Thinking About Hiring a CFO for Your Small Business? Consider These Two Important Factors First

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Deciding to create additional executive corporate finance positions — or even just one position, for that matter — is a huge decision for a small business to make. Bringing in a CFO (chief financial officer) for the first time can be a major , positive milestone, and it can also be a little scary and intimidating.

With that in mind, here are a couple things to consider before you decide that your small business needs to hire a CFO:

The CFO job description, versus a CEO: As the name would suggest, a CFO is in charge of handling all the financial tasks, and usually managing additional company accountants and financial analysts, so your business should only be considering a CFO if you really need help with finances. CEOs often have basic accounting skills, but their main responsibility is to manage every non-financial task in the company. Additionally, many small companies benefit from outsourcing financial tasks, especially if they only need to handle things like paychecks and taxes, or they choose to bring in a specialized accountant rather than an executive manager.

The company’s current revenue, and predicted future revenue: It can be tempting to create new jobs and corporate finance positions when your business experiences a huge increase in revenue, but it’s also important to look at the estimated long-term status and financial stability of your company. Experiencing a major growth in revenue isn’t necessarily enough to warrant a new executive management position — you also have to estimate if the company is likely to continue experiencing similar increases in the future, or if it’s likely to level off sooner rather than later.

Ultimately, it’s important to remember that each business is in its unique financial situation — it’s impossible to determine if your company needs a CFO just by looking at other companies that have created new executive management positions.

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