You’ve come to the conclusion that your company needs a new CFO. That’s the easy part. This article shares six tips to help you choose your new CFO.
You might be wondering: Why are CFOs important for a business? It’s common sense that the financial decisions of a company will determine the future. In fact, over 29% of small businesses fail because they run out of money.
Your new CFO will play a critical role in making financial decisions. So, here are the important skills you need to look for choosing CFOs. Plus, don’t hesitate to ask for references and reviews to really ensure that your new CFO possesses these skills.
- Financial Experience
Your new CFO, whether you want to hire or outsource your CFO, must possess solid experience and knowledge of financial principles and cycles. This skill is the most important one and even trumps industry experience. Instead, these are the financial skills that a CFO should have:
- Financial reporting
- Management of cash flow
- Making money
As you see, the responsibilities need excellent business finance experience, not industry experience.
Your new CFO is part of the leadership team in your company. He or she will be leading the team towards achieving specific financial goals. Therefore, the ability of the CFO to lead with empathy, understanding, and management is key.
Ask your candidates about previous leadership roles they have held. This helps you understand how they will build relationships within their team and with stakeholders.
- Strategy Orientation
A CFO needs to be able to spot opportunities and areas that need change. A strategic thinker is necessary to give your business that boost growth. So, find someone who can contribute to a vision and think in the long-term. That’s the best key to survival.
- Cultural Fit
A CFO that doesn’t have the same values as your business will struggle to fit in. Not only that, but they have not developed the same motivation to move the company forward. Ask yourself: What’s our company culture? Which values do we have? Use these questions to find a CFO that fits into the company.
- Communication Skills
If a CFO needs to lead, communicate strategy, and fit well in the culture, they need communication skills. That’s just a part of it. Financial insights are necessary for other teams to function well. So, a CFO needs to be able to communicate the most important insights to the right people.
For example, the quarterly report should communicate the company’s performance and how it contributes to the vision. This may require speeches or further explanations.
- Risk Management
As mentioned earlier, the financial decisions of a company impact its future. There’s a lot of risks associated with how money is spent. Your CFO should be able to assess those risks. For example, these risks may come from:
- Disruptive technology
- Cost controls
- and so on.
A talented CFO can spot these risks and implement measures to mitigate them.
Choosing CFOs for a Better Future
Your small business may get by with shouldering the financial tasks on your own. But as you begin to grow, you need to graduate from bookkeeping to hiring a tactical CFO. This will boost your financial health – if you know how to go around choosing CFOs. Use the tips above to find the perfect fit for you and your team.
You can find more tips and tricks for your business on our blog! Check it out.