CFO vs Fractional CFO: Which Does Your Business Need?

At some point, growing businesses face a question: do we need a CFO? And if so, should we hire one full-time or bring in a fractional CFO?

The answer depends on your stage, needs, and resources. This guide breaks down both options to help you make the right decision for your business.

What Does a CFO Actually Do?

Before comparing models, let's define the role. A CFO provides strategic financial leadership—not bookkeeping or basic accounting, but forward-looking financial strategy:

• Financial planning and analysis: Forecasting, budgeting, scenario modeling
• Cash management: Ensuring the company has the cash it needs, when it needs it
• Capital strategy: Determining how to fund growth—debt, equity, or internally generated cash
• Performance management: KPIs, dashboards, and metrics that drive decisions
• Risk management: Identifying and mitigating financial risks
• Strategic support: Providing financial perspective on business decisions
• Stakeholder communication: Board reporting, investor relations, lender management

A good CFO is a strategic partner to the CEO, not just a financial technician. They help make better decisions about growth, investment, and risk.

Full-Time CFO: The Traditional Model

The Investment

A full-time CFO is a significant investment:

• Base salary: $200,000-$400,000+ depending on company size and location
• Bonus: Typically 25-50% of base
• Equity: Often 1-3% for growth companies
• Benefits: Health insurance, retirement, etc.

All in, a full-time CFO costs $300,000-$500,000+ annually, plus equity dilution.

When It Makes Sense

A full-time CFO is justified when:

• Revenue exceeds $50M+: The complexity justifies dedicated leadership
• You're preparing for IPO: Public company readiness requires full-time attention
• Highly complex operations: Multiple business units, international operations, or complex financial structures
• You need constant availability: Fast-moving situations requiring daily strategic finance engagement
• Building an internal finance team: Someone needs to lead, hire, and develop the team

The Risks

Hiring full-time too early creates problems:

• Underutilization: Not enough CFO-level work to keep them engaged
• Overqualified for daily tasks: Expensive resource doing routine work
• High fixed cost: Difficult to scale down if circumstances change
• Opportunity cost: Capital that could fund growth goes to overhead

Fractional CFO: The Flexible Alternative

The Investment

Fractional CFO arrangements vary, but typical structures include:

• Monthly retainer: $3,000-$10,000/month for ongoing engagement
• Project-based: Fixed fee for specific initiatives (fundraising, M&A, etc.)
• Hourly: $200-$500/hour for as-needed support

For most growing companies, a fractional CFO costs $50,000-$100,000 annually—a fraction of full-time cost—while delivering senior expertise.

When It Makes Sense

A fractional CFO fits when:

• Revenue is $2M-$50M: You need CFO expertise but can't justify full-time
• Needs are episodic: Heavy finance work around fundraising or transactions, lighter otherwise
• Cash is constrained: Every dollar of overhead matters
• You need expertise now: Can't wait 3-6 months for an executive search
• Specific initiatives: M&A, fundraising, or turnarounds that need experienced hands

The Benefits

• Senior expertise at fractional cost: Get $400K talent for $80K
• Flexibility: Scale up for intensive periods, scale down when stable
• Breadth of experience: Someone who's seen many companies brings broader perspective
• Fast engagement: Start in days, not months
• No equity dilution: Cash expense only, no ownership given up

The Limitations

• Not always available: They have other clients, may not be reachable instantly
• Limited internal presence: Can't attend every meeting or embed fully in the team
• Divided attention: Their focus is shared across clients
• May not build team: Less suited to developing an internal finance function

Decision Framework

Use this framework to decide:

Choose Fractional If:

• Annual revenue under $30M
• CFO work is 10-20 hours/week, not 40+
• You have a good bookkeeper/controller handling operations
• Cash efficiency is critical
• You need to start immediately

Choose Full-Time If:

• Annual revenue over $50M (or complex business at lower revenue)
• Daily strategic finance needs
• Building a finance team from scratch
• Preparing for IPO or major transaction
• Board or investors require it

The Middle Ground

Many companies use a fractional CFO as a bridge. They start with fractional support, and when they've grown enough to justify full-time, the fractional CFO helps define the role and recruit the replacement.

This approach gives you senior expertise during the critical growth phase without committing to overhead prematurely.

Questions to Ask

When evaluating either option, ask:

• What specific problems are we trying to solve? Make sure you're hiring for real needs, not prestige.
• How many hours of CFO-level work do we have weekly? Be honest about the actual workload.
• What's our runway? Don't add fixed costs that accelerate burn without clear ROI.
• What's the experience we need? Industry expertise? M&A experience? Fundraising track record?
• How fast do we need to move? Full-time searches take 3-6 months; fractional can start in weeks.

How ThriveStart Fits

We provide fractional CFO services designed for growing companies. Our approach:

• Senior expertise: Experienced professionals, not junior staff
• Flexible engagement: Monthly retainer that scales with your needs
• M&A capability: Deep transaction experience when you need it
• Practical focus: Actionable tools and insights, not theoretical frameworks

We're honest about fit. If you need a full-time CFO, we'll tell you—and help you find one. If fractional makes sense, we'll show you why and how it works.