Congratulations, you’ve built a business! Your hard work and long nights have paid off. But, now it’s time to build out a team to help you get to the next level. One of those next hires could be a Chief Financial Officer (CFO). Hiring for a business is never easy and is often eluded by entrepreneurs. Adding staff and personnel is a significant capital commitment and most entrepreneurs are reluctant to spend funds on anything other than building or selling products and services. While these apprehensions are understandable, there comes a time when a business grows to the point at which a CFO is absolutely necessary.
How can a CFO help you grow? Tactically, CFO’s can create profitable pricing models, assist in controlling inventory, and offer visibility into customer profitability. Strategically, they can contribute to creating beneficial organization and capital structures as well as developing a sound business succession plan. These are all critical areas within an organization and failure to have knowledgeable leadership in these areas, could result in loss of capital and lack of business growth.
So, how should an entrepreneur determine when it is time to hire a CFO? Here are four main indicators entrepreneurs and business owners can use to determine if it is the right time to hire a CFO.
High Speed Company Growth: When a company is experiencing fast growth, much more focus is required for activities such as managing day-to-day financial obligations and ensuring cash flow needs are met. But, getting to the next level requires significant planning, and a CFO is your right-hand person to ensure you’ve have a fully-vetted growth plan in place.
Desire to be Acquired within 2-4 years: As you approach an acquisition, a CFO ensures that you have accurate and trusted information. When potential acquirers trust your financials, the value of your company increases.
A Need to Raise Debt or Equity: If raising debt, your CFO is your go-to co-pilot to ensure that you raise the right amount of money at the terms that make sense. When raising capital, having a CFO raises your business’ credibility.
Financial Statements are becoming complex. Being able to understand your business in a concise manner is crucial to stay competitive. At some point your business becomes complex and needs a CFO to help provide you with the insight to beat your competition.
About Hardesty, LLC
Hardesty is an executive services and financial consulting firm providing best-in-class executive leadership and professional services to middle market companies through its nationwide network of offices. The firm provides executive search, interim executives, technical accounting consulting, and strategic consulting services. Hardesty’s team of seasoned partners and professional resources is available for rapid deployment to companies regardless of location. Hardesty has grown rapidly since its formation in 2011 and has been recognized as a “Fastest Growing Company” for several years. Hardesty is headquartered in Orange County, California with offices in major U.S. markets.
Article Written by Hardesty Managing Partner and Northern California Practice Leader, Bob Worthington.