Why Hiring a CFO is Imperative for the Success of Your Business

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As a first-time CEO, you’ve navigated a maze of issues to get your business in full expansion. So far, it’s been an intense labor of love and you’ve endured many of your first business milestones alone. As you continue to grow, decisions won’t get any easier.

At the same time, your PE firms, investors and board members are urging you to bring on a CFO, but you have hesitations. CFOs cost money; they have strong opinions grounded in hard numbers; they tend to pump the brakes when your foot is firmly planted on the gas. Why bring on a sidekick now?

Read on to see how a CFO can help your business achieve its goals, and what to look for in potential candidates.

What to Look For in a CFO Candidate

While a CPA or MBA from a top school may be an enticing candidate for the role, academics may not have the Street Smart and practical experience to provide the guidance you need, and they may be expensive. Your company is not necessarily on a well-defined path and the “industry” may not have existed long enough for candidates to have a proven track record.

Change is the only constant, and the tail of exceptions has proven to be particularly long.  As a result, hiring a CFO highly specialized in a specific field or industry may have limited upside in the short run.  As Abraham Kaplan once said: “If the only tool you have is a hammer, you will start treating all your problems like a nail.”

The reality is that technical skills and industry experience are necessary but not sufficient. You need a CFO that can see your business with a fresh set of eyes and an open mind. You do not need someone to regurgitate stale academic principles or round up the usual solutions to drive your company’s success.

You need an agile CFO with enough depth over a wide range to combat a domain where the rules are unclear or incomplete, where there are no clear repetitive patterns and where feedback is delayed, inaccurate or both. 10,000 hours of practice in any specialized environment is of no value in a field where you can’t see the players and the rules aren’t shared.

Empowering Your CFO to Become a Trusted Business Partner

As a trusted business partner, the CFO will be the strategic visionary, skilled communicator, advocate, confidant, and creator of value for your investors. The following three steps will help them gain the trust of investors and other colleagues to propel your organization forward.

  1. In the first few days or weeks of the new job, the CFO needs to meet everybody connected to your organization. They must find out who does what and who the key players are. This will allow the CFO to gain their own broad-based view of the company, its employees, vendors, customers, board members and bankers. A CFO that spends the day only pouring over management reports will not be effective as they waste time reading and analyzing financials and paperwork rather than building relationships.
  2. Allow the CFO to take the time to talk to people, and then observe, reflect and discuss perceived problems with key players. After making observations, the CFO should propose possible solutions, but do not let them make any big decisions prematurely. Remember: Nobody likes surprises.
  3. Once your CFO has a good grasp on the immediate surroundings and understands the people, they can set priorities in line with the corporate strategy, such as:
    • Assessing the reliability of the control systems in place
    • Examining the performance measures and ensuring they result in behaviors aligned with corporate strategy
    • Encouraging performance improvements across departments
    • Being the Corporate Strategy advocate (keeping communications open with as many employees as possible)
    • Delegating the daily administration of accounting activities to the Controller

The CFO is the person in charge of finding innovative ways to solve problems and use change management skills to implement them. The CFO helps you deal with tough business decisions so the rest of the organization can enjoy a gentler learning environment.

Bring in Expert Assistance

At Bridgepoint Consulting, we have the right people with the right expertise and a single vision – your success. Whether a company needs help with strategic finance, operational improvements, technology or regulatory compliance, the Bridgepoint team is ready to deliver measurable results. Get in touch to learn how we can help.