It’s Time to Hire Your First CFO

by Barbara Frank

5 min read

Unless your company is a $50 million corporation, you won’t likely need a full-time Chief Financial Officer (CFO). One size does not fit all! Even so, how do you plan the best use of funds as they flow into and out of your business? How do you plan the financial aspects of a project that could span several years?

More than ever before, in today’s competitive business world, success requires that you understand the details of how your business operates so you can make informed decisions with confidence. But every day, business owners are sidetracked by issues that waste their time, challenge their expertise, or impact their focus on visionary leadership.

When it comes to finances, if it’s not your actual profession, you should delegate the responsibility and then integrate the information into your management activities.

As your business evolves, your finances will likely become more complicated. You need someone who knows the ins and outs of your financials, including how to read them and how to use them to advise you.

What is a CFO?

The strategic decisions to manage and grow a business are the domain of a CFO. As a result, a CFO can play a pivotal role in shaping the direction of your business. A CFO questions conventional thinking and challenges the business to perform better. A good CFO will focus on current performance needs, long-term strategic planning and guidance, and provides a hands-on, operational approach, all of which becomes more critical as you grow. Responsibilities of a CFO can include:

  • Managing financial risk
  • Financial planning
  • Record keeping
  • Financial reporting
  • Assessing investment opportunities
  • Planning growth and expansion
  • Controlling spending

A good CFO can bring years of experience, valuable connections, and essential skills, but those assets come at a price. So, before you invite a CFO onto your bandwagon, you need to understand what, when, who, and how much it will cost.

When Do You Need a CFO?

Looking back at the early stages of your business, you probably managed every aspect of it on your own. Things were hopping, orders coming in, invoices going out, clients being served, deliveries being made… In fact, you were likely your own CFO!

As your business grew, though, you began adding people, expanding your facilities, increasing expenses and costs, all the while continuing to lead and manage your operations.

Then that confusing bank statement came in, and a tax penalty was incurred, among other details here and there that needed attention.

Despite having a bookkeeper who handled the record keeping, billing and other basic accounting tasks, you were still faced with critical, strategic questions, like how to improve performance, and you struggled for answers.

Higher-level financial professionals can help assess critical strategic options related to your finances,and, more importantly, show how they could impact your profitability. This type of business reasoning is the product of the CFO.

Consider Outsourcing

Outsourcing is the practice of contracting outside providers for work normally performed inside a company. You can often get quality assistance and tailored solutions at a much cheaper cost as needed, e.g. more in busier periods, scaled back at other times. Outsourcing can solve some of the headaches that can come from managing accounting and finance tasks, leaving you more freedom to better concentrate on growing the business.

Outsourcing leverages high-level financial expertise at a budget-friendly prices, without commitment or risk. It can also free up funds for higher-impact investment areas.

What to Outsource:

To determine what tasks are best suited for outsourcing, you should ask yourself the following questions:

  • Which are the tasks that dilute your time and effectiveness, and sap your energy?
  • What functions incur penalties if done late, or incorrectly?
  • How often do you need this task done? What actions can be automated?
  • What external expertise is available and at what cost?

Who’s Who?

Your business can have several people in accounting and finance:

  • A Bookkeeper tells you where you have been
  • A Controller tells you where you are now
  • A CFO tells you where you are heading

Where Do You Find a CFO?

You don’t know what you don’t know, so get professional advice. Take the long-term view and lay the groundwork for ongoing professional growth of your business. Talk to your network for ideas, experiences, and referrals. Always try to hire from referrals and references.

Don’t hire your spouse or your uncle to do the books.

Don’t hire online without “feeling for the rocks” first.

Some key considerations to keep in mind when outsourcing a CFO are:

Specialty

Do they have the background to provide the services you need? Are they familiar with your industry?

Communication Skills

Financial people are confident in discussing numbers, but managing your business is about people. How well does this CFO relate to the people side of your business?

Belief in Your Idea

How interested are they in your business niche? Are you “just a number” or is he / she excited about the potential of your enterprise? The greater the enthusiasm, the more you can be sure they have your company’s best interests at heart.

Designation

An accounting designation doesn’t guarantee someone is right for the job. If you found someone you like, get references and check them. Ask if they did what they claimed, how they did it, how long it took, how satisfactory it was, etc.

Making confident, informed decisions is a necessity for business survival. Your outsourced CFO should give you high-level finance expertise without breaking the bank. It’s a perfect storm! If you’re ”shopping” and you’re not sure, you could hire a finance person to interview on your behalf. No guarantees, but a heightened degree of confidence, perhaps.

Ask, research, compare, interview, and weigh the alternatives that fit your particular business needs. That way you can be sure the shoe fits first before jumping in with two feet.

Don’t forget, if you have doubts at any point, if you aren’t speaking the same language, or if you have questions, you should always speak up and raise your concerns. Even though your CFO is managing the finances, when all is said and done, the buck stops with you!

Photo copyright: Stuart Jenner

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