When Is It Time to Hire a CFO?

Business owners tend to be do-it-yourself people either because the financial circumstances of their business dictates that approach or because they just think no one can do it quite the way they can. The outgrowth of this approach is that they wear so many hats in their business that they can lose sight of why they started their business in the first place. They can spend an inordinate amount of time on issues that someone trained in that discipline could knock out in a fraction of the time–and with better results!

So are there clues when a business owner is stretched too thin? Absolutely—and here are several red flags that tell a business owner it is time to either hire a full-time CFO or use part-time CFO services:

1. An owner who can no longer succinctly describe the business, what advantage it has that makes it successful, the 3 or 4 measures he/she uses to gauge performance and his/her vision for the company

2. An owner who is constantly fighting fires in a reactionary mode because the business is running him/her

3. An owner with a defined skill set (e.g. Engineering or Manufacturing) who is ignoring that aspect of the business while attempting to handle banking relationships or negotiate financing terms

4. An owner who lists “Cash Flow” as the company’s #1 issue (as most owners do!) yet has no idea what the drivers of the company’s cash flow are or how to forecast even short-term cash flows.

In summary, the 4 issues listed above are much more effective at predicting when a company needs a CFO than a simple numerical benchmark such as annual sales size. Whether the company needs a part-time CFO or full-time is best judged on a case-by-case basis. However, the real key is to act – when you see the signs listed above, begin to look for a CFO.

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Are you debating whether it’s time for your company to hire a CFO? Share your hesitations with us in the comments below.

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Tom Gentile
Tom Gentile
Tom Gentile is a founding partner with BeaconCFO Plus who has created successful business solutions for companies across multiple manufacturing industries.  He has extensive experience in strategic planning, turnaround management, working capital/cash flow improvement, acquisitions and procurement.  Tom regularly speaks to groups of business owners providing advice to improve their ability to generate cash flow.
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