How to Become a Fractional CFO

November 16, 2022

Adam Hoeksema

The concept of a fractional CFO might not be a brand new concept, but if the search volume trend for “fractional CFO” is any indication it looks like this might be an idea whose time has come. 

This is a screenshot of the search traffic from Ahrefs over the last 7 years.  We can see a steady climb in interest, with a spike in the summer of 2022.  I am not going to speculate too much on why the recent boom in interest, but if I had to make one guess, I think it might be that employers were struggling to retain accounting and finance staff and were looking to a fractional CFO option to help fill a gap.  

Regardless, this looks like a long term trend, so I wanted to spend some time researching the industry to try to answer some key questions that I have and that I suspect others might have if you are looking to start a fractional CFO business or grow your existing practice.  

But before I get too far into what I learned, just a little bit about me.  I am the Founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors and lenders.  Although we are not fractional CFOs we operate on the edges of the industry.  Most of our clients don’t have a CFO or fractional CFO or even an accountant on staff yet, so when their potential investor or lender asks for a set of financial projections, they Google in a panic “how to create financial projections”, and they find us.  

Since we operate on the periphery of the fractional CFO industry I wanted to do my own research about the industry, and just write down what I learn for others as well. I am going to answer some questions from the perspective of a business owner that is looking for a fractional CFO and then in the second half of the article I want to focus on how you could become a fractional CFO yourself and answer some key questions surrounding that topic. 

With that out of the way, here is what I hope to cover: 

With that as a game plan let’s get started with the basics:

What is a Fractional CFO?

A fractional CFO is a part-time CFO (Chief Financial Officer) who typically has prior experience as a full time CFO and who works with multiple startups and small businesses to provide CFO services on a part-time or contract basis. 

What does a Fractional CFO do?

A part-time CFO will typically focus on high level financial planning, analysis and forecasting.  

Fractional CFO Services

Here is a list of specific services typically offered by fractional CFOs:

  • Lead capital raising efforts with investors and lenders
  • Manage cash flow
  • Budgeting and forecasting
  • Oversight for Accounting department
  • Support for a merger or acquisition

What a Fractional CFO does not do

You might expect that a CFO would handle your accounting, but that is not the case.  Typically a CFO is focused on forward looking financials, not historical financials.  So you will still need to employ a bookkeeping and a CPA or accountant to help complete your monthly bookkeeping and produce financial statements.  A CFO is not necessarily a CPA, so you should not assume that your CFO is going to be creating journal entries, completing your taxes, working with auditors on GAAP accounting, etc.  A good CFO may be able to hold their own in a discussion about GAAP accounting standards, or internal controls, but that is really the domain of a Controller or CPA.  

How much does a Fractional CFO Cost?

A fractional CFO is likely to cost your business between $5,000 and $7,000 per month according to PreferredCFO

Next you probably want to know how much work you are really getting for that cost?  

How many hours per month does a startup need a fractional CFO?

The typical startup might utilize a fractional CFO for approximately 20 hours per month.  Of course this can vary depending on the situation.  If you are in the middle of a complex acquisition, a capital raise, or the annual budget process the CFO might need to put in additional hours.  It seems that many fractional CFO firms try to place clients on retainers instead of a specific hourly rate.  As a business owner I am a fan of hourly rates instead of retainers, so if you can negotiate for an hourly rate, I think you will be better off as a business. 

How much does a fractional CFO cost per hour? 

A fractional CFO will cost a business $300 per hour on average according to Tipalti

This can certainly range based on the level of experience and size of company you have, but $300 per hour should give you a good baseline to start with. 

Why do Startups need a Fractional CFO?

Startups need a fractional CFO during the phase of the business when resources are tight and you can’t afford a full time CFO, but you need help from a strategic, experienced, financial executive.  Typically the why just comes down to budget.  If you can get a seasoned CFO by outsourcing to a part time CFO for $60,000 per year, you will see substantial savings compared to a full time CFO which should cost at least $150,000 per year plus benefits, taxes, and bonuses.  

When does a Startup need a Fractional CFO?

There are a handful of catalysts that can cause a startup to realize it is time to hire a part time CFO.  Here are some of the most common catalysts. 

Raising Capital

As a founder you are probably going to be on your own when raising angel investment or pre seed and seed rounds of investment.  Once you have raised a seed round of investment it is probably time to hire a fractional CFO because presumably at that point you have several employees, material revenue, and hopefully you are growing fast and will raise a Series A round of venture capital.  At that point you need to have some level of sophistication, and probably shouldn’t be trying to wing it as a founder on your own. 

Cash Flow Forecasting

Once you have raised some substantial capital, you need to have a pro forma financial model that you are using to manage and forecast your cash.  You need to know how long your runway is so that you know when you need to either reach cash flow positive or raise additional capital.   

Board Reporting

Once you raise investment that will probably come with a board of directors as well.  You will need to have board meetings and complete financial board reporting.  A fractional CFO with experience in board reporting can be really helpful in this stage. 


A fractional CFO can also help in the acquisition process, whether you are getting acquired, or you are acquiring another company. There are a number of complex financial considerations in an acquisition and a CFO can help create a financial model for an acquisition to help in the process of securing funding to close the deal. 

Where to Find a Fractional CFO? 

If you think it is time to find a fractional CFO for your business, there are a number of places to look. 

  1. Ask other founders - If you want honest feedback, I would recommend talking to other founders who have used a fractional CFO in the past and ask for a recommendation. 
  2. Ask your investors - If you have investors you can bet that they have a CFO that they have worked with in the past that they would love to recommend to you.  Now you might really feel pressure to take your investors advice which is why you might want to ask other founders and do your own research first. 
  3. Maybe don’t ask your CPA - Not to pick on CPAs, but if you ask your CPA firm for a suggestion on a fractional CFO, I wouldn’t be surprised if they try to pitch you on allowing the CPA firm to provide the services.  In my opinion you probably want to work with a firm or individual that has explicit experience working as a CFO and that simply isn’t the business model for most CPA firms. 
  4. Fractional CFO Marketplaces - There are many fractional CFO marketplaces where experienced CFOs will create a profile and bid on opportunities that are posted by startups and businesses on the marketplace.  A few examples are:
  1. Shiny - Fractional executives including CFOs
  2. Toptal - Freelance marketplace that caters to freelance CFOs among other talent 
  3. Paro - A marketplace that focuses on finance related positions

Ok I hope this has been helpful to startup founders who needed a quick run down on part time CFOs, I am now going to turn my attention to what it would take to start your own fractional CFO business. 

How to Start a Fractional CFO Firm?

If you have been a full time CFO or Controller for a company for some period of time, the thought has probably crossed your mind, what if I could be my own boss and work with a handful of interesting companies as a fractional CFO?  We know this is a growing trend and it has never been easier to start your own fractional CFO business.  The first step is getting your first client, so how do you do that? 

How to Find Companies that Need a Fractional CFO?

Start with your Current Employer

A common approach to starting your fractional CFO business is to talk to your current employer and let them know you want to leave to start your own thing, but that you would be willing to stay in a part time capacity.  This is probably the easiest and most common way to secure your first client. 

Startups that Raised Seed Investment

You can also approach startups that just raised a round of investment and publicly announced the raise.  What better time to connect with a client than after they announce raising a $1 million Seed round and you can offer a cost effective way to help meet the financial reporting expectations from the investors.  Your primary target is probably going to be startups that raise a seed round.  Pre seed probably can’t afford you yet, and Series A and beyond will either already have a fractional CFO or a full time CFO in place most likely. 

Fractional CFO Marketplaces

If you can’t source a full client roster from your own network and connections, then a CFO marketplace like Paro, Upwork, Toptal or Shiny could be a great way to compete for opportunities.  These marketplace platforms will attract startups and businesses to post jobs on their platform and then you will be able to submit a proposal for your services.  These can be competitive, but also a great source of potential clients.  

Work on Project Based Jobs

At ProjectionHub we help founders create financial projections for potential investors and lenders and we are often asked by our clients if we would be willing to stay on as a fractional CFO.  Since that really isn’t our business model we always decline that work, but if you are in the business of looking for ongoing retainer clients a great way to get your foot in the door is to help with a set of projections during a capital raise.  We have a number of consultants, advisors and fractional CFO using our projection template library to help provide financial modeling services to clients. 

How many Clients Should I have for my Fractional CFO Business?

The average fractional CFO will have 4 to 8 clients.  

Since most fractional CFOs will spend 5 to 10 hours per week per client you can expect to have a roster of 4 to 8 clients per CFO.  

How much can I make as a Fractional CFO?

Fractional CFOs can make between $240,00 to $480,000 per year.  

You are a fractional CFO so you understand this all depends on how many clients you have, whether you are on retainer or hourly and how many hours you work per client.  But if you take an average retainer of $5,000 per month per client and 4 to 8 clients you will get $240k to $480k per year in revenue.  We also learned that the average rate for a fractional CFO is approximately $300 per hour, so if you worked a full 2,000 hours per year, you would be looking at $600,000 in annual revenue.  

Now I probably don’t need to tell you this, but you will have some expenses to consider.  You will likely have some travel costs, marketing expenses, and commissions that you have to pay to CFO marketplaces if you acquire your customers through this avenue.  Typically the platform will charge the client an hourly rate or retainer and then pass on a bulk of that revenue to you.  So while you might be able to bill a client $300 per hour through Paro or Toptal, you might only get paid $225.  

How to Scale a Fractional CFO Business Beyond one Person? 

So let’s say you are able to start and grow your fractional CFO firm to the point where you are at your capacity.  That $600,000 in annual revenue is highly likely to be a ceiling for most fractional CFOs unless you are working with very large or specialized clients.  So you might have more potential clients than you can support on your own, how can you grow your business beyond your time.  

Selling More Than Just your Time as a Fractional CFO

In order to grow beyond just trading your time for money, many successful fractional CFO firms will productize different services.  For example, your fractional CFO firm could provide a quarterly board reporting service where your firm will take the financial statements and prepare a board presentation.  Now you don’t really need an experienced CFO to do the formatting work in Excel and Powerpoint right?  So can you sell the service for $1,000 per quarter to your clients while you personally only spend an hour reviewing the work that one of your staff accountants can put together for you?  Probably.  

We have seen fractional CFO and accounting firms use a number of our templates to create a productized service.  Some examples include:

  • Provide a budget to actual service where you help the client create a pro forma and then track actual progress using our budget to actual template
  • Model a potential acquisition of a competitor using our acquisition template
  • Create a roll up acquisition strategy and financial model to help raise private equity to implement a roll up strategy using our roll up financial model template

These are all productized services that you can provide to many clients while you simply oversee the work of a staff accountant or financial analyst that completes a bulk of the work.  

We are still learning more about creative ways our clients are using our tools. 

At the end of the day there seems to be a lot of opportunity in this new and growing trend, so if you are thinking about doing your own thing as a fractional CFO, now seems to be the time! 

We would love to hear your journey as you get started!

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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