The Rise of the Virtual CFO: How a Fractional CFO Model Builds Lasting Value for Small and Mid‑Size Businesses

Audio The Rise of the Virtual CFO: Building a Business that Lasts

Video The Rise of the Virtual CFO: Building a Business that Lasts

Chapter-by-Chapter Summary

Following are the sections we covered in this conversation with their summaries, along with the time location in the video and audio to follow along. The timestamps in orange correspond to the chapters in the YouTube version of the podcast episode. This video will display to the lower right as you scroll down. 

00:00 Introduction

I'm Bhavesh Naik, host of The Business Philosopher Within You. In a recent episode I sat down with Ellen Wood, CEO and co‑founder of vcfo, to unpack how the virtual CFO concept started, how it scales, and why it matters for founders and CEOs building businesses that last. Ellen pioneered the virtual CFO model in 1996 and, over nearly three decades, vcfo has worked with more than 6,000 clients. What follows is a concise, practical summary of our conversation and the lessons any business leader can apply.

02:47 The Genesis of vcfo

Ellen's idea for vcfo came from firsthand need. As a young CFO working through acquisition transactions in the late 1990s, she realized the gap in access to high‑level financial expertise for small and mid‑size companies. After an acquisition and an integration role that revealed how rare M&A experience was outside large enterprises, she concluded that the way to bring strategic CFO work to growing companies was to serve multiple clients through a firm — not as a single employee.

Key early conditions that helped vcfo grow:

• Austin's rising tech ecosystem in the mid‑1990s paired well with venture activity that wanted CFO‑level reporting without hiring full‑time finance leaders.
• vcfo's early work with technology startups established repeatable services: forecasting, cash management, and disciplined planning.
• Diversifying beyond tech proved critical when the market softened, demonstrating finance is largely portable across industries.

09:57 Vision for vcfo and Who It Benefits

Ellen describes vcfo's growth as “a spark that became a snowball that did a bit of a pit.” Today the vision remains consistent: help clients maximize shareholder value and instill operational excellence. The goal isn’t to be the largest firm in every state; it’s to be the best partner for CEOs and founders who want to grow value sensibly.

vcfo focuses on companies that typically have:

• Annual revenue between $10M–$100M
• Headcount in the tens to low hundreds (often 20–200 employees)
• A CEO or founder who needs strategic financial leadership but may not want or afford a full‑time CFO immediately

13:37 The Perspective of a Virtual CFO

vcfo delivers everything in the office of the CFO: strategic forecasting, cash planning, risk management, M&A support, and hands‑on accounting cleanup when needed. Ellen emphasizes starting with a deep understanding of what the client wants to accomplish. That objective guides which interventions deliver the greatest return.

Practical first steps vcfo often takes:

• Create a 13‑week rolling cash forecast to understand immediate cash risk
• Prioritize fixes that reduce risk and increase return, then phase additional work as budget allows
• Work toward client self‑sufficiency by helping hire internal finance leaders when appropriate

17:55 Understanding the Ideal Client

While there are outliers, the best fit for vcfo is a founder or CEO who wants a strategic partner to professionalize finance and accelerate value creation. Engagements often start with a CEO or founder and can include HR services when people and culture issues intersect with finance.

vcfo also adapts to client needs: sometimes the immediate requirement is a tactical bookkeeping/audit cleanup; other times it’s a strategic forecast for a financing or sale. Ellen’s team maps services to the client’s most pressing objective.

19:44 Psychological and Cultural Aspects of Financial Management

Money management has psychological and cultural dimensions. Ellen ties financial responsibility to core values: for vcfo, “put people first” is the top value, followed by integrity. That mindset shapes how they approach clients and their own team.

“When you look at your income statement, there's nowhere that it says missed opportunities.”

Turnover, morale, and culture don’t have explicit line items, but they create real, measurable costs — lost revenue opportunities, inefficiencies, and higher cost of sales. Addressing culture is therefore a financial issue as much as a people issue.

22:29 Supporting Clients' Value Systems

vcfo includes HR capabilities for two reasons:

• Culture and retention directly affect company performance and value.
• Regulatory complexity (e.g., payroll tax liabilities, visa compliance) creates legal and financial risk for growing companies that many founders don’t anticipate.

Ellen shared a common, dangerous founder mistake: delaying payroll tax deposits to manage cash. That short‑term workaround can create massive penalties and owner liability. Proper HR and payroll governance are part of protecting shareholder value.

26:37 Internal Strategies for Company Growth

vcfo applies the same discipline internally that it brings to clients. A few internal practices Ellen highlighted:

• Annual NPS surveys to measure team sentiment
• Use of Predictive Index during hiring to match candidate attributes to roles
• Adoption of an operating system (EOS / Traction) to create clarity, accountability, and predictable meeting rhythms

Those systems helped vcfo pivot quickly during crisis periods (for example, the COVID lockdowns), because roles and responsibilities were already clear and communication flows were established.

29:27 Organizational Vs. Accountability Chart

Ellen draws a clear distinction:

• An organizational chart lists titles and reporting relationships.
• An accountability chart defines who is responsible and accountable for outcomes — who to contact when something goes wrong and who makes the decisions.

vcfo also uses RACI matrices (Responsible, Accountable, Consulted, Informed) to map decision workflows and ensure everyone knows their role for key processes. This combination eliminates confusion in daily operations and during major pivots.

31:46 Honoring a Legacy: Award-Winning Leadership

Ellen’s leadership has been recognized in Central Texas. She was inducted into the Austin Technology Council legacy hall of fame and has received industry awards that reflect vcfo’s impact on the local entrepreneurial ecosystem.

33:11 Overcoming Obstacles and Learning from Crisis

Like many founders, Ellen has faced deep challenges. The 2008 financial crisis was especially painful: vcfo had expanded offices and made capital investments at the worst possible time. The company had to cut expenses, reduce salaries temporarily, and act decisively.

“We had to do all the things that we were advising our clients that they had to do. We had to do it immediately.”

Her leadership response was hands‑on and transparent: create survival plans, run best‑case/worst‑case scenarios, and provide clients with alternative financing options so they wouldn’t panic if their bank line was threatened.

38:30 Insights from the 2008 Financial Crisis

Main takeaways Ellen shared for leaders facing macro shocks:

1. Take stock quickly — assess your cash position and scenario outcomes.
2. Put together contingency plans and clear trip wires for action.
3. Don’t delay difficult decisions; every week of indecision reduces your ability to pivot and seize opportunities.

“Opportunities always come out of crisis,” she said. But you must be prepared to act — to “pull the lever” — when the trigger is hit.

41:33 Entrepreneurial Journey: Navigating Change While Remaining Grounded

Ellen reflected on personal change across her career. She now counsels that leaders should listen widely before deciding: “There are 13 sides to every story.” That means seeking multiple perspectives, especially when the stakes are high.

At the same time, she recommends being rooted in core values so rapid change doesn’t erode judgment. For her, strong family and mentor models helped cultivate a steady orientation that supports good decision making under pressure.

46:30 Importance of Assessing Shareholder Value

One of Ellen’s final points was direct and practical: measure the value of your company at every stage. Too many founders obsess over revenue or headcount without thinking about what a potential buyer or successor would value.

Questions to ask today:

• What would someone pay for my business right now?
• Which operational gaps (financial ratios, customer concentration, culture, compliance) are suppressing value?
• What strategic changes could improve valuation in 12–36 months?

Embed value creation into your strategic plan, not as an afterthought but as a continuous discipline.

49:14 Getting In Touch with Ellen Wood and vcfo

Ellen is open to conversations with founders, board members, and leaders. The best way to reach her is via LinkedIn — connect, describe your question, and she’ll often point you to resources or next steps. For leaders seeking fractional CFO expertise, integrated HR support, or a practical path to greater shareholder value, vcfo remains a model of how to scale financial leadership into lasting business advantage.

Key Practical Actions for CEOs and Founders

• Run a 13‑week rolling cash forecast immediately if you haven’t already.
• Map critical processes using RACI and build an accountability chart, not just an organizational chart.
• Measure company value periodically and build strategic initiatives to improve it.
• Prioritize people and integrity; culture impacts revenue and costs even when it’s not visible on the income statement.
• When crisis looms, take stock, prepare contingency plans, and be willing to act decisively.

If you want a deeper conversation on any of these topics, Ellen and I explored many more practical examples during our discussion on The Business Philosopher Within You. Connect with Ellen on LinkedIn if you’d like to continue the conversation about fractional CFO services, HR integration, or value creation.