When you’re running a startup, every new hire feels like a milestone. In the beginning, you and your team of co-founders may fill every role. However, as you grow, you can start to hire specialists for things like marketing, sales, and more. There’s the big day when you graduate from outsourced accounting and bookkeeping to a full-time CFO. The hire of your first salesperson or account manager may feel like a big milestone.
Another important hire is your first financial planning and analysis (FP&A) associate. FP&A can be a critical role for startups, especially those who have validated their service or product and are ready to scale.
What is FP&A?
As the name suggests, FP&A involves financial work, but it’s different than a bookkeeping role. Bookkeepers look backward. They record, manage and analyze transactions that have already happened.
An FP&A associate looks forward. They’re involved in strategy and decision-making to help you avoid risks, capitalize on opportunities, and achieve your strategic goals. For example, they may forecast cash flow and revenue. They could implement processes and systems to efficiently manage cash and reduce burn rate. They could work with your management team to implement growth strategies and boost valuation.
How do you choose the right FP&A candidate for your startup? Obviously, they should have a strong financial background and should be familiar with your industry and your position as a startup.
There are likely many candidates with resumes that meet those basic requirements. The interview is where you can really identify those candidates who may be the best fit for your company. Below are a few questions you can ask in an interview to differentiate the FP&A contenders from the pretenders:
Why Are You a Good Fit For This Company?
This is a great question for startups to ask in any interview; not just an interview for an FP&A position. You want candidates who know about your company and its unique challenges and objectives. They’ll need to know how your company fits into the marketplace and its growth potential and how best to structure and model your industry and business. In short, you want candidates who share your vision.
It’s hard for a candidate to share your vision if they haven’t researched your company. This question is a great way to ask them how much they know about your business without asking directly. Ideally, their answer should pair their specific skills with your company’s strategy, opportunities, and long-term objectives.
What’s Your Experience in FP&A?
For many candidates, FP&A roles are stepping stones to larger roles, like CFO. You could have candidates who have experience in FP&A, but they could come from other backgrounds as well. For instance, you could have applicants who have experience in accounting but want to transition to FP&A. You could have some who are fresh out of business school.
It shouldn’t be a dealbreaker if a candidate doesn’t have FP&A experience. However, you do want to know how their past experience informs their knowledge and skills. For instance, how would their accounting experience guide their decision making in an FP&A role? This is a great question to get the candidate talking about their experience within the context of FP&A.
Core skills that you’re going to want to draw out in the interview process include (but are not limited to):
- Can the candidate build three-statement financial models?
- Do they understand how to calculate and work within current startup metrics?
- Do they have a solid accounting background, or barring that, a strong understanding of financial statements and how they are connected?
Here are some additional questions to help you pinpoint the right skills and experience in your potential hire:
What Financial Tools & Systems Have You Used or Developed in Your Past Experience?
Much of the work in an FP&A role is focused on systems. Specifically, an FP&A associate should implement tools and systems that manage cash flow and project revenue and expenses. For instance, a candidate may have developed a system that reduces spending and boosts financial efficiency. Or they may have a favorite tool to accurately project sales or estimate valuation. Use this question to look for creative ideas that you can implement in your business.
How Familiar Are You With Our Business Model?
This is an important question to ask anyone who is going to be trying to make sense of your startup’s financial future and current health, but it can be especially critical if your business is significantly different from where they might have worked before.
If your model is SaaS, for example, the skills and knowledge needed to help guide your financial future are going to be different than a business with inventory. You’re going to want someone who understands revenue reconciliation and the difference, for example, between cash flow and profit.
Give Me An Example of a Time When You Told a Boss or Superior That They Were Wrong
Again, an FP&A associate’s job isn’t just to analyze data, but to provide valuable insight, feedback and strategic input. That may mean disagreeing with a CFO, CEO, or even a founder. The FP&A associate will be intimately familiar with the company’s finances and the opportunities and risks on the horizon. They may have a more informed opinion than you, so it’s important that they feel comfortable disagreeing with you if they believe your strategy is incorrect.
This question gives them an opportunity to demonstrate how they may disagree with a superior. You want to see that they’re unafraid to share a contrarian opinion, but know how to do so in a professional and polite manner.
What Should Keep Me Up at Night?
Perhaps the best candidate is the one who can bring fresh insight to your company. This question allows you to pick your candidate’s brain and really see how well they know your business and your industry.
For example, maybe your candidate has done some research and noticed a competitive obstacle on the horizon. Maybe they see issues in your company’s ability to scale. Perhaps they think you’re missing out on potential growth opportunities. You can use this question to test-drive your candidate’s ability to provide insight and strategic advice.
Think your startup is ready for FP&A but unsure if you need a full-time associate? Let’s talk. Contact airCFO today. Our team has deep experience in startup FP&A and can scale with your needs, or we can help identify if a full-time FP&A Analyst is right for your business.