I Need A Fractional CFO - What Now?
Congratulations! As the owner or leader of a company you have made the decision to invest in a fractional CFO (FCFO). It is a big step and not one to be taken lightly. As you look for the right FCFO for your company there are several things to keep in mind. The most important realization you will need to face is that not all FCFOs are created equal. There are different types of FCFOs with different skill sets and with different hourly rates/retainers.
First Thing - What Type of FCFO Do You Need?
When working with a company to find the right FCFO for them, I go through the different types of FCFOs -an argument could be made that there a lot more types, but I put them into three buckets. Before I get a bunch of messages telling me I am wrong, I get it - there probably more types - I use three. Also, these types are not mutually exclusive - a FCFO can be strong in more than one area and a company may hit the jackpot and hire a FCFO that is all three rolled into one and has an affordable rate/retainer. I hope they do. The three types of FCFO I relate to are:
The Swiss Army Knife: If your company values a FCFO with a broad range of experience and strong communication skills, the Jack-of-All-Trades is a great fit. This FCFO can handle various tasks and work effectively with different departments. With extensive experience in various financial roles, this FCFO can streamline your processes, improve reporting, and ensure compliance. Many times, this FCFO can be involved with the company until a fulltime CFO is hired.
The Investment Guru: If your company is in need of investment capital, a Investment Guru FCFO is the ideal choice. With extensive experience in raising capital in various rounds via PE or VC investment, this FCFO typically has a rolodex of contacts and relationships. As such, they are able to help the company to get their foot in the door at VC/PE firms. They also are experienced in putting together pitch decks as well as other activities that are needed to help secure funding. This FCFO is not usually a long term option. The come in, they raise capital and they are off to their next client.
The Strategic Leader: This FCFO is basically a Swiss Army Knife FCFO but they also have experience with helping with a company's strategy and planning. This FCFO is usually a member of the company's Management Team. If your company is seeking aggressive growth and needs a FCFO who can drive results, an Achievement Leader is the right choice. This FCFO excels at transforming businesses by improving financial processes, using metrics, and standardizing data.
Key Considerations When Hiring a FCFO:
Hiring the Right FCFO: A Step-by-Step Guide
Finding the Right FCFO Candidates
When searching for a FCFO, partnering with a firm specializing in C-Level fractional professionals can be invaluable. These firms specialize in having an extensive network of top fractional executive talent. Most firms go through a strong vetting process to ensure that professionals in their network have the needed experience and skills to be a FCFO.
In addition to using fractional firms, other options include:
Interviewing Prospective FCFOs
During the interview process, prepare targeted questions that delve into the candidate's experience, strategic thinking, and adaptability. A well-prepared interview will help you assess if the candidate is a good fit for your company and the FCFO role.
There will be a number of FCFO candidates that can do the work; however, when interviewing, focus on finding a FCFO who aligns with your company culture. Ask questions about how the candidate has resolved conflicts and how they would approach strategic goals related to your business. This will give you insights into their financial vision and problem-solving abilities.
Integrating a New FCFO into Your Business
A comprehensive onboarding process is essential for a smooth transition and effective integration of a new FCFO. Share the company's goals, values, and mission to ensure the FCFO understands the company culture and expectations. Additionally, effective team integration is key. Introduce the new FCFO to department heads and team members, and ensure they attend regular meetings to foster a productive and harmonious work environment. The FCFO is part of the team, not an outsider with an agenda.
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Summary
Hiring a FCFO should not be taken lightly. Hiring the right person can help your company in a multitude of ways - they will add to your company. I hate to say it but the wrong FCFO can set your company back. Making sure the FCFOs skill and experience match your needs and that their personality and personal culture are in line with your company's is absolutely vital.
Stay Ahead of the Curve: Follow These Minds
Dev Chandra - https://theprocesshacker.com/
Jonath Aufray - Grothhackers.net
Articles Worth Reading / Tools to Consider:
PwC - "How AI will transform the CFO’s role"
The Future of Fractional Executive Services: Industry Trends and Predictions
Small Business Trends - "How to Hire a CFO: What You Need to Know About Hiring a Chief Financial Officer"
Forbes - "Is Fractional Work Right For You?"