with businesses in Ottawa and Eastern Ontario, as well as across the river in Quebec. “We want to feel that relationship. We don’t want to be labelled as consultants, because we’re not consultants. We’re a business partner. They view us as one of theirs.”
While some fractional CFO service providers work with startups, The CFO Centre clients tend to be at a growth stage where they’re no longer able to manage on their own.
“I want to make sure the business isn’t going in every direction and, at the end of the day, we’re growing,” Le Bouthillier said, laughing. “That’s one of my jobs, to keep them on track. We want the creative juices flowing, but we’re the rational brain behind that to make sure they’re making good, funded business decisions.”
Since the pandemic, the concept of fractional CFOs has become more popular with clients, said Jeff Stoss, vice-president of consulting solutions at Consero Global, which offers CFO services to clients internationally, including in Ottawa. Consero bought Ottawa-based Positive Venture Group in 2021.
“During (the pandemic), we had companies potentially closing their doors or laying off all their staff while trying to navigate all these government programs,” he said. “Then we went to a world where money had been sitting on the fence for a little while, then all of a sudden put to work; larger financing rounds, really high valuations, all of these conditions.”
In such a rapidly changing landscape, Stoss said fractional CFOs offered an experienced guiding hand.
“It’s the year of the CFO,” he said. “Everybody was being asked to stretch their cash flows. Having a finance partner that can help you model different scenarios, look at different strategies for stretching your runway, make tough calls on staffing decisions . . . it’s been an interesting few years for CFOs being able to help companies in all those areas.”
For companies in growth stage, Stoss said having the support of a CFO can also mitigate risk and provide reassurance to potential investors.
“We really don’t believe there’s a need for a full-time CFO until after you’ve raised your series B,” he said. “Until then, (with a fractional CFO) the company gets the benefits of having an experienced CFO that knows how to navigate raising equity, financing and finding the right funding partners. We bring large company experience to them and make it available based on their needs.”
For many companies, Stoss predicts challenges ahead when it comes to hiring a full-time financial officer, as competition for top candidates is fierce. In those cases, he said fractional CFOs can also be an effective temporary solution.
“What I’m finding in these recruitment processes is that it’s taking quite a lot longer,” he said. “In one instance, a company brought us in for a three- to six-month assignment and we ended up helping them for over nine months.”
When a CFO retires or quits, he said a fractional CFO can take up the role in the interim.
“It makes it a bit easier to eventually recruit,” he said. “It can be daunting for a CFO to show up, knowing there has been a vacancy for six months. (It’s better if) there’s another CFO they can speak to in a transition capacity.” 
