Small and medium-sized enterprises play an important role in economic growth, employment and innovation. Across the UAE and the wider Middle East, many SMEs have been built by entrepreneurs who identified an opportunity, understood their market and were prepared to take the risks required to establish and grow a business.
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The challenge often comes at the next stage.
A business that has been successfully managed by its founder can reach a point where the size and complexity of the organisation begin to demand a different approach. The owner may still be involved in sales, operations, people, banking and major commercial decisions, while at the same time trying to plan for future growth.
This model can become difficult to sustain.
As an SME expands, management needs a clearer view of profitability, cash flow, working capital, funding requirements and business performance. It becomes increasingly important to understand which customers, products or business lines are generating the best returns and where resources should be allocated.
Good financial information therefore becomes much more than an accounting requirement. It becomes part of how the business is managed.
This is also where experienced financial leadership can add significant value.
The role of a CFO in an SME should extend well beyond preparing budgets, reviewing accounts or dealing with auditors and banks. A good CFO works closely with the owner and management team, understands the commercial priorities of the business and helps bring financial discipline into day-to-day and strategic decision-making.
Cash management is one of the most important examples
Many growing businesses appear profitable but remain under pressure because cash is tied up in receivables, inventory or expansion. Growth itself can create funding requirements that are sometimes underestimated. Having a forward looking view of cash flow enables owners to anticipate pressure points rather than reacting to them when they arise.
The same principle applies to major business decisions.
An entrepreneur may be considering a new market, additional employees, a larger facility, a new product line or an acquisition. These opportunities may make commercial sense, but they also need to be evaluated against the financial capacity of the business.
The CFO can help management assess the investment required, the expected return, the risks involved and the impact on cash flow and profitability. This does not mean slowing down entrepreneurial decision making. It means providing the information needed to make those decisions with greater confidence.
Governance is another area that becomes more important as SMEs grow
In smaller businesses, decisions are often concentrated around the founder. Over time, the organisation needs clearer responsibilities, financial controls and accountability. The aim should not be to introduce unnecessary bureaucracy, but to put in place a structure that allows the business to grow without losing control.
There is also value in having someone within the leadership team who can provide an independent financial perspective.
Owners naturally have strong confidence in the businesses they have created. That belief is often essential to their success. At the same time, important decisions benefit from challenge. A CFO should be able to question assumptions, consider alternative scenarios and highlight risks that may not always be visible from a purely commercial perspective.
For many SMEs, this does not necessarily require the appointment of a full-time CFO.
A fractional CFO model can give businesses access to experienced financial leadership at a stage when they may not yet require, or be ready for, a permanent senior finance executive. It also allows the CFO to work with the existing finance team, strengthen processes and help develop the internal capability of the organisation.
Ultimately, the most effective relationship is one in which the entrepreneur and CFO complement each other.
The owner brings the vision, market knowledge, relationships and entrepreneurial drive. The CFO brings financial insight, discipline and an independent perspective. When the two work together effectively, the business is better placed to manage growth, make informed decisions and prepare for its next stage of development.
For SMEs, the objective is not simply to become larger. It is to build a business that can grow while remaining financially sound, well managed and sustainable.
The author is the Founding Regional Director of The CFO Centre Middle East and Managing Director of BIMAC Group.
