If you’re a beauty and wellness brand focused on growing your company while maintaining healthy cash flow and profit margins, finding the right financial partner to work with you and your team will be a major key to your company’s success.

While the beauty and wellness industry can have great margins and high demand, it is also highly competitive. Any profits you make can be quickly eaten up by marketing and fulfillment costs. This is especially true as consumer demand shifts, social media marketing and advertising effectiveness decreases, and inflation continues to hold steady.

So, to get clarity on your business’s financial health, you start looking for a service provider to outsource your accounting and advise you on managing these complexities.

With the slew of financial professionals offering anything from bookkeeping to fractional CFO (or fCFO) services, it can be confusing to understand what you really need right now and who to contact. You may be wondering what fractional CFO services are and whether you need them or not.

Well, my friend, you are in the right place because I am about to demystify who you should be looking for right now.

Early Stage: “Am I looking to get to my beauty and wellness brand to the first few six figures in revenues?”

If you earn $250k or less annually, getting clear on your margins is crucial to your long-term success. Many people believe that securing grants and loans is necessary to get their business off the ground or to earn their first $100k.

They are correct: starting a business requires cash, even more so if you sell physical products.

However, if your margins are not set up correctly from the start, you’ll always end up scrambling for funds when the initial money runs out. By that point, it’ll be extremely challenging to meet the criteria of fair lenders (i.e. NOT Shopify or PayPal capital). Eventually you’ll need to close shop because not even more sales can get you out of that gut-wrenching cycle.

There are two things I recommend if you fall in this category:

Get clear on your beauty brand’s margins with a pricing analysis

First, hire a pricing strategist, freelance financial analyst, or fractional CFO to help you analyze your costs of providing goods and services and then price them for sustainable profits. You’ll want to take this information and set it up within your shopping website platform (for example, Shopify), so you can quickly pull reports that show gross profits, which is sales minus costs of goods sold, but before any other costs.

InsightFull Financials offers this pricing analysis service for beauty and wellness brands at all revenue levels, but we find that early-stage founders benefit most. It sets the stage for greater confidence and reduces the severity of future cash-crunch stress.

The bonus? You can take advantage of this whether you are pre-revenue or have been in business for some time but have yet to clean up your books.

Hire an experienced, detail-oriented bookkeeper – particularly one with beauty industry expertise

Secondly a solid bookkeeper will be of great help. You’ll want to check that they have several years of experience and have some background or training in bookkeeping and accounting.

Bonus points if they have experience with product-based businesses, but they may be out of your price range if you haven’t cracked $100k in revenues. If you’ve set up your prices correctly and pay attention to your inventory levels, you should be okay for now however.

A word of caution: I know it’s tempting to save on this by going to an accounting tech company that promises to automate 100% of your bookkeeping or high-volume, low-cost accounting firm like Bench, you’ll be missing out on the critical attention health & wellness brands need to stay competitive.

The biggest issue with these firms is they are NOT detail-oriented, even though you’d think a bookkeeping service would be. And if they mess up (which they likely will), you’ll end up paying for bookkeeping twice after the second person comes behind to clean THAT up.

For the same reason, you want to ensure that this person is not just a tax expert who also cleans books. Tax experts may not know how to optimize your books to ensure crystal-clear margins and business performance on an ongoing basis.

Taxes are important, but you must remember to never let the tax tail wag the business dog. If you get the bookkeeping piece right, finding a tax preparer is much easier because your books will already be clean and in a way that benefits YOU first and the IRS second—as it should be.

Mid-Level: “Is my beauty and wellness brand in maintenance mode looking to run my business more effectively?”

I want to stop here and also say this: maintenance mode isn’t a bad place to be. It is highly underrated and most business owners do not spend enough time here, truly maximizing their processes and preparing for the next stage. The last thing you want happening is trying to scale while your cash, profits, and processes aren’t under control.

Upgrade to a beauty & wellness specialized accountant

If you’ve already achieved multiple six figures annually (roughly $250k to $1M) but you still aren’t seeing the profits and cash flow you’d like, you’ll need to upgrade your bookkeeper or accountant to one that specializes in the beauty & wellness industry and/or specializes in product-based businesses.

This is not optional if you’re serious about financial sustainability.

This is important because in order to get reports and guidance that help you determine how and where to optimize, the accountant needs to be aware of industry quirks, know how to code transactions correctly and book more complex entries to support higher-level analysis of your business.

Bonus if they can help you generate service or SKU-level sales reports, which is key in 1) correctly calculating margins and 2) inventory management. Ask any prospective bookkeeper or accountant if they offer this specifically.

The good news is we accept a limited number of brand owners looking for ongoing, specialized accounting support. This is to ensure we are able to service all monthly accounting clients with a high level of care and attention to detail. If you’re interested in this, inquire here.

If you’re looking to maintain your business at the current revenue level, hiring a fractional CFO on an ongoing basis may not be the best move just yet, especially if you don’t have a large budget for accounting services. It’s not that this service isn’t useful but it may be overkill. Quality services start at $2,500 per month at the very low end and up to $10,000+ per month. This is JUST for the fractional CFO piece… oftentimes there is no accounting performed.

Revisit your margins and optimize your inventory strategy

And frankly, unless you are approaching $1M in revenues, you likely don’t need monthly fractional CFO work – so don’t pay monthly fractional CFO prices when you aren’t even going to get the work. Fractional CFO work is designed to help you scale, manage external parties like investors or large lenders, coach, provide executive-level accountability to higher-level team members, and more.

Secondly, I want to caution you that many are offering fractional CFO services at fractional CFO prices, but they aren’t providing CFO level work.

Next, I recommend a couple of other things in addition to the specialized bookkeeper or accountant.

One is to revisit your pricing and cost of goods sold to ensure the margins are still there to support healthy cash flow. Similar to the early-stage brands, you can hire a financial analyst or fractional CFO on a project basis to do a pricing & margins tune-up. I also highly recommend you have them create and train you how to use a simple cash flow forecasting tool for you and your bookkeeper to manage on a weekly or monthly basis.

We offer both margin tune-ups and cash flow forecasting here at InsightFull Financials.

Second, you may want to consider hiring an inventory strategist or analyst. This person can come in and help optimize your backend to pull more robust inventory reports and/or help you analyze your inventory turnover. This helps you do the following:

Make better purchasing decisions so your cash isn’t locked up in slow-moving stock,
Determine WHEN to restock best sellers, and
WHEN and by HOW MUCH to liquidate old inventory

Once you’ve worked with these professionals, you should start seeing some traction in the form of improved margins and fewer cash crunches.

Advanced: “Am I looking to scale my beauty and wellness brand beyond $5M annually and/or get outside funding?”

If you’re generating around $2M+ annually -OR- you ARE close to the $1M mark and are looking to scale your beauty and wellness brand into a multi-million dollar brand, then you’ll want to start looking into a fractional CFO.

Your best bet is to find one that specializes in the beauty and wellness industry and/or has experience with product-based businesses as InsightFull Financials does.

Some fractional CFOs also offer accounting services, so it’s possible for you to bundle both accounting and CFO work under one firm. Other fractional CFOs only perform CFO work, and you’ll need to have an in-house or outsourced accountant in place. Alternatively, they may be able to help you place this accountant, so don’t be afraid to ask.

Why fractional CFOs (fCFOs) are critical to your success in the beauty and wellness industry

Why does this happen? Well, traditionally, accounting and finance are two different functions in most large corporations. Accounting is compliance- and past-focused and finance is strategy- and future-focused. However, great financial advisory depends on great accounting work being completed. So many accountants have moved into the finance space, but the reverse (finance experts becoming accounting experts) tends not to happen.

Here are some of the top things a fractional CFO can help you with:

Longer-term cash flow forecasting

Cash flow becomes as complex as your organization does. Getting a handle on long-term cash flow forecasting is the secret to building a resilient beauty brand.

Some common reasons for cash flow complexity are if you are a product-based brand purchasing large amounts of inventory well in advance – particularly if you are manufacturing your own goods — and/or you have wholesale clients on net terms. This also helps you make sustainable decisions before making high-level decisions with long-term financial impact like:

Anticipating and plugging gaps in cash flow ahead of time
When and what funds to purchase inventory with
Hiring people full-time
Getting into a long-term warehouse/storefront lease or purchasing property
Comparing options between in-house or outsourced fulfillment
Which type of financing you need and when to use it
And much more

Multi-year financial modeling

Modeling is key in larger companies because the results achieved five years into the future as a million-dollar beauty and wellness band need to be worked toward NOW. Financial modeling helps you:

Manage future profitability and cash flow,
Better predict sales using marketing metrics and historical data in order to better plan larger inventory purchases (thus getting additional bulk savings)
Uncover additional sales and cost-savings opportunities
Initiate conversations with and secure funding through larger investors and lenders.
Optimize your business value in preparation for IPO or exit through sale.
And much more.

Strategic goal setting and monitoring

Fractional CFOs work with you and your team to set quarterly, annual, and multi-year strategic goals and set checkpoints to provide executive-level accountability. This can show up in many ways:

Spearheading and co-hosting annual and quarterly company strategic meetings with you, sales leaders, marketing leaders, and operations leaders.
Directly overseeing your accountants and driving accounting policy and accounting close process
Collaborating with your tax expert for tax planning purposes

Executive accountability, coaching, and perspective

Additional perspective and coaching on how to be a better-informed and effective founder and CEO. Having an executive-level financial expert on your team who has seen multiple businesses like yours provides you with a robust sounding board and training ground from which to strengthen your business acumen and decision-making ability. The best fractional CFOs don’t tell you what to do but coach you on HOW to think.

At InsightFull Financials, we pride ourselves on serving our beauty and wellness clients in a fractional CFO capacity using our unique Finance Beauty Rx System.

So there you have it: a comprehensive guide on which experts to hire for your beauty and wellness brand if you want additional clarity.

Key Takeaways About Hiring a Financial Professional to Help Grow Your Beauty Brand

If you are an early-stage beauty and wellness brand: hire a pricing expert or fractional CFO on a one-time basis to get clear on your margins AND a solid bookkeeper to manage your financials on an ongoing basis.

If you are a mid-level beauty and wellness brand: upgrade to an industry-specific or product-based accountant to support relevant and effective reporting and revisit your pricing and inventory strategy for profit and cash flow optimization.

If you are an advanced beauty and wellness start-up, add a fractional CFO to your team for long-term strategy and financial management, executive accountability, and preparing your business for larger funding or exit.

Want to learn more about how we can serve you? Need a Beauty Finance Rx Financial Health Assessment to determine the next best steps for you? Book a consultation call with us today!

About the Author and InsightFull Financials

Valerie Mondesir, CPA is the owner of InsightFull Financials, which offers financial advisory services and ongoing accounting support for beauty and wellness brands using a unique Beauty Finance Prescription System. Valerie has 17 years of experience in accounting and finance roles ranging from clerk to finance executive in various industries. The last four years of her professional career have been dedicated to serving entrepreneurs in the beauty and wellness space.