Did you know that 29% of small businesses fail after running out of cash? The financial decisions you make today will determine if you’ll be in business tomorrow. As such, it is crucial to be keen when choosing a CFO for your company as they will play a critical role in making financial decisions.
The right chief finance officer will ensure that your business is in it’s best version. The CFO works with the business’s different functions, which include operations, marketing, and sales.
With the many options for CFOS, it would help to consider some tips before choosing a professional fit for the job. Here are the factors you’d want to consider when choosing a CFO.
1. Leadership Ability
The chief finance officer will be part of your company’s leadership. You need to get a CFO who has the right set of leadership skills. Besides handling financial matters, the CFO will be leading the team, especially those within the finance department, towards achieving specific goals.
You can establish the leadership abilities of a CFO from the first interaction. In the interview, get to know the past leadership roles that a leader has been involved in. You can further vet the applicant to know some of the skills they possess as leaders.
Some of the effective leadership traits you can look for in a CFO include positive attitudes, self-motivation, self-confidence, and honesty. You can test each applicant to know if they possess some of these traits.
2. Excellent Communication Skills
Typically, CFOs are popular in organizations for their financial prowess, not communication. It is essential to prioritize communication skills, especially if you are outsourcing for CFOs. These experts won’t be working in your office, which makes good communication a crucial aspect.
You’ll need to be on the same page with the chief financial officer. It will be easier to know what the CFO is working on every other day with open communication. As such, the essence of good communication skills for CFOs can’t be emphasized.
By communicating, the CFOs will be able to report on tasks. They can explain to the rest of the financial team the steps they need to take for the business to grow. When choosing a CFO, be keen on their communication as it can make or break your business.
3. Financial Experience Should Outweigh Industry Experience
Some companies often prioritize industry experience instead of experience in finance. Your CFO candidate needs to possess experience and knowledge of financing cycles and basic accounting principles. Some CFOs have all the necessary finance experience but zero industry knowledge.
You’ll be missing out on a great pool of top talents if your main focus is industry experience. If you check out what a chief financial officer does daily, you’ll realize that industry experience is unnecessary for one to be an exceptional CFO. The roles, which include financial reporting, management of cash flow, and making money, only require finance experience.
Note that most small businesses have similar roles as CFO. As such, you can get your CFO from any industry. You’ll be surprised at the extent of new perspective the CFO will bring!
4. Cultural Fit
What is your company’s culture? Do you have a clear set of values guiding your staff? It is crucial to use your organizational culture as the basis of choosing a CFO.
A chief financial officer who doesn’t fit within your organizational environment will have a hard time succeeding. Having shared values often leads to successful employees. As such, it would be best to look for a CFO who fits in with your business culture.
A culture clash can lead to misunderstandings. Hiring a fractional CFO who doesn’t share in your culture and company values is a pitfall you don’t want to get yourself in. It can bring your company down as the CFO won’t match up with your energy.
The culture determines the style of communication and problem-solving approach. During an interview, you can have a set of questions that will help you understand the values and beliefs a person upholds.
5. Check References and Reviews
About 93% of consumers state that online reviews have a significant impact on their purchasing decisions. Online reviews and references can guide you when choosing a CFO. You can search online, especially if you want to outsource CFO.
You’ll get a list of finance agencies, which you can then check online for their reviews. Credible and experienced finance gurus have good ratings. If you find a finance officer or agency with multiple negative reviews, don’t engage them further.
However, ensure that you vet a CFO more even with the positive reviews and ratings. Some people tend to fake reviews, which can make you hire wrong. The reviews should only guide you in identifying potential finance officers but not making the final decision.
6. Analytical Ability
A chief financial officer doesn’t only report on the numbers; the roles further include analysis of numbers. They also provide predictions on the calculations, while giving recommendations based on these projections.
Today, many companies are using accounting software to generate reports. However, you’ll need a CFO who will be translating the reports to make actionable plans that will help your business to thrive. Startups should particularly consider a CFO with analytical ability since they are in more need of financial footing.
You Should Consider Several Factors When Choosing a CFO
A chief finance officer plays a critical role in any company. When choosing a CFO, it’s crucial to consider some factors to ensure that you get the best. Getting a person with the right set of skills and competencies can be a resource for your business.
Are you still wondering how to go about getting the right people in your team? Our inspirational blog is a great resource for your business. Check out our other informative posts today.