Taking Financials to the Next Level  

It might be a financial "surprise" in some form - like a bank notice, tax penalty or unusual financial statement. Sometimes it can even be a nudge from one of your investors.  Or maybe it's the simple realization that your revenues have reached a point where financial management is no longer one of the many hats you can wear.

Whatever the tipping point is, there will come a time for most growth-oriented companies when their financial affairs demand more than the services of a bookkeeper or tax preparer.  But how do you know for sure when it's time to bring in a Chief Financial Officer?

It's not always a cut-and-dried decision.  There really is no magic revenue number that, when reached, requires a CFO to be brought on board.  It is more a question of when the complexity of the business and the financial demands become great enough that the experience and specialized skill sets of a CFO are required to continue running and growing your business successfully.

The validity provided by a specific event or condition is an indicator that it is time to bring on a CFO - even if it is on a part-time or contract basis.  It may also be dependent on the individual business and the industry in which it competes.  A company generating $5 million in revenue might be ready for a CFO, while another company generating $10 million may not be.  The number, type, complexity and average dollar amount of transactions needed to reach a specific revenue number are more telling indicators of a need to bring on a higher level of financial experience and knowledge.

Growing companies reach a critical transition point when they are required to determine how much liquidity (i.e. cash) they will have at some future point.  The skill required to produce that type of cash flow forecast is beyond the skill level of a bookkeeper or staff accountant.  It is one of the many skills a CFO can bring  to your business.  This skill is critical for controlling the growth of your company, and for communicating the results to those with the money at stake - the shareholders, investors, banks, insurance companies, and even the employees.  The CFO can also create management financial tools and systems, report results of financial analysis, provide financial business advice and participate as a member of the strategic planning team.

Business Humor

Rick, fresh out of accounting school, went to an interview for a decent paying job.  The company boss asked various questions about him and his education, but then asked him "What is three times seven?"

"22" Rick replied. After Rick left the interview, he double checked his answer with his calculator and realized he wouldn't get the job.

About two weeks later, he got a call from the company boss telling him he had been hired for the job!  Rich was not one to look a gift horse in the mouth, but he was curious.

So the next day when he reported for work, he asked the boss why he got the job, even though his answer was wrong.

The boss shrugged and said, "Well, you were the closest." 

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Business is like a dogsled team.  If you aren't the lead dog, the scenery never changes

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