The role of a CFO has evolved over time from solely executing finance-related tasks to one that oversees highly strategic decisions meant to drive and manage growth.
The decision to bring in a CFO for the first time is a big one, and there are lots of options and tradeoffs. Do you leverage an on-demand resource or hire a full-time employee? Do you find someone virtual or on-site? Do you tap your network or use a recruiter?
Regardless, there are a few things to understand about what a CFO is not. These are important to keep in mind when searching for the right fit.
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 that 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 having to take into consideration your feelings like a friend does. We all try to leave emotions out of the work place 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% replaceable.)
2. Your CFO is not a Swiss Army knife.
No matter how bad the economy, 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 who is experienced in inventory accounting and cost allocations, or one who manages those functions well. If you run a law firm, hire a CFO who specializes 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 not a solopreneur.
When you hire a CFO, you need to 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 that both codes and builds a department, then the right CFO for you is one who 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.
Early-stage companies often need team members who can think strategically one minute, and get into the weeds the next. Don’t make the mistake of hiring a CFO who doesn’t want to roll up their sleeves just like the rest of your executive team would.
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 with the intention of letting them build a great finance department.
Expect your new CFO to clearly design roles and jobs that people want, aligned with compensation or costs that are 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.