You need to spend money to make money, right?
There is some truth to that old adage – but only to a certain extent.
For example, it doesn’t make much sense to hire a Chief Financial Officer if you don’t really have a need for one. Finances will get more and more confusing the bigger your business grows of course, but you don’t necessarily need to solicit the service of six-figure C-level team member to help you out in the beginning stages of that growth.
Here are 3 reasons why you shouldn’t hire a CFO right now:
- The Cost
Let’s get down to brass tax, the bottom line: CFOs aren’t cheap. They make, on average, somewhere between $240,000 to $390,000 a year.
Does anyone in your company make that much money? For that matter, do you make that much money? If not, it doesn’t really make any sense to hire a full-time CFO and make them the person with the highest salary in your operation. Unless you’re bringing in well over millions of dollars in annual revenue, you have needs that are surely more pressing.
In Most Cases, the Advice You Need Can be Provided for Less than What a CFO Charges
A CFO does provide a level of expertise that you just can’t find with a lower-level financial pro – but that doesn’t mean that you need that level of expertise to succeed, or even that it’d be especially helpful to your business, according to Andrew B. Clawson of ABC Law in Utah.
“Even a mid-level finance pro can move an organization’s planning, budgeting and forecasting processes beyond Excel spreadsheets so managers have the data and analytics needed to understand those ‘what-if’ scenarios and utilize predictive analytics and forecasting,”says Christian Gheorghe, CEO of Tidemark Systems, Inc.“And when it finally comes time to bring on that CFO, you can bet he or she will have plenty of thanks for the team who enabled them to inherit a finely tuned machine.”
- A CFO Isn’t What It Used to Be
“Today’s finance executives are expected to recognize that planning involves data, decisions and people–not just spreadsheets and budget mandates,” Gheorghe continued in his TechCrunch piece. “They’re now expected to work across the organization to model the business for growth, develop potential responses to likely scenarios (good and bad), align new initiatives with monetization, and deploy resources and investments where they’d drive new revenue.”
Those new responsibilities could be handled by A) a part-time CFO or B) a slightly less-qualified candidate who isn’t a C-level staffer quite yet but still has the experience and skill (and certainly the desired asking price) to handle your finances.
- The Opportunity to Outsource
Indeed, it’d be one thing if you had the choice between hiring a full-time CFO and hiring no CFO at all. But that’s just not the case.
Troy Martin of Cook Martin Poulson, P.C in Utah suggests; instead of hiring a full-time CFO, you’d be wise to hire a remote, part-time CFO that can provide basically the same services that a full-time CFO would at a fraction of the cost.