You Should Hire a CFO As Soon As You Have Product/Market Fit
Once solely focused on reporting business results, today’s CFOs are emphasizing driving business results; increasingly becoming active partners in determining a business’s future.
This shift was explored by Quora CFO Kelly Battles in a session at February’s SaaStr Annual Conference. Titled, Demystifying the Role of CFO, she outlined the major roles of the CFO, what to look for in a CFO, and how the CFO can partner across departments to build toward company success.
For startups, Ms. Battles suggests: "You should hire CFO when you have a product/market fit. Before they'll be bored." Incorporating senior financial leadership at this point, while a company remains agile, strategic and thinking long-term, allows the leader to develop that entrepreneurial DNA before running the department becomes just about financial reporting and management.
These leaders set the pace in the organization with goal setting and accountability. It is easy for a company to describe a long term mission, but lose sight of how to get there with regular progress and accountability. Today’s CFOs provide this with the practical, operational decision making.
As a SaaS company focused on improving business performance through software licensing optimization and management, Cleanshelf knows that finance leadership plays a critical role in strategic business operations. The evolving role is a crucial one for our customer’s leaders to grasp. The right CFO offers a unique blend of data-driven practicality and forward-facing vision.
Short-term, the CFO must deliver on the basics – business operations, financial statement development, and forecasting. Long-term, the CFO drives the strategic plan, company-wide budgeting, and the long-range operating model specifics. This balance is highlighted in Battles' four axes of CFO personality -
- Strategic vs. Operational: A CFO must be a strategic thinker who thrives on complexity. Being intellectually curious and analytical is crucial to providing the best possible results in a way that challenges industry norms. At the same time, she must be operational – a doer grounded in reality. The CFO must envision the future, but execute processes and build teams that work for the reality of the business right now.
- Live efficiently in the past vs. Stretch boldly to the future: Understanding the financial realities of the past produces accurate and timely financials. But CFOs cannot only live there. Stretching into the future boldly, but efficiently, requires taking the financial picture of the past and leveraging that insight to move the business forward. This is how CFOs become viewed as true business partners, instead of building a reputation as bean counters or the “no” guys.
- Heart of a customer servant vs. Mind of a police officer: Leading as a customer servant encourages relationship among the organization. Conversely, a CFO with the mind of a police officer ensures that the organization practices compliance and has clean audits. By partnering with service functions like accounting, which, according to Battles, "keeps us out of jail," – the CFO ensures that the organization's financials are well-organized, clean, and confidential. This goes beyond simply compliance too. Tight financial systems and processes give confidence and allow credible risk-taking.
- Frugality vs. Scalability: A CFO who acts with frugality guards the finances of the organization. This isn’t about shutting down ideas or not-approving spend. It is about enabling competitive investments in scalability. She thinks like the leader of a public company, a steward of stakeholder resources, even if she is not at the moment. Battles warns, "CFOs need to think in advance. Think like public company already, now."
The scope of the CFO role varies depending on the organization's life stage. However, companies are realizing the benefits of strong relationships between the CFO and other executive leadership. To a CEO, the CFO can be a strong business partner. His intimate knowledge of company financials means that he can tee up strategic choices and use data to join CEOs in forward-thinking, business enhancement.
Risk taking is scary enough, but not being well-grounded with all available information is foolish and downright paralyzing. The right CFO provides a competitive edge. Don’t wait, find yours today.
Cleanshelf is the leading SaaS spend optimization solution focused exclusively on tracking, controlling, and benchmarking subscription SaaS applications. Cleanshelf’s cloud technologies help companies save up to 30% on their SaaS spending by automatically identifying unused, underused, or unmanaged licenses and subscriptions.
Headquartered in San Mateo, CA, Cleanshelf serves dozens of clients, including Drawbridge, Revinate, Dynamic Signal, Qumulo, and Service Rocket.