Most small businesses know that a CEO is one of the most essential financial management jobs, but they don’t always realize that a CFO, or chief financial officer, is just as important. That being said, for some small companies, bringing in a CFO would be unnecessary — either financial analysts in the company are able to compute the business’ financial tasks, or the CEO is capable of handling both employee management and financial management tasks.
So how do you find out whether or not your business really needs to hire a chief financial officer? Here are three small tips to help you out:
- The best indicator of needing a CFO, according to corporate management experts, is if your business has grown very quickly over a very short period of time, and is in an industry where the competition is high. Many startup companies find themselves growing quickly, but not every startup has to calculate many financial risks simply because there is so little competition. When major financial decisions involve a lot of risk — and when there’s a competitor waiting to take your place if you fail — you’ll definitely want a CFO around who will make the best decisions.
- Because the CFO job description and responsibilities all center around finances, you should consider adding financial management jobs if your business is having trouble managing its finances — past, present, and future. Corporate finance positions often require extensive training in accounting and corporate finance, which is extremely beneficial if your company’s CEO doesn’t have much experience with accounting and financial responsibilities, and if your company has to do more than just calculate paychecks and taxes for a handful of employees.
- And finally, it’s important to look at the current stability of your business and make a realistic estimation of where the business will be, financially speaking, in a few years. By this, we mean that you should take a look at your business’ finances and make an honest prediction of whether or not you can afford to pay the salary of a CFO — not just at the moment, but for years to come. Because financial management jobs require so much education and experience, the best candidates will only accept job offers that come with decent salaries.
Now we’re asking you for some help — if your business is considering creating a CFO position, what’s your major reason for going in this direction? Be sure to share your thoughts and questions in the comments section!