Companies that do not have the revenue to justify paying someone a six-figure salary may consider hiring someone to play the role part time. For example, when her advisory board suggested she hire a CFO after her company hit $2 million in revenue, Bibby Gignilliat, founder and chief executive of Parties That Cook, which stages hands-on cooking parties and corporate team-building events, turned to a consultant on that position.
Jeff Gustafson, whom Ms. Gignilliat pays $150 an hour for typically eight hours a month, took on several critical projects for the company, including building an extensive financial model that demonstrated the impact of expanding into new cities, hiring employees and raising prices. “It has allowed me to be the CEO, working on the business versus working in the business,” Ms. Gignilliat said.
For growing companies, a common trigger can be the decision to bring on investment capital. At these companies, the finance chief often becomes the liaison charged with keeping investors updated on how the company is performing.
Paul M. Doman, chief executive of the Accurate Group in Charlotte, N.C., which provides financial services to banks and mortgage lenders, made the decision last February to hire a finance chief to help manage his relationship with Evolution Capital Partners, a private equity fund based in Cleveland.
“My expectation from a CFO tends to be high,” said Brendan D. Anderson, a partner in Evolution Capital. “I almost view the CFO as the next step to the CEO in that they understand everything and can communicate verbally and in writing how the business is performing, how the plan is coming together and also forecasting where budgets and projects are headed.”
Forecasting performance is particularly important if a company sets its sights on an initial public offering. That is why Karen S. Camp joined VirtuOz, which is based in Emeryville, Calif., and provides companies with virtual agents for online marketing, sales and support.
VirtuOz, which has 75 employees and more than $10 million in annual revenue, is considering pursuing an initial public offering in the next few years — a process Ms. Camp has guided other companies through five times as an investor and finance officer.
“Even though we are not yet a public company, we will eventually do an IPO or be acquired by a public company,” Ms. Camp said. “In my role as CFO, I have to make sure that the nuts and bolts, reporting standards and control systems are up to a public company standard.”
In addition to her internal duties, Ms. Camp said that an important part of her job is building visibility for the company with investment bankers and analysts. “It’s all about language and communication and understanding what they need to hear,” she said.
Finance officers can also bring tremendous value to a company when it is considering making an acquisition or preparing itself to be acquired. For instance, when Sharon Napier spun off her Rochester, N.Y., marketing agency, Partners & Napier, from a holding company in 2004, she wanted to put her agency on the fast track to growth.
“I wanted to be in an agency that would be nationally recognized,” she said. “I figured that would likely mean that we would need to eventually make an acquisition or be acquired. And having a CFO on board to manage that was part of that strategy.”
She hired Jim DiNoto for the post in 2001 and made it a crucial part of his job to analyze the market for potential acquirers or acquisitions and to ensure that the company’s books would be ready to stand up to any due diligence process.
The turning point for Partners & Napier came when it began discussions with a newly formed holding company, Project: WorldWide, about being acquired. Ms. Napier credits Mr. DiNoto with shepherding the process along until the deal was finalized in January.
“Jim took the lead role in providing the data Project: WorldWide needed from us,” she said. “He had to interact on a daily basis for eight weeks with their CFO and mergers-and-acquisition team working over every single financial issue. An acquisition can break down if you can’t provide the right data or think ahead to what might be needed, and that’s where a CFO like Jim is invaluable to a business.”
The bottom line is probably this: hire a CFO as soon as you can afford one.