Why Hire an Experienced CFO for an International Startup?

CFO for International Start-up

A Chief Financial Officer (CFO) is a great asset to any firm, but in a startup, an experienced CFO can mean the difference between success and failure.

Every CFO should have training understanding international financial accounting, preparing financial reports, management accounting etc. An experienced finance director, however, is more than the lead accountant. S/he can bring some understanding to a startup, helping the new company to avoid pitfalls and stay clear bankruptcy and closure.

While that seems like a heavy task for a single member of the Executive Team, in reality, that’s what every finance manager should be doing.

Why Hire a CFO for Your Startup?

In this article, I want to talk about how a CFO with experience can be the perfect person to guide a startup.

Reduce External Consultancy Cost

Lawyers, compliance officers, accountants, and IPO specialists can all cost a huge amount of money. With an experienced Chief Financial Officer, particularly one that has global and/or regional experience, these costs can be reduced.

Someone with experience preparing IPOs, handling merger proposals, and addressing compliance issues can save the company immense amounts of money. One place where this is helpful is in Europe where the European laws cover the almost the entire continent. Whether a firm is German or French or Italian, those laws stay more or less the same the same. Hiring a CFO with the right experience can reduce the need for outside help.

Global and Regional Compliance

Beyond national and regional laws, some of the most important compliance issues come from international treaties and standards of business.

Compliance with industry standards, even voluntary regulatory bodies, is imperative to help build credibility. A new business has no “street cred” and being able to show compliance with local or international GAAP, ISO or other standards can go a long way to reassuring customers or investors of the company’s ability to be profitable and meet with global standards.

Better Communication with Board and Investors

Investors and Boards of Directors love numbers when angel investors and other financiers are involved. They need to be able answer questions that transcend the fundamentals.

With the help of an experienced CFO, everyone on the Board will understand the finances clearly and be able to share the information with the money people.

What is the Difference between a Controller and a CFO?

Experienced CFO = Financial Control

Keeping costs under control is key when working with a startup. One thing that can get a startup into the deepest trouble is the constant need to have the shiniest, newest equipment, software, hardware, and more.

A finance director who understands the dangers of overspending can help to keep all of that under control. He can see where the startup is hemorrhaging money and staunch the bleeding, often without comprising the firm’s forward momentum. Compromises can be made and must be made for a startup to survive, but they need to be done judiciously.

One of the most important controls the CFO can put into place is the Strategic Plan. A Strategic Plan is a comprehensive guide to each step of the growth and viability process. It guides everyone’s decisions and ensures that money is placed where the firm needs it, not where a single manager or director “feels” it should go.

CFO vs CEO – Which one for a startup?

If you’re trying to decide where you need the most experience, a CEO or Chief Financial Officer, it’s best to err on the side of the CFO. Hiring a CFO that has “been there before” can reassure a rookie CEO that she has the finances under control.

A CEO can guide the team with words, ideas, and vision. A CFO must guide the money well or there will be no team.

Consider the number of CEOs who run massive companies. Many had no experience running any company, let alone a massive multinational, but founded some of these companies. Looking to hire a CFO with more experience can ease the pain and learning curve of a new, dynamic, but inexperienced, CEO.

As long as the two trust each other, a veteran finance director and a rookie Chief Executive Officer can be a powerful team.

Personal Experience

Having worked in companies in Switzerland, Russia, and throughout Europe, I can tell you that it’s easy to see when a firm is controlled by an experienced CFO.

When I arrive, I can see that the plan has been handled well, designed correctly, and is realistic in its projections for the firm’s success. Having run companies that ranged from medium-sized to massive multinational and having guided them through easy times and rough seas and huge mergers,

I know that I would not have been able to handle some of today’s startups when I first started up. Looking at startups like Facebook, Amazon, Microsoft, Starbucks, and others that started out small and exploded, often led by rookie CEOs, it seems clear they must have been guided by one or more experienced hands to succeed.

For a startup, nothing is more important than an experienced CFO. A steady hand on the tiller can guide any ship, new or old, to success.

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