As a purpose based executive search firm, Y Scouts often helps companies hire a chief financial officer. But how do you know when to hire a CFO for your company?
Timing is an important part of any business transaction, and hiring a new executive is no different. Here are five signs that can help you determine when to hire a CFO:
1. Your company has experienced a lot of growth in a short time.
If your business has just had a sharp increase in revenue, your financial situation is going to change drastically. Similarly, if your business just acquired many new employees in a short period of time, someone needs to make budget adjustments to ensure everyone gets their paycheck. A CFO can guide your company through a transition period and prevent finances from growing out of control.
2. Your company is going public.
Taking the leap to become a publicly traded company requires careful financial planning. Whoever is in charge of your company’s finances must be able to set your business up for the best possible IPO in order to ensure your future success. The expertise of a chief financial officer can be a huge asset when your business is taking this step forward.
3. You’re acquiring or merging with other companies.
A merger or an acquisition can change your company’s finances very quickly. A merger or acquisition might be a good time to hire a CFO in order to accommodate these quick changes and keep your company’s finances on track.
4. Your business is going through an audit.
Whether the government is auditing your business or you’re undergoing an audit for internal purposes, hiring a CFO can help you through the process. They will be able to use their experience to double check that your business’ finances are in order before the process begins, which could keep problems from arising.
5. Working with your finances has become too much for you to handle.
If you don’t have a whole lot of experience dealing with corporate finance, it won’t be long before fulfilling the duties of a CFO becomes overwhelming. Don’t stretch yourself too thin by trying to wear multiple hats when you aren’t qualified to do so. Hiring a chief financial officer could alleviate your stress and give you more time to work on projects that utilize your skill set.
You might be interested in these other posts about hiring a CFO:
– What to Look for in a CFO
– How to Hire a CFO
– 15 Incredible CFO Interview Questions
– What to Pay a CFO
How did you determine when to hire a CFO for your business? Let us know in the comments.
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Frequently Asked Questions
Q: At what point do you need a CFO?
A: Figuring out when to bring in a CFO can be a bit of a balancing act. If you hire too early, you might stretch your budget, but if you wait too long, you could miss out on growth opportunities. Generally, companies start thinking about a CFO when they’re pulling in around $50 million in annual revenue. Before that, it’s often more practical to manage financial matters with external help.
Q: Why would a company hire a CFO?
A: A company hires a CFO to make sure its finances are in top shape and investments are paying off. A good CFO brings a wealth of industry know-how, a solid network of contacts, and valuable resources. This expertise can be crucial for steering the company through big expansions and complex financial decisions.
Q: What are the risks of not having a CFO?
A: If you don’t have a CFO, you could run into some big problems. First, you might make poor financial decisions because you’re missing expert guidance. Also, without proper financial planning, you might miss out on important chances for growth or funding that could really help your business.