When and how to Recruit a CFO?
If your business is growing fast and has 30 or more employees, you probably need to find a chief financial officer. Recruiters can help When San Francisco e-mail marketer Vertical Response grew to $6 million in revenues and 30 employees last year, company founder and CEO Janine Popick was overwhelmed with budgeting and accounts receivables. Eventually, she hired a chief financial officer to help her resolve the short-term problems, with the long-term goal of setting her company on track for sustainable growth. "I wish I had hired him earlier," says Popick. "He was a life saver." She says the CFO not only helped improve cash management and reporting but also helped deal with investors and HR issues. A CFO is often an overlooked hire at a new business because of the expense and misunderstanding of the role. Traditionally, a CFO prepares and interprets financial statements; develops financing strategies (with banks and investors); does tax planning; sets internal controls (to help minimize fraud); forecasts budgets, and handles compliance. Hefty Salary These tasks can be vital for a company. Yet it's common for founders to neglect them — instead building products and finding customers. If a company wants to grow, there needs to be a solid foundation, which is what a good CFO will provide. In fact, in today's rough economic environment, a CFO may be even more critical for a company's success. Before starting the selection process, a small business owner should keep in mind that it can easily take six months to hire a CFO and could potentially require a large salary—say $150,000 to $250,000 — including stock options (which may represent 1% to 3% of the company's outstanding shares). Given the time and cost, you're already probably wondering, when do you need a CFO? There is no definitive answer. But there are some guidelines: The company's revenues are growing quickly (30% or more per year) The company has received venture capital There are more than 30 employees In some cases, your company may reach those levels. What do you do in the meantime? One strategy is to retain a part-time CFO. He or she will have a solid background — and may have been a former CFO — but will devote a couple days of week to your company. A part-time CFO can help build financial systems and even help with some of the long-range strategies. More important, the part-time CFO can help provide a transition to a full-time CFO. So, how do you find a top-notch CFO? Of course, the most common approach is to hire a recruiter. While the fees can...