4 Signs You Should Hire a CFO
In the natural progression of a company, there comes a time when it takes that next level and brings on a chief financial officer.
But how do you know when to hire a CFO?
If you are experiencing these four issues below, it might be time to take the next step, and bring on a qualified CFO:
Financial Issues Become Part of Your Strategic Decision Making.
As owner/CEO of a small business, you can generally wrap your mind around the critical financial metrics that drive your business. However, as your business grows, the number of these metrics and difficulty in gathering and analyzing the data will also grow.
Just before your get to the point where you say “I would have made a different decision had I had better information,” you need a CFO. The problem is you usually don’t know it until after you’ve made the wrong decision.
You Can No Longer Handle the External Financial Meetings and Discussions.
In a small business, a significant part of the CFO’s responsibilities is meeting with bankers, investors, attorneys, payroll, insurance and benefits providers, and other financially-related partners. When the CEO is being distracted from critical revenue generating activities to handle financing or similar issues, it’s time for the CFO to take his place and make these things happen.
Reporting to Outside Parties is Important for Your Success.
As a company grows and brings on investors or debt, or expands into multiple states, or any number of reporting requirements come into play, the CEO cannot waste his time reporting on the company’s progress or whether or not the company met loan covenants.
Yes, the CEO will need to do some reporting, but the role of the CFO is to provide the necessary data and information so the CEO can deliver the message. The CFO should handle preparing and delivering external and internal reporting, reporting of covenants, working with auditors, or other functions that distract the CEO.
When Finances Distract the CEO from Leading
In essence, when financial-related responsibilities begin to distract the CEO from leading the company, it’s time to bring in a strong CFO. And, once the CEO starts to feel the pain, act quickly, because a good CFO can provide tremendous unforeseen support and help avoid some of the growth problems companies face.