If you’re a startup founder or small business CEO, you may be starting your finance function from scratch. One crucial area to focus on is your hiring plan. In this article, we’ll share some insights on key attributes for new hires, as mentioned in our guide in partnership with Stripe, ‘Building your startup’s finance team.’ Here are 4 tips that can help you set the right foundation for your growing team.
1. Decide on the best option to get your team up and running
tl;dr: There isn’t a one-size fits all approach for starting your team. Pick the option that’s the best fit for your business.
Outsource your finance
You can outsource finance functions such as accounting, finance, and tax. You often don’t need a full-time accounting or finance hire until about 25 hires, so this might be the best selection if you’re in the nascent stages. It’s best to wait until you have enough volume in your customer base, rather than bringing on a full-time hire too early. If you do decide to go the outsourcing route, consider assigning a team member with leading your outsourced functions as they can help the fractional team better understand the needs of your business.
Have other team members take it on
As a temporary solution, you might be able to have a senior executive who has financial management experience handle it until a fractional or full-time hire is onboarded.
Hire a controller
Bringing on a controller to bring your accounting needs in-house can help guarantee that your data and accounting are strong and accurate, and can also help support your FP&A.
Hire a VP or head of finance
Lastly, you could bring on a VP or head of finance. We’ll go into more detail on best practices for sourcing the right candidate below.
2. If hiring a VP/head of finance, look for investment experience
tl;dr: Your ideal candidate combines the internal (accounting expertise to provide a strong foundation) with the external (fundraising experience to secure capital).
With the rise of venture capital, more and more companies are looking for candidates with skills such as investor relations. This is a departure from the previous emphasis on a strong accounting background, with employers now more focused on the quality of their books than strategic finance and fundraising. As a result of this, plus the rise of finance operations and gains in operating leverage, there is a wider pool of talent to pick from. Individuals coming from private equity, hedge funds, or Wall Street are now rubbing elbows with more traditional candidates.
Why a hire with these skills is important for your team: A hire with prior experience in venture capital or investment banking, who is adept at external-facing tasks such as building models, can be an asset in securing capital. This is especially relevant in today’s uncertain economy, with businesses vying to secure assets that are significantly more scarce than they were a year ago. Bringing on a candidate with this experience could mean the difference between your business scaling up or winding down. After all, your model is a numeric representation of your overall strategy. A hire who’s familiar with your industry’s KPIs and can put a compelling model together is worth their weight in gold.
3. Ask incisive interview questions
tl;dr: The right questions can make or break your team.
The right interview questions can help you hire candidates, no matter which option you select, who will yield the most ROI for your finance team. Here are some of the most important questions to ask:
- What would you want to see from this company to understand its past?
This question helps you understand how they see the business’s financial characteristics.
- What’s the bull case for this company?
This question asks the candidate to forecast the future as well as their rationale, thereby assessing reasoning skills and financial knowledge.
- Tell me about a recent time that you’ve driven either turnout or improvement to a company’s top line, bottom line, etc.
This question examines their possible impact to the company by looking at their past success, e.g. how were they able to affect change? Are they focused exclusively on themselves or are they a true team player?
- What attributes do you view as critical to a successful company culture?
This helps assess whether a candidate fits the overall culture of the org. Culture is paramount to the success of your business, so be sure to keep it a key hiring consideration.
4. Avoid overhiring with a smart finance tech stack
tl;dr: Overhiring can be very detrimental to your finance team’s longevity.
Especially with uncertainty swirling in today’s economy, it’s important to avoid spending too much on new hires. You want to be deliberate about who you bring on and when. With the right automated tools, such as the ability to issue virtual cards to employees, you won’t have to waste time chasing down unapproved spend and will be able to give your employees more autonomy. This can in turn have a large impact on the functions you need to hire. A well-oiled, integrated tech stack can set the team and the org up for success in 2023 and beyond.
By following the steps above, you’ll be on the right track in the new year. Remember to select the best hiring option for your business, ask the right questions to determine whether a particular candidate is the right fit for your company, and lean on your tech stack to help prevent onboarding unnecessary hires.
Make sure to check out the full guide, from Ramp CEO and co-founder Eric Glyman, to learn about other insights that can help you build a strong finance function, including why startups are becoming increasingly reliant on fractional CFOs, when it’s time to move from generalists to specialists, and the importance of investing in payroll expertise to build a remote team