As a startup founder, you may have reached a point in your business where you realize you need a Chief Financial Officer to help manage your finances and make strategic financial decisions. However, hiring a CFO for the first time can be a daunting task, especially if you don’t have experience in financial management.
Often this role is the first hire for your leadership team. This person can set the tone for the management organization, and the culture of the whole company. Perhaps most importantly, your CFO will be your partner in difficult situations.
This critical hire is essential to get right. Even though there are no perfect candidates, getting this one right will be the best way to pave the bumpy road of tech startup growth into a highway for scaling. Your CFO works with every department in your organization. They have the ability to instill employee trust in your company and to bring calm during times of turmoil. If they can keep their cool during difficult times, the organization will be able to overcome almost anything.
Here are six tips to help you hire your first CFO:
1. Define your most necessary needs
Before you begin the hiring process, it’s essential to clearly define your needs and budget for this role. Consider what specific financial tasks and responsibilities you want the CFO to handle, such as financial reporting, budgeting, fundraising, and strategic planning.
A great tactic to achieve this is to ask yourself: “If this person achieved these three challenges, that would be a critical success.”
Once you know what the core of your CFO’s success would look like, it will be much easier to find the right person to thrive in this opportunity.
It may feel obvious, but during this assessment phase, you need to determine how much you can afford to pay a CFO and what benefits you can offer. Having a clear understanding of your needs and budget will help you attract the right candidates and avoid overspending.
Keep in mind that candidates aren’t only looking for compensation, but their whole daily experience with the company as well as future growth opportunities. Build the whole picture in your mind so you can confidently communicate what you offer to candidates.
2. Look for experience and expertise
When hiring a CFO, you want someone with experience and expertise in financial management, of course. Look for candidates who have worked in similar industries or companies, and who have a track record of success in managing finances, and achieving goals that you want to achieve with your business.
Don’t forget to look for candidates with a strong understanding of financial technology – this is an underrated CFO skill that can really help you streamline your financial processes and keep your spend lean.
One common mistake that is made when assessing past experience is only looking at metrics for financial statements.
A CFO’s role is far more than the balance sheet. This person will work with almost everyone in your organization. So, what projects have they accomplished in the past that have enhanced the way the full team works? How do they assess the validity of a new tech stack from the marketing team? Do they ask critical questions, but still keep an open mind?
These details will really help you identify which candidates will be looking after the health of the business, not just the financial statements.
3. Consider cultural fit
In addition to experience and expertise, it’s important to consider cultural fit when hiring a CFO. Your CFO will be working closely with your team and will need to have good communication skills, adaptability, and a collaborative mindset. Look for candidates who share your company’s values and vision, and who will be a good fit with your team’s culture.
A great way to assess cultural fit during an interview process is to incorporate a casual element into the meetings.
You can do this by offering to make them a coffee when they arrive, and see how comfortable you two are together while doing something that is not work-related. Or, invite them to have lunch with some people from different teams to understand how easy or difficult it is for them to be themselves.
You’ll be spending a lot of time with this person and it’s important that everyone feels comfortable being around them as well.
4. Conduct thorough interviews and assessments
When you have a shortlist of candidates, conduct thorough interviews and assessments to gauge their skills, experience, and fit with your company.
Ask them about their experience in financial management, their approach to financial strategy, and their experience working with startups. Use the STAR method when formulating interview questions. This gives candidates the ability to structure their responses in a full-lifecycle structure so you can see what problem they solved, how they solved it, and what the outcome was.
It’s important to be prepared to critically review a candidate’s experience and personality. But perhaps even more important is to be prepared to present yourself and your business confidently. No finance professional wants to join a company that doesn’t have clear metrics or a clear vision. So, know your numbers, know your needs, and practice pitching your value before the meeting.
Need help developing a short list? Get in touch with us today.
5. Get input from advisors
Get input from advisors or mentors who have experience in financial management or have hired CFOs before. They can provide valuable insights and feedback on your candidate selection and interview process. They may also be able to recommend candidates or connect you with resources for finding qualified candidates.
The best way to do this is to reach out to your network and ask experts you trust for their opinion. Find your connections on LinkedIn who have successfully hired a CFO before what they wish they knew before they started the process.
Additionally, ask other financial professionals what they look for when assessing a potential company to join.
6. Recognize when you need to bring in the experts
Getting this hire right is a key element of any growing technology organization. Like we mentioned earlier, there are no perfect unicorn candidates. But to root through the unknowns, it can be worth it to solicit the help of a recruiting agency.
You’ll get a neutral and practical point of view from a partner who isn’t emotionally attached to the business.
Handing this task off to the pros means more time to focus on the business while knowing we’ve got your back. That’s what we do. We take hiring executive roles seriously – we put ourselves in your shoes, and find the candidates that will be worth your time to talk to.
Hiring your first CFO can be a critical step in your company’s growth, and these tips can help you find the right candidate for the job.
Remember to define your needs and budget, look for experience and expertise, consider cultural fit, conduct thorough interviews and assessments, and get input from advisors.
With the right CFO in place, you can focus on growing your business and achieving your financial goals.
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