One of the most senior employees at any organization is the Chief Financial Officer, or CFO. For small companies and tech firms, it may seem that it is not necessary to invest in a quality CFO. However, there are several situations in which it could be time for a small and growing tech firm to hire a CFO to manage and run their finances and accounting processes.
One situation in which you will need to hire a CFO for your tech company is when you are looking to grow quickly. While you can have a great business plan and idea in place, you will not be able to grow and develop the way you want if you do not have an organized financial plan. For tech startups looking to grow fast, hiring a CFO should be one of first tasks.
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You Don’t Know Where You Stand Financially
Another key indication that is is time to bring on a CFO to your firm is if you do not know where you stand financially. While you could have great tech and are making great clients, you still may not have a strong financial picture when it comes to your income statement, balance sheet, and cash flow statement. If this is the case for your firm, hiring a new CFO should be your top priority.
Finances Taking Up Too Much Time
Many small companies and tech firms are able to operate without a CFO for a period of time before they hit a period of growth. However, when a tech company continues to grow and develop, managing finances will continue to take up more time and be more of a focus. If you suddenly find that managing finances and accounting is taking up too much of your time, it could be a good indication that you need a CFO on board. This will free up more time that can be spent on other areas of your business.
You Need A Loan Or More Equity
When it comes to managing a tech firm, getting access to capital is often a necessity. When you are looking to raise money through either a bank loan or through private investors, you will want to have confidence in your finances. One of the best ways that you can be confident in your finances and make investors and lenders confident is by having a strong CFO on your team.
Time To Go Public
Another situation in which having a CFO working for your tech firm is if you are looking to go public. While you could try and grow your company with private equity and venture capital, there will come a time when going public will make a lot more sense. However, before going public you will need to be able to look like a viable and stable company to the market. To do this, you absolutely will need to have a strong CFO working for your firm.
When You Can Afford It
While having a CFO on your team will be helpful, they are also expensive and will require an investment on your part. Because of this, you will want to make sure that you can actually afford the CFO and that the cost will not cause you to lose money. If you can’t afford the salary, offering more stock and other incentives could be a good option.
When it comes to determining whether or not you should hire a CFO, the time that it makes sense varies for every business. You need to make sure that you spend time considering the advantages and disadvantages of hiring a CFO to figure out if it makes sense for your company. You should also come up with benchmarks that will indicate when bringing on a CFO would make sense in the future.