Post 3 of 4 in the series on Scaling CFOs – other posts are How to Engage with Your CFO and When it is Time to Hire Your First Chief Financial Officer.)
A lot of startups have a bookkeeper, accountant, or even a spouse of a founder or employee handle the finances when they first start out, and that’s fine. But at some point you’ll want to hire a CFO and if you’re dealing with a lot of chaos it’s easy to think, “well, anybody is better than what we have now.” But I would hold off on that thinking because the CFO, a great one, will do a lot more than just manage the finances, AP, and AR. A great one can do four things particularly well:
First, a great CFO will spend time learning and steeping themselves in the substance of the business; they’ll understand the product, the people who created it and market it and sell it, and they’ll spend time in-market with customers and partners. They do not believe their function is only “corporate” or only a service function; instead, they see it as both of those, as strategic, and as pathway to greater financial understanding for every person in the company. They insist that the people in their department do the same.
Second, a great CFO is deliberate about regularly reviewing homemade systems, processes, and spreadsheets and looking for opportunities to streamline things, reinvent them, or move them into systems. Once most things are automated and in systems, they are constantly evaluating whether or not the systems are serving the business well enough and are looking to integrate systems across the company. They are not afraid to tear down and reinvent systems and processes that they themselves set up in the past. That is, their ego is less important than doing what’s best for the company.
Third, a great CFO will have the right balance of pessimism and optimism and they are strong at communicating both. While they are proactive and timely about delivering bad news to you and the Board, their orientation isn’t around “no” and bad news. Their orientation is around investment and return and always thinking about things going on around them in the company through the lens of realistic opportunity.
They can fly at multiple altitudes at the same time, noticing the smallest detail that’s off while thinking about business models and strategy. While most executives need to be strategic and tactical at the same time, the CFO needs to be like that more than most — mostly because the details and tactics are frequently life-or-death for your startup.
(Posted on the Bolster blog here).