Hiring a CFO?

SO YOU THINK YOU NEED A CFO?

The decision to bring in a CFO for the first time is a big one. Do you go with an outsourced CFO or hire in-house? Part-time or full-time? Do you find someone virtual or on-site? Do you tap your network or use a recruiter? Do you need an expert in your vertical or your stage in development?

Wherever you net out, I have a few simple tips on how to avoid thinking about what a CFO is and is not and how to avoid common mistakes when bringing on into the fold..

WHAT A CFO IS NOT

Much has been written about what the role of a CFO is, but I’d like to share with you what a CFO is not. 

1. Your CFO Is Not Your Friend

Don’t hire one of your friends to be your CFO. Just don’t do it.

Your CFO needs to do what a CFO is supposed to do: help you build a great company that drives shareholder value in a way that is consistent with what the board expects.

Hiring a friend means they may be too worried about how you’ll react if they plan to see you over the weekend or carpool your kids to swimming lessons.

Give your CFO the freedom to make work-related decisions without considering your feelings like a friend does. We all try to leave emotions out of the workplace, but when the chips are down, you want what is best for your friend. This may be counter to what is best for the business.

(Besides, a great friend is irreplaceable. A CFO is 100 percent replaceable.)

2. Your CFO Is Not a Swiss Army Knife

No matter the economy’s terrible, a dermatologist would never accept money to treat depression or replace a knee.

Likewise, great CFOs know what they do well and are ethical enough to represent themselves as the specialists they are.

So, if you run an early-stage SaaS company, hire an early-stage SaaS CFO. If you run a manufacturing firm, hire a CFO experienced in inventory accounting and cost allocations or one who manages those functions well. If you run a law firm, hire a CFO specializing in professional service firms.

The truth is, there is no shortage of CFOs out there ready to take your money. Be thorough and find the one that meets your needs. Do not settle.

3. Your CFO Is an Executive

When you hire a CFO, you should expect them to function on the same level as your other VPs and CXOs, with the same depth of engagement across the organization.

For example, if your VP of Engineering is one who both codes and builds a department, then the right CFO for you should be able to do a mixture of some accounting while hiring and developing talent to backfill as you grow. If your CMO is working a trade show booth, your CFO should be responsible for getting you through an audit.

Don’t hire a CFO and expect them to be a one-stop shop if you do not wish your Chief Revenue Officer also to carry the most significant quota.

4. Your CFO Is Not Your Entire Finance Department

Don’t expect your new CFO hire to be the entire finance department. You should hire a great CFO to let them build a great finance department.

Expect your new CFO to design roles and jobs people want, aligned with compensation or costs commensurate with the market. And note that developing a strong finance department does not always mean hiring full-time employees.

It’s a big decision. If you think you’re ready to add a professional CFO to your executive team, keep these considerations in mind to avoid future heartbreaks and business interruptions.