Startup founders wear Lots of hats. They have to build, they have to employ, and they have to inspire. They have to test, confirm and pivot.
They have to manage their financial affairs.
When it comes to financing startups, things can get tough quickly. But when is the right time to hire a CFO, and is a full-time CFO necessary in the era of the executive level as a service?
I’ve worked with founders and CFOs my entire career. The skill sets required for each job are completely different, but their complementary personalities can be exactly what moves a company forward. I also asked a few experienced CFOs and executives to advise on this crucial question.
Why do you need a CFO?
Financial managers are responsible for managing cash flow, overseeing financial planning, and managing regulatory compliance. This ensures that the company has sufficient liquidity to support its operations and growth. They also play a vital role in financial planning, guiding the company’s strategic financial decisions and ensuring compliance with relevant regulations.
It’s common for founders to think narrowly about accounting when considering hiring a CFO.
It’s common for founders to think narrowly about accounting when considering hiring a CFO. Instead, they should think about the finance function more broadly. Sure, clean books and financial controls are important, but a true CFO brings much more than just good housekeeping on this front. An experienced CFO will look at the business from the perspective of resource allocation and capital optimization.
For example, a good CFO will be able to plan and secure different types of capital (e.g., loans, leases, etc.) and align cost with return, keeping the company’s more diluted, more expensive investment capital free for product development and team building. , and market expansion. This, in turn, will increase your return on investment (ROI).
Startup coach and CFO Yevgeny Popov Hiring a CFO is a no-brainer, he said, similar to finding a CTO for your tech company.
“The CFO is a crucial role for every company, regardless of its size, especially in the case of technology startups aiming to expand,” he said. “Unfortunately, hiring a CFO is not an obvious step for founders because most founders come from the product or technology world and don’t see a CFO as vital to growth.”