What the Theranos Collapse Teaches Small Businesses About the Real Value of Financial Oversight

We all know the name Theranos — not because of its breakthrough innovations, but because of what went wrong.

When CFO Brew published their piece, Preventing the Theranos Fraud

it got me thinking: What lessons does this story really hold for small and growing businesses? After all, most of us aren’t running billion-dollar biotech startups — we’re building service companies, tech platforms, or consulting businesses that are pushing from $1M to $5M and beyond.

But here’s the thing: the red flags at Theranos? They show up at the $1.5M level too — just in quieter, less dramatic ways.

The Problem Wasn’t Just Fraud. It Was the Lack of Oversight.

According to the article, one of the most critical breakdowns at Theranos wasn’t just Elizabeth Holmes' deception — it was the lack of true financial leadership. The company’s CFO raised concerns early, was pushed out, and never replaced. The board had little financial control. No one was truly watching the money with both eyes open.

That’s not a Silicon Valley problem — that’s a business problem.

And if you’re a business owner running a growing company without a financial strategy partner on your team, you may be feeling that same gap, even if no one's committing fraud.

What This Looks Like in a $1–2M Business

You’ve got an accountant or bookkeeper. Your books are reconciled. QuickBooks is running. You might even have a tax pro you talk to once a year.

But:

• You don’t know why cash flow is tight some months

• You aren’t sure how profitable each product or service line actually is

• You're guessing when it's safe to hire or invest

• You make decisions based on gut — because the numbers aren't helping

• You find out problems after they’ve already happened

  
  

Sound familiar?

This is the modern-day version of financial blind spots. No fraud, no scandal — just a lack of strategy, analysis, and forward-thinking review.

Why a Fractional Finance Team Changes the Game

You don’t need to hire a full-time CFO or controller tomorrow. But you do need someone who can help you:

• Review your financials each month, not just produce them

• Spot trends early and adjust course

• Build forecasts that actually guide decisions

• Put in basic internal controls that protect your business

• Help you make the numbers make sense — in plain English

  
  

That’s the power of a fractional model. You get seasoned professionals — controller-level insight, CFO-level strategy — without the full-time price tag.

What This Looks Like in Real Life

We’ve worked with business owners who were doing great on the outside — solid revenue, big goals — but didn’t really understand their numbers. Once we stepped in, cleaned up the books, and layered on monthly financial reviews and cash forecasting, their decision-making improved dramatically.

They didn’t need a full-time hire. They needed a partner to show them what was working, what wasn’t, and how to move forward.

Don’t Wait for a Crisis to Get Clarity

Theranos fell apart because the right people weren’t in the room. But you don’t need to be a billion-dollar company for that lesson to apply.

If you’re growing, your financial foundation needs to grow with you. That starts with having someone who’s not just managing your books — but helping you understand, interpret, and act on them.

If you want to explore what that looks like for your business, let’s talk. A quick conversation could open the door to the clarity and control you've been missing. Send me an email at help@essentialaccountingllc.com.