Should you hire a CFO?

Someone asked me today when it’s appropriate for a startup company to hire a CFO. I found the question challenging because the answer requires that we all share a common definition of what a CFO is. (We’ll define “startups” on another day.)

What is a CFO? 

Simply put, a CFO is the person — with comfort in numbers — whom you invest in because you are serious about taking your company to the next level. 

How do you know if you need one?

Think about what your company needs. What types of skills could help you supplement your own? We’ve worked with clients who were looking for the following:

Well-rounded, senior-level talent that can complement a CEO’s skillset to bring ideas and execution to building a business from its early stage. A person to help you with what you know you don’t know, when you’re physically unable to play the Jack of All Trades anymore (even in an office as small as 5-15 employees).

Counsel on getting out of debt. Let’s say you’re a CEO with around $1M in revenue and some recently acquired debt. You want insight into what really will happen to the business while modeling out a few scenarios. 

Someone to help raise money with Angels or VCs. Your CFO can help you understand the numbers and work with your group to build the go-to-market strategy. 

More time to focus on your clients and your product. In order to grow your company and with your company, you need to learn to delegate. To truly succeed, your accountant, bookkeeper and back-office staff need more hands-on leadership than you can give. You need someone to assess and work with your team to build the internal operations you’ve always wanted.

Remember what CFO stands for.

Chief Financial Officer: this is someone who can take the accounting, financing, risk management, and sometimes operations off the CEO’s plate. CFOs can also serve as a COO, overseeing a large number of the managers of your organization. Consider this when thinking about the value you will invest if you choose to fill this position.

You also want to consider what’s right for your organizational culture and the timing of your business. Do you want an operationally focused CFO to help you build the organization? Or do you need a financing CFO who can help you raise money and produce reports for investors? These two positions do not seamlessly overlap: until your business reaches $50-100M in revenue, you need your CFO to be involved with the execution of the day-to-day business AND investor relations.

Give serious thought about whether you need a CFO to be a Thinker or a Doer. Is your expectation to find someone who thinks “big picture” and then hires a staff to execute the work, or do you need a CFO who will get some work done? To answer that question, consider what your management team looks like now.

The right investment.

You’re probably thinking a CFO comes with a big price tag, and you’re right. Many in that senior finance professional role are accountants with desired salaries ranging from $90K to $400K. One option is to hire a part-time CFO, which can help companies cut down on costs (something we here at Quincy CFO know a little about!). Whatever type of hire you decide to make, be sure that all parties considering the decision are on the right page regarding your investment.