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WHEN SHOULD A COMPANY RECRUIT A CFO.

Kwesi Blankson's Profile

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

When it needs (in no particular order) a) strategic planning and thinking, b) an interface between the company and bankers, lenders, vendors and customers who feel that the person knows them as well as the company, c) financial analysis, budgeting/forecasting, d) interface with complex topics such as insurance, real estate, health insurance, accounts receivable and legal issues.

The controller handles the day to day accounting issues with oversight by the CFO.

Hope this helps

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

You hire one in the beginning, i.e. your second or third employee.

A business owner would probably say - I will start with a bookkeeper. As my needs grow, I will hire a Controller. If I grow even more, I will hire a Manager of FP&A. If in the end I need an across the board specialist in Accounting/Finance/Risk Management, I will hire a CFO.

Problem - In this approach you are always playing catch-up. The business owner realizes they need the next hire after an error has been made that has financial or risk ramifications.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

This would make sense in a perfect world, but alas you are correct as to what a Business Owner would say/do and not only are they playing catch-up, they've made some real mistakes with real negative impact on their bottom line...

Anonymous
(CFO) |

A CFO is looked at from the perspective of book keeping and compliance rather than a strategic thinker who brings in a pool of resources and administers the operation from the strategic perspective bringing in efficiency, visibility and good governance. Quite a few of Indian Entrepreneurs ( most of them being either family oriented businesses or are first generation entrepreneurs) would not share strategy with their CFO's as they think that he is either a police person or will always discourage the strategy coming from a conservative background. He is taken as a controller or a finance manager who brings in expertise to manage accounting and compliance so that the promoter of the company does not need to deal with this on a day to day basis.

In India , there are a few organisations that have understood the CFO's profile but largely the thought process is undergoing a change but slowly. I guess, when the organisations like SEBI and other regulatory bodies give prima facie recognition to the job of a CFO who should be prime responsible for majority of the organisations value addition and compliance, the importance would be felt, until then I would say the CFO positions is evolving.

Diane D. White, CPA, CMA, MBA
Title: Principal and Business Owner
Company: Diane D. White, CPA, CMA
(Principal and Business Owner, Diane D. White, CPA, CMA) |

My experience with start-ups strongly argues for Wayne Spivak's position, and I also can vouch for the reality of Anonymous' comment that "a CFO is looked at from the perspective of book keeping and compliance". It's certainly not just true in India! The ideal "CFO" for an infant organization might be a person with the experience, skills, and willingness to play multiple roles effectively -- CFO, Controller, Treasurer, Accountant, even Bookkeeper -- while it's tiny, and the leadership skills to overcome many entrepreneurs' unfamiliarity with the value proposition of today's CFO.

Irv Williamson
Title: Owner
Company: Growth Guidance Solutions
LinkedIn Profile
(Owner, Growth Guidance Solutions) |

CFO's role is to understand where the company is headed and to make sure it has the resources to get there. So whenever a company is in a transition stage (growth, contraction, or exit) a CFO should be considered.

In some early stage companies the founders lack the experience and understanding of the CFO's role. Too often, accountants flatter themselves by accepting the CFO title, but do little more than bookkeeping and reporting chores. To be effective, CFOs should only serve in those organizations that fully embrace the CFO concept.

Robert Herford
Title: Owner Operator
Company: R D Herford Consultant in Corporate Stra..
LinkedIn Profile
(Owner Operator, R D Herford Consultant in Corporate Strategy and F) |

Small companies miss the value of CFO guidance from the start. The best solution is to retain a consultant CFO if only for a few hours a month from the earliest time that it can be afforded even in the new business planning stage. Allow that consultant to guide you in the development of bookkeeping / accounting function and setting up simple KPI's as well as act as an overall business and strategic adviser. A good consultant will be pushing you to obtain a CFO at the earliest feasible moment. While expensive per hour you can ruthlessly manage their hours to only the what contributes on a multiple of cost basis.

Ken Kaufman
Title: CFO
Company: Community Dental Partners
LinkedIn Profile
(CFO, Community Dental Partners) |

I was interviewed last year by Entrepreneur Magazine on this exact topic. Here is a link to the article: http://www.entrepreneur.com/article/220353

It comes down to three main things, in my opionion...size (usually $1 million in annual revenue for a part-time CFO, $25-$50 million for a full-time CFO), complexity (thousands of SKUs, lots of investors, complex debt instruments, etc.), and trajectory (is the business growing or shrinking rapidly). If a business can answer yes to at least one of these questions, then it's time to consider a CFO, at least on a part-time or outsourced basis, and possibly full-time.

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

Alternative some companies consider is "hiring a smart" individual early, have them grow into the role and invest in their development. This comes down to a "buy" or "build" decision as far as talent. Depending on the resource constraints and rate of business growth, companies may not have a choice.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I don't believe (except for the under $1M companies) that they can't hire someone who knows what they are doing, at least in a part-time mode while they "build" from within.

"Buy" and "Build" is fraught with large learning curves which often time lead to large errors in judgement, due to lack of experience.

Ken Kaufman
Title: CFO
Company: Community Dental Partners
LinkedIn Profile
(CFO, Community Dental Partners) |

I like this strategy, I just haven't seen it work very often. The reality is that few early-stage companies really understand what a real, full-blooded CFO looks like (in terms of skills, experience required, and overall value add to the company) and how that individual can become the most important asset to "nailing" the business model and building a culture of execution.

Fernando Gonzales
Title: Realtor
Company: Prudential California Realty
(Realtor, Prudential California Realty) |

First of, small to medium size company owners need to understand what a CFO does and how vital their contribution to their companies' performance are. A lot of them think of CFOs as the "necessary evil". I worked for a company as a CFO/Controller for eleven years and one of the partners still referred to me as his bookkeeper.

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