Many small business owners are unsure of how to read their financial statements. This can detract from making important decisions about the company. But hiring a Chief Financial Officer (CFO) can help reassure you that you are taking the proper steps to run your company.

Does Your Company Need a Chief Financial Officer?

A company’s Chief Financial Officer, or CFO, manages the business’s financial operations and strategy. The CFO usually reports directly to the owner or Chief Executive Officer (CEO) and has significant input regarding the company’s capital structure, investments, money management, and long-term business strategy.

CFOs can be valuable business advisors as you navigate through many new business challenges. A Chief Financial Officer can help your company with:

  • Managing cash flow
  • Creating operational efficiencies
  • Preparing for transactions
  • Managing investor expectations
  • Complying with employment laws
  • Creating administrative efficiencies and the right level of internal controls to handle exponential growth

One of the critical factors in determining whether or not your business needs a CFO is the company’s planned growth rate. For example, if your company does not generate any revenue yet but is planning to bring in $3 million over the next few years, hiring a part-time CFO could help you build a solid foundation and focus on key aspects of the business that owners might overlook. In this case, a CFO can create processes for getting things done while allowing you to focus on the future rather than the basic day-to-day tasks.

If your company’s customer needs are complex, a CFO could also assist you with guided, more nuanced strategies. Likewise, if you have sophisticated investors on your company’s board of directors, you might also need a CFO to ensure that you focus on the right things and have a solid sounding board to work through issues and strategies.

For instance, more sophisticated investors require more sophisticated financial and operational reporting so a CFO can assure them that their investments are moving in the right direction. A Chief Financial Officer can turn pages of numbers into a story for you and your investors. They could also help you create financial forecasts that investors often require for making decisions that support your company’s short- and long-term objectives.

CFOs, CPAs, and Bookkeepers

CFOs do not perform the same duties as CPAs and bookkeepers. For instance, a Certified Public Accountant, or CPA, is a licensed accounting professional who must meet education, work, and examination requirements to earn this designation. Therefore, not all accountants are CPAs.

These individuals are typically involved in accounting tasks like producing reports that reflect the company’s dealings and filing taxes for businesses and individuals. Further, a CPA can help you choose the best strategies for minimizing taxes and maximizing profitability.

A bookkeeper’s job is to record and reconcile transactions. However, bookkeepers should know how to read financial statements to record information correctly. In some instances, bookkeepers are involved in developing the business’s strategies.

How to Hire the Right CFO for Your Business

If your company needs a CFO, you want to ensure that you hire the right person for the job. To help narrow down the best candidate, you should fully understand the company’s needs and goals, such as:

  • Short- and long-term growth and revenue projections
  • Additional financing needs (from investors or other funding sources)
  • Preparing for growth and changes in your industry
  • The potential for mergers and acquisitions in the future

In addition, you should also look closely at a CFO candidate’s background, experience, and education and your company’s culture to determine whether they are a good match.

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