You just raised a great amount of money. Now you have to recruit, build, sell, process, expand, and grow. And you start focusing on more pressing questions : What is my burn rate ? How much more money do we need ?
It’s time to hire the perfect CFO. But who is it ?
How to find this person who will :
• Have a strong experience
• Be hands-on
• Not cost as much as half of your Ops team
• Be legitimate enough to represent your company in front of the banks, funds, and other partners
• Eventually prepare your next fundraising
Obviously, this is one of the toughest recruitment you’ll have to do. And the most « engaging ».
>>> Here are some of our advice :
#1 : Focus on experience…but not only !
Start-ups CFOs don’t only track and report results, establish guardrails for spending, and close the books every quarter. Their role is much more transverse. They need to lay the groundwork for a high-performance environment.
This is why you can look for various types of backgrounds, not only the top CFO worth 200k$ per year.
2 tips for you :
• It’s important to match the experience of the CFO to the size of the company.
• Multitasking is the key !
Mid-level financial professionals (for example : controllers or managers in audit/TS companies), may be the best people to grow with your company. Provided they have excellent financial knowledge, a talent for strategy and a head for business, someone fresh to the title of CFO could well provide the kind of agile thinking that’s invaluable to a start-up today.
Our recommandation : a good CFO is the right hand to the CEO. He takes care of the admin/ops stuff, and lets the founders focus on building value. So check it’s hard skills AND soft skills !
#2 : Elaborate the full scope of the responsibility : more is better than less
Start-up CFOs naturally work across silos (legal, HR, Information technology, product teams, marketing etc.), wearing many hats to create processes and procedures that will quickly result in measurable success.
Before meeting candidates, take time to draft a list of all the duties your CFO would be in charge of. It might be a long time before you can afford a legal head, or a HRD. So he/she needs to be comfortable with finance, legal documents, recruitment, information technology, etc.
So please elaborate the full scope of his/her attribution. And remember : this is also the reason why an excellent CFO would want to join your team. He/she will be excited by new challenges.
#3 : Cash is king
Ken Morse, who was running until recently the MIT Entrepreneurship Center, used to put it simply : CIMITYM. In other words "Cash Is More Important Than Your Mother".
The biggest sin of entrepreneurship is to run out of cash unexpectedly. Your CFO is the one who will understands cash-flow and can give you the confidence to know when it's running out.
Easier said than done : the financial policy you may apply changes according to several parameters. It will not be the same if the degree of capital intensity is high or not. Similarly, the need for working capital in your start-up plays a major role. The expenditure of personnel (often highly qualified) is cash consuming. Stocks can also be significant if the product is not launched at the right time in the market or is not sufficiently finalized. It is also important to look at whether factoring can be achieved at lower cost. In addition to equity financing, financing can also be financed through self-financing and bank financing.
In other words, your CFO needs to master cash management in YOUR industry: he will not only control day-to-day expenses, but also be able to take into acount your industry specificities and anticipate quick changes in your market.
Last but not least : your CFO must be able to stretch your funding by knowing which expenses to cut without harming your business.
Tips : You need someone who knows the deal. Don’t hesitate to ask the candidates how they would manage the following tasks :
• Implementation of cash management tools
• Cash flow collection and disbursement
• Cash flow analysis
• Cash flow forecasting
• From a recruiter point of view, their answers will be very enlightning !
#4 : Ask for operational excellence with the perfect amount of PRS
Growing fast implies to organize your company, at every level.
The perfect CFO should know how to implement the right amount of process, reporting and structure (yes, we are talking about PRS).
Warning : too much PRS might slow you down. Not enough PRS leads to chao. The CFO has to find the right equilibrium to smoothly run and grow the engine.
Questions to ask : Which process did you implement in your previous experience ? What were the results ? Which tools did you use ? What are your key PRS achievements ?
#5 : Hard skills are as important as soft skills
Your CFO will be your right hand. You will rely on him/her on a daily basis, in good and bad times.
Therefore, you need to check his/her soft skills.
Here are some basic questions you should have answers to, after interviewing the candidates :
• What are his/her drivers ?
• What inspire him/her ? Does he/she love challenge ?
• What can he/she bring to this role that you’re certain other applicants can’t?
• Would he/she fight against adversity, and take the right decisions ?
#6 : Ask your investment fund(s) to meet the top 3 candidates
Building a company is a long and hard adventure. And your financial partners know the deal. That’s why it’s highly recommanded that they meet your top 3 candidates.
They will have the right insights. And they will know how to challenge them.
High Flyers Agency is right there to help you. Feel free to reach out !
Founder & CEO | High Flyers Agency
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