Survival Guide for Hiring a Startup CFO

A founder’s budget is often limited. When you’re laying the foundation of a business, you’re relying on your financial investments to carry you into a revenue-generating future.

If you’re looking to conserve resources, you might wonder: do I need a CFO? Most often, the answer is “yes.” CFOs expand your skill range in numerous ways, such as treasury management, financial planning, investor relations, and financial strategy. While it’s your responsibility to establish the pillars that will later define your business, a CFO will ensure that those pillars have a financial base to stand on.

What do you need to know, then, when hiring a startup CFO?

Outsourced or Part-Time

You’ll need to decide early on what kind of commitment you want your CFO to make to your startup. This means choosing whether to hire an outsourced CFO, a part-time CFO, or a full-time CFO.

• Outsourced CFOs offer full-time, contract assistance to your startup. They’ll be able to bring GAAP comprehension and a career’s worth of experience to your business for a concentrated time block. Working with outsourced CFOs will save you money as you’re starting your business, but you won’t be able to retain their input past the end of their contract.
• Part-time CFOs, comparatively, work with your startup from its inception to eventual fruition. They’ll have more time to familiarize themselves with your business’s data, and they’ll be able to emphasize your ROI after your startup’s launch. However, part-time CFOs will have different boundaries than outsourced CFOs; they won’t be as readily available as outsourced CFOs unless you invest in making them full-time.
• Full-time CFOs will provide your startup with the same financial guidance as the other two CFOs noted here, but they’ll be able to dedicate more time to your operation. This means that you’ll be investing in a long-term partner who will be able to project gains well into the future. However, it is possible to hire a full-time CFO too early in the startup process. When you’re laying your business’s foundation, you may want to save your money and delay this investment.

What’s The Difference Between a CFO and an Accountant?

Note that hiring an accountant is not the same thing as hiring a CFO. While you can hire an accountant to help you manage your resources as you’re starting your business, they won’t be able to perform the same projective work that a CFO can.

• Accountants look at your past spending habits to determine your business’s financial trends. Because of this focus, they’re better to onboard once you have a business history to assess.
• CFOs, comparatively, look to the future and predict financial trends that your business may encounter, manage your runway, and bring financial clarity to your business with metrics, modeling and much more. As you’re laying a financial foundation, CFOs can assess your current spending and determine, for example, when you’ll be able to step out of the red and into the black.

Early Or Late: When To Hire

As a founder, then, you need a CFO. When should you onboard your preferred partner?

Founders often manage their finances on their own in the early days of a business. If you have the range, you’ll want to retain control over your projections in this early stage. CFOs, after all, are a financial investment on their own. If you’re sinking resources into your startup, you need to make sure you’re spending them on essentials. A founder familiar with bookkeeping may not need a CFO until the late days of a startup’s beginning.

However, CFOs can readily provide first-time founders with the expertise and experience that they lack.

When determining the best time to hire a CFO, then, consider your own familiarity with financial management. If you think you need additional guidance, bring one on earlier rather than later. If you’re low on resources, however, consider delaying this hire until you’re assured of your startup’s financial standing.

Staying Competitive With Equity, Culture & Salary

If you are strapped for resources, you can still woo a CFO to your business. CFOs, after all, can readily determine the economic potential of a startup. However, you’ll find the greatest success in wooing a CFO when you partner your startup’s potential with equity and culture.

These benefits don’t stand in for a salary. Any CFO that expresses interest in working with a startup, though, knows that the finances of a founder are limited and understands the value of equity. When looking for a CFO in the early stages of a business, make sure their values align with yours and offer them benefits based on those values. When you partner that environment with equivalent equity, you’ll have a winning hand.

CFOs Are Critical Startup Partners

Working with a CFO emphasizes your focus on the future and demonstrates the seriousness and viability of your business. If you scale appropriately and intelligently, a CFO is a critical element of your growth strategy.

CFOs often prove to be invaluable partners to startup founders. They’ll offer a litany of expertise to those new to their chosen industries as well as to those who’ve been through the startup ringer before. Whichever party you represent, seek out a CFO who holds similar values to yours. In establishing this partnership, you’re not only solidifying your commitment to your startup – you’re laying the foundation for your startup’s financial future.