How To Hire The Right CFO For Your Business

Identify if you are ready for a CFO and what qualifications they should have.

The role of a CFO can vary for any organization depending on a lot of variables. Day in and day out, you may need someone with a strong accounting background but ultimately businesses need someone strategic to help guide the business with the leadership team.

In most cases, CFO’s oversee accounting and tax compliance. The best CFO’s combine the numbers story with operations to achieve strategic opportunities. There is even more to consider in your CFO selection process if you are planning to be acquired, want to acquire, raise funding, or need to prepare for an eventual IPO.

The following tips will help you determine if it’s time for a CFO and the kind of progressive CFO you need.

Real signs you need a CFO

1. Growth – most small to medium sized businesses don’t start out with a CFO. Having someone perform accounting and take responsibility for the taxes is enough. But as your company grows, balancing that growth and having financial strategic direction toward the overall business goals becomes imperative to know how to afford growth. Typically when businesses go above $5 million in revenue is when complexity accelerates. See this article as well from Entrepreneur, “What you need to know about Hiring a CFO”
2. Staffing – although this is another implication of growth, hiring more staff, managing the influx in payroll, taxes, benefits and legal protection (for them and the business) is also a sign it’s time for a CFO. We like to gauge this around 30 or more employees.
3. Infrastructure – the larger and more complex a company gets, so does its need for software, systems and processes to keep working like a well-oiled machine. Without standard operating procedures (SOPs) everything from revenue, payments, payroll, communication and legalities can become compromised.

Qualifications in a CFO to match your business objectives

1. Basic accounting – even if you are planning to hire a CFO for high level strategic direction and supervision, they still should know basic accounting principles. Many CFOs today are also CPAs in order to help with ever changing regulations, but it’s not unusual for larger companies to have a CFO with an investment banking, financial planning, or non-traditional background as long as they still have the ability to still oversee the accounting function. See this article,  “Companies Don’t Need CFOs to Be CPAs Anymore” from CFO.com. The depth of accounting experience may depend on the size of your company and if you can afford a CPA under your CFO.
2. Leadership – the CFO is going to be the CEO’s right hand. It’s critical that this person have leadership skills, how to gain trust from various teams in the company, and how to manage individual people—from peers to those reporting directly to them. It takes strong leadership to speak up when things go awry or forecast obstacles before they happen.
3. Strategic Financial Management – a good CFO is adept at going beyond current operational needs to examine the financial impact and spot opportunities in market and operational functions. They should be able to identify specific ways to accelerate profit and increase the value of your business and have the courage to demonstrate estimated returns from these activities.
4. Networking – you may want a CFO who is involved in industry organizations and has experience networking and presenting to other players in the field. This ensures that your business is able to build the right Success Team as needs develop.

The one thing we didn’t talk about here though is budget. Of course, you have to be in a position to hire a full time CFO. CFOs tend to expect a handsome compensation package consider the benefits that they bring including salary, benefits, bonuses, and potentially stock options. If you’re borderline about if you need a full time CFO, you may look to outsource CFO services. With outsourcing, you won’t have to skimp on qualifications or the requirements of the job as needed. In fact, many outsourced CFO’s have better methods and tools because they helped more businesses succeed. An outsourced CFO will grow with you. Start with what you need today, and add services as the return makes sense.