Podcast – How to Hire a Part-time CFO

Five steps to hiring a part-time CFO to simplify your life.


This podcast lasts for 8 minutes 49 seconds.

A written format is available here.

How to Hire a Part-time CFO

In my earlier article, Seven Reasons to Add a CFO – part-time or full – to Your Team, I discussed the reasons to add a Chief Financial Officer (CFO) to your team. If you have not read that article you should do so before reading this one.

The first step in the hiring process is to define the job you want filled. What specific results should the CFO produce for you and your company? Are you concerned about running out of cash because you have taken on a big project but will not get paid until completion? You worry about having enough cash on a regular basis. You are not certain that the bookkeeping is being done in an efficient and rigorous manner? What else of a financial character concerns you? Is your CPA driving you crazy with questions or suggestions that you do not entirely understand?

Make a list. Look back at the seven reasons I gave in my earlier article and see if this don’t provoke some additions to your list of worries. When you have completed your list, these are the problems, largely, that the CFO should solve.

Do not spend too much time thinking about exactly which functional skills are required to produce these results. It is the job of candidate CFOs to demonstrate to you that they have solved problems like yours and produced the required results. You are not hiring a trainee or development project, you are hiring an experienced CFO.

A few concrete skills and experiences you should look for.

First, your CFO must know how to get their hands dirty. This means they must have active skills to build spreadsheets and extract information from financial software systems and paper documents. Second, they must know how to present this to you in a clear, actionable format. A key task for them is to get financial information about company performance into your hands in a timely fashion and in a format that leads to making decisions. Third, preferably they will have experience in your industry so that they can set the analysis within the context your business lives in. Fourth, they should have worked as part of a team so that they have the skills to present the financial “score” clearly and then engage in a dialogue with the other management team members to help drive the business forward in a coherent fashion. At the level of the CFO, finance is not an isolated function, rather, it plays an integral role in managing the ongoing business and developing new strategies. Continue reading

Are You Afraid of Your Financial Statements?

I picked up this little book, Warren Buffett and the Interpretation of Financial Statements – the search for the company with durable competitive advantage (Scribner: New York, 2008), thinking that I might learn something valuable about the current economic mess and as a possible guide to shaping personal investment decisions. However, from the small investor perspective of building long-term wealth the strategy is summed up in the tag line: “durable competitive advantage”.((1))

But, to return to the Buffett book, I am struck by another use of this book. That is as guide  to the basics of how to read and interpret the important elements of a company’s financial statements. The book covers The Income Statement, The Balance Sheet, and The Cash Flow Statement. If you feel uncomfortable or completely ignorant of these three financial documents, this book might just do the trick.

While you are learning about Warren Buffett’s approach to durable competitive advantage, you will be lead through a tour of these three statements. This is a very literal line by line march. For instance, thirteen chapters, averaging three pages each, cover all of the common elements of the income statement. With the example statement always in sight it is easy to follow the calculations to see what Gross Margin or Earning per Share mean. If you find Depreciation a mystery, this is covered too. In this era of excessive leverage, the book carries along a discussion of the impact of debt on the performance of a company.

So, pick up this book at your local library or buy it. You will understand more about the how and why of Warren Buffett’s strategies and learn to understand financial statements. Then, get out your own statements and march through with this book as a guide.

  1. My attention for that purpose has shifted to another more compelling analysis – John Bogle’s The Little Book of Common Sense Investing (John Wiley & Sons, Hoboken NJ, 2007) []