Three Reasons Why You’re Putting Off Hiring Your First CFO

The necessity to hire your first CFO is usually a function of a Good News / Bad News scenario. The good news is that your company has been growing in size and complexity and it’s entirely probable that your company will continue to grow at that rate.

The bad news is that you can’t keep every facet of your operation in your head anymore and you have a sneaking suspicion that you’re not running the business as efficiently and effectively as you used to when it was a lot smaller. Furthermore, you’re coming to the realization that you need quite a bit more financial sophistication in the organization to keep growing.

You’ve probably been thinking about this for quite some time and in the back of your mind (and probably the front of your mind on some days), you know that you need to hire your first CFO. But you keep putting it off. I’ve worked with some owner-managers who’ve procrastinated on hiring their first CFO for almost a year before they called. This is not an uncommon situation.

There are usually three reasons owner-managers stall on hiring what they know could be a crucial part of the management team.

1.??????Cost: An owner-manager keeps wondering if the incremental increase in overhead by hiring a Director of VP of Finance can be justified (a company with revenues of $25mm to $50mm can expect to pay anywhere from $150K to $200K all in).

2.??????Time: Hiring any executive is usually a huge time sink and especially so since most owner-managers take the DIY route on the first go-around. A job board posting is going to pull anywhere from 100 to 200 responses, most of which will be wide of the mark by a mile.

3.??????Don’t Know What to Look For: Owner-Managers inevitably have sales or operations backgrounds – accounting is just not their thing. And the whole CPA/CGA/CMA/CA, Controller vs. Director of Finance vs. VP Finance vs. CFO thing is just confusing. Just like the 1966 Clint Eastwood spaghetti western, you’re going to get The Good, The Bad And The Ugly - how can you tell them apart?

I address the cost issue in detail in an article on my website (https://www.osbornefinancialsearch.com/why-you-havent-pulled-the-trigger-on-hiring-your-first-cfo/). That article goes into depth as to why the person running your finance function should not be a cost centre. A good Director or VP of Finance can make you back five times or more what you pay them in terms of cost savings and overall contribution to a more efficient running of the operation and input to growth.

As to reasons 2 and 3, there’s a simple solution – hire an executive recruiter who knows what they’re doing (me, of course). Job boards are very much a hit and miss solution. The odds of you finding someone great are very remote, the odds of finding someone average are pretty good and the odds of your mis-hiring are pretty good as well due to reason 3 – you don’t really know what you’re looking for.

As Red Adair famously said: “If you think hiring a professional is expensive, try hiring an amateur.” Hiring an executive recruiter does add to the cost equation but the returns you’ll realize by hiring a top-drawer finance professional should dwarf what you lay out in a search fee by an order of magnitude.