Financial literacy is crucial to business success. Far from being just a popular term, it serves as the critical foundation for establishing and sustaining a profitable business. Despite its importance, a recent Xero survey of 1,201 self-employed small business owners in the U.S. reveals that many still struggle and need the expert support of a CFO.
The Numbers Don’t Lie
According to the survey, 50 percent of small business owners are facing financial challenges, largely due to limited financial literacy. This includes everything from managing cash flow to understanding tax strategies.
18 percent are unsure how to optimize tax strategies.
16 percent struggle to implement and maintain budgets.
16 percent find it difficult to interpret financial metrics.
16 percent don’t have effective cash flow management in place.
Even more concerning, while 55 percent of respondents rated their financial literacy as “high,” only 38 percent have an emergency reserve fund, and 13 percent don’t have any plan for unexpected expenses.
Why You Need a Fractional or Outsourced CFO
The survey also revealed that 39 percent of small business owners handle their finances independently. While this may seem cost-effective, it often leaves them without the strategic insights that come from working with a Chief Financial Officer (CFO) or financial advisor. A CFO can help small businesses tackle key challenges such as:
Tax optimization
Cash flow management
Budgeting
Financial forecasting
Yet, only 16 percent of respondents currently use an accountant or advisor. This gap means many business owners are missing out on opportunities for growth, efficiency, and resilience.
The Power of Expertise
Financial challenges, particularly cash flow issues, are common among small businesses. In fact, 60 percent of business owners report experiencing frequent or occasional cash flow problems since starting their ventures.
A CFO can provide the expertise needed to solve these issues by creating tailored financial strategies that align with your business goals. From ensuring you have an emergency reserve fund to managing day-to-day expenses, working with a financial expert helps prevent common pitfalls.
The Generational Divide
The survey highlighted a notable generational gap when it comes to financial literacy. Younger business owners, in particular, are struggling more:
60 percent of Gen Z and 59 percent of Millennials report financial challenges due to limited financial knowledge.
Only 22 percent of Boomers face the same issues.
Moreover, 23 percent of Gen Z business owners don’t have an emergency financial backup plan, compared to just 5 percent of Boomers.
For these younger entrepreneurs, partnering with a CFO can be especially valuable. As many start their businesses as side gigs—67 percent of Gen Z and 69 percent of Millennials compared to less than half of Boomers—transitioning to full-time entrepreneurship can be daunting. A CFO can ease this transition, helping business owners move from side hustle to sustainable enterprise without risking personal savings.
Why It Matters
As Ben Richmond, Managing Director, North America at Xero, says, “Financial literacy is vital for the health and growth of small businesses, as it empowers owners to make informed decisions and navigate complex external and internal landscapes.”
In short, having a CFO onboard can transform your business by providing expert insights, helping you avoid financial missteps, and setting your company on the path to long-term success. Instead of going it alone, consider the value of professional financial support — from navigating tax laws to helping you build a solid financial foundation.
By working with an outsourced CFO, you’re not just maintaining your business; you’re giving it the strategic tools to thrive.
If you are a business owner or CEO within the San Francisco Bay Area and Silicon Valley, in need of an experienced fractional or outsourced CFO to help your company control costs, increase profit margins, improve cash flow as well as identify strategic growth opportunities, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.
Comments