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Posted: August 27, 2010

Six key questions to ask before hiring a CFO: part 1

How do you know you really need one?

Marty Koenig and Keith McAslan

Before hiring a financial executive to guide your company, ask these six questions to ensure that you don't end up paying a whole lot of money for services that are not what you need, expect or want. Hiring an on demand CFO does not have to be a confusing experience. Instead, it can be the most empowered decision you ever make for your company.

1. How do I know if I need a CFO?

Many small companies have a bookkeeper, accountant or CPA. Their roles are important, but very limited in scope compared to the experience of a CFO. Bookkeepers and accountants function mostly in the day-to-day work of keeping up with your records and taxes. Even a controller is often seen as a "number cruncher" that spends a lot of time with their nose in spreadsheets and doing reports. A CFO is very different and provides far greater value to small businesses.

Here are some examples of why a small company might need a CFO:

• Rapid company growth has stretched the capabilities of your current accounting staff to the limit, but you still cannot afford a full time senior financial executive.

• You are planning a major expansion and can benefit from adding an outsourced CFO and trusted advisor to your management team.

• You need assistance in dealing with bankers, lenders or outside investors.

• Your company is in a crisis, experiencing financial or other difficulties and requires strong financial leadership that cannot be provided by your current accounting staff.

• You need specialized financial expertise not available internally, and could use the help of an experienced CFO to mentor and coach them to do better at what they do.

• You are planning an exit from your company with a merger, acquisition, or sale and want to gain maximum value and sale price in the future.

• Your CFO leaves unexpectedly and your company has no one internally with the skills and experience to take over. Until you complete the search for a replacement, CxO To Go can provide the financial expertise to keep your business running smoothly.

• You need a periodic financial advisor to keep your company on track, someone that is dedicated to your company as it grows.

• You are a new start up company and want professional advice to begin your financial management correctly.

2. What questions should I ask a CFO to be sure he/she has the experience and personality traits to help me?

Throughout your conversation, determine if the CFO is a people person, not just a number-cruncher. His/her people need to like him and trust him, and he/she needs to inspire everyone around him. Some accountants and professionals do not enjoy working with a lot of people and collaborating for success. These types will never be successful CFOs.

Ask them about breadth and depth of knowledge and experience. While knowledge of your particular industry fine, a big part of his/her ability to add value to your firm will be his experiences in and around a multiple of industries. He will possess the unique ability to understand and lead several, if not all, of the disciplines of the company with great focus and precision. He needs to have significant experience helping companies obtain clarity, maximize cash, improve profits, and optimize their resources from a multi-disciplinary perspective.

Ask them to give you examples where they have had to be diplomatic and persuasive. The CFO holds all of the confidential and valuable information to the business model and plans for growth. He needs to carefully and professionally work with others around him without being abrasive but using persuasive communication to engender buy-in and loyalty. These are sometimes rare traits, but a great CFO needs them desperately.

Ask them if they are open to new opportunities and flexible. If he/she always says no before hearing you out, then he will never succeed as the CFO. In the broad and deep context of all of his experience and strategy for the company, he/she should be able to filter through opportunities and help the company implement the ones that best position the company to achieve its objectives and improve its competitive advantages in the market.

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Marty Koenig is Founder and CEO of CxO To Go LLC. He loves what he does for a living, because he gets to work with so many great, world-changing people and help them succeed in their business. His team is dedicated to building financial, operational, strategic, technological excellence for small/mid size business owners. Marty has over 29 years of diversified experience in private and public companies, from startups and mid-size firms to multinational Fortune 30 companies including AT&T, General Electric, NCR Corporation and StorageTek.

Keith McAslan is a partner with CxO To Go, VP of CFO Services and member of our executive team. Keith is sought after to provide advisory services the trusted advisor to Owners and CEO's. By utilizing extensive experience as a successful financial and operational C-level executive, McAslan brings a results driven leadership style to complex situations. Keith's expertise includes: financial advisory; management consulting part time, interim & virtual CFO, COO and CEO; debt and equity financing; turnaround management; operational performance improvements; acquisition and divestiture advisory. Nominated for the Denver Business Journal CFO of the year

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