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What to Look for When Outsourcing a CFO for Startups

What to Look for When Outsourcing a CFO for Startups

/ Virtual CFO / By

5 Qualities to Look for in an Outsourced CFO for Startups

A CFO for startups can mean the difference between the 90% of promising companies that fail and the 10% that succeed. Rapid expansion, especially when you have a unique MVP that you want to leverage for initial growth, requires swift decision-making in:

  • Finance
  • Human capital
  • Supply chains
  • Distribution

Your startup’s financial future is often better in the hands of a chief financial officer (CFO) who can use their experience to guide your company forward. An outsourced vs traditional CFO offers less commitment on the part of the business and still ensures that your financials are being managed by someone with the experience to guide the company to success.

What should you look for in an outsourced CFO?

We recommend the following:

5 Qualities to Look for in an Outsourced CFO for Startups

1. Industry-Specific Experience

If you want to get the most out of hiring a CFO for startups, we recommend selecting someone with experience in your industry. Every industry has its own financial nuances. A CFO with the right resume can help you navigate them.

For example, if you’re a budding tech company offering a new accounting SaaS product, your needs will be different than a startup in:

  • Biotech
  • Aerospace
  • Legal
  • Etc.

If you’re offering a solution that redefines industries, a CFO who is familiar with the space can integrate industry-specific strategies and forecast issues that might slow growth or impact your market share.

P.S. If you need venture capital or additional funding rounds to help your business grow, a CFO who has raised capital in the past may have invaluable connections that can help streamline financing.

2. Reliability and Leadership Skills

Executives must be reliable leaders if you want them to help you hit your objectives and KPIs along the way. An outsourced CFO should:

  • Lead your business to its goals
  • Take charge of teams without impacting other areas of the business
  • Be reliable through the good times when the company is growing and the hurdles that you may face along the way

Accounting and finance are just two areas where a CFO can lead a company. If the CFO lacks leadership and problem-solving skills and overlooks small details, they may be worth passing over.

3. Excellent Problem-Solving Skills

Problem-solving is one of the benefits of an outsourced CFO that cannot be overlooked. You need someone who knows and understands that, sometimes, things don’t go as planned. Startups always face unique problems that need to be solved, such as:

  • Slow growth that needs funding to solve
  • Rapid growth without the human capital to scale properly
  • Investments that don’t materialize

Interviewing potential CFOs and asking them tough, problem-solving questions will help you judge whether the executive is agile and able to guide your business through good and bad times.

Your CFO should offer financial strategies that you – as a non-financial professional – would overlook.

4. Focused on Innovative Financial Strategies

Startups are all about innovating and disrupting industries. Your CFO should have the same innovation-driven mentality when it comes to your financial strategies.

When searching for an outsourced CFO, ask about their approach and strategies. What growth opportunities have they identified and leveraged? Do they have a unique financial initiative they’ve taken, and if so, what were the results?

Understanding their approach and mindset can help you determine whether they would be a good fit for your startup.

Along with having a passion for innovative strategies, your outsourced CFO should also be familiar with modern fintech and make recommendations on tools and solutions that will benefit your business.

When weighing your options, ask about their favorite tools and whether they’re comfortable learning and teaching new software. 

5. Sees the Big Picture But Doesn’t Overlook the Details

Your outsourced CFO should be someone who can see the bigger picture but is still detail-oriented. They should be forward-thinking and stay on top of your income, cash flow, expenses, and all other critical financial-related matters.

Many startups fail because they run out of cash. In fact, 47% of Series A startups spend at least $400K per month. An outsourced CFO can help keep your cash flow in positive territory, so you can continue growing your business.

More importantly, your startup needs an expert who knows how to analyze and put your financial data to good use. Their insights, advice and strategies can help your startup evolve into a sustainable, established business.

Closing Thoughts

An outsourced CFO can help steer your startup in the right direction toward its growth and financial goals. But finding the right professional can be challenging.

That’s where we come in. We’re a forward-thinking firm that can help you answer important questions, like:

  • How can I improve my bottom line?
  • Can we afford to hire someone?

Once we understand your goals, we’ll analyze your financial data and create a plan to help you achieve those goals. 

To learn more about our CFO services or how we can help you with your accounting needs, schedule a consultation now!

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