In the last column, we talked about how to determine when the time is right to hire a CFO. Once you've made the decision, the next step is figuring out what's involved in hiring the right person.
Mark MacLeod, the CFO of two start-ups, Akoha and Tungle, and an adviser to several online and software companies, says many businesses start by hiring a part-time CFO, which is sort of like dating, before a company decides to make a full-time commitment. Mr. MacLeod said the most important consideration is avoiding someone who is between full-time jobs.
"This person will leave you high and dry as soon as a full-time gig comes along," he said.
"Choose someone that is in the business of working with multiple companies. Also, avoid horizontal CFOs, which are CFOs that work across many industries. While accounting is accounting, the CFO's role has very little to do with this. Value comes from vertical or industry expertise and contacts. Work with someone who knows your space."
Another important issue is finding someone who gets along with the chief executive officer, given they will work closely as a team on a variety of projects such as arranging financing and dealing with existing and/or potential investors. Again, it's like dating - you want to have a relationship with someone who is compatible while bringing other skills, expertise and networks to the table.
"The best CFOs will take care of things that the CEO should not do, leaving the CEO to do what he or she does best," Mr. MacLeod says.
In terms of where to start once a part-time or full-time CFO has been hired, Mr. MacLeod says cash planning and management are logical areas so there are no surprises about metrics and reporting as the business grows.