Startup founders wear many hats as they juggle the responsibilities of building, hiring, and inspiring. They must constantly test, confirm, and pivot in order to move forward. However, one crucial task that often falls on their shoulders is managing their finances. This can quickly become overwhelming for startup founders, and many wonder if and when they should hire a CFO. In today’s world of C-level-as-a-service, is a full-time CFO even necessary?
Having worked in close collaboration with both founders and chief financial officers throughout my career, I understand the importance of their complementary skill sets and personalities in driving a company forward. To gain further insight, I turned to seasoned financial operators and CEOs for their advice on this crucial question.
Why Do You Need a CFO?
A CFO plays a critical role in a company, overseeing cash flow, financial planning, and regulatory compliance. Their main goal is to ensure that the business has enough liquidity to support its operations and growth. They also have a key role in strategic financial decision making and must ensure the company complies with all relevant regulations.
However, when considering whether to hire a CFO, many founders tend to think strictly in terms of accounting. In reality, the role encompasses much more than just maintaining clean books and financial controls. An experienced CFO brings depth to the finance function, offering valuable insights on how to allocate resources and optimize capital.
For example, a skilled CFO can plan for and secure different types of capital, such as loans and leases, and align cost with return. This allows the company to rely less on costly venture capital and prioritize product development, team building, and market expansion. The result is an increased return on investment, benefiting the company in the long run.
Startup coach and CFO Evgeny Popov emphasizes the importance of hiring a CFO, comparing it to finding a CTO for a tech company.
“CFO is a crucial role for every business, no matter its size. This is especially true for a tech startup looking to expand,” he explained. “However, many founders come from product or tech backgrounds and may not see the CFO as integral to their growth strategy.”
By considering the broader role of a CFO and the value they bring to the table, founders can see the importance of hiring one for their company’s success.
