The role of a CFO in a Startup vs Corporate

Today’s finance chiefs are poised to play a critical role in the big, strategic decision making that carries an organization forward. Here you can read about my experiences in how the CFO role looks like at big Corporates vs Startups.

CFO role at a Corporate:

Today he is called CFO, the former chief accountant. His position is clearly defined both in established medium-sized and in big corporate companies in terms of content in the form of job descriptions and organizational instructions — everything is, of course, decidedly coordinated with the personnel and organization department. Corporates typically prefer internal hires for the CFO position, these CFOs have years of experience rotating through multiple roles within the finance function — controlling, treasury, audit, financial planning and analysis, or business unit finance. They tend to have intricate working knowledge of the company and are often experts in relevant finance and accounting issues, such as financial regulation, international accounting, or capital structure. Many have advanced accounting degrees or experience at an auditing firm.

A lot of your time as a Corporate CFO he plays the policeman for the company departments. He helps to set the budget and makes sure people don’t go over it. Finance chiefs at Corporates play only a narrow role in strategic decision making and virtually no role in business transformation. They are expected to take responsibility for the financial implications of the strategy, to be sure. But most remain almost entirely focused on their own function. Some Corporate CFOs already try to expand their influence beyond their original number crunching roles.

CFO role at a Startup:

The start-up CFO as the commercial manager is certainly one of the central roles in a growing young company. Small and especially young companies are much shirt-sleeved. Especially for start-ups, where the benchmark for the resource “how much money do we need for the next months” is expressed, the question arises here from what company size a CFO is needed at all and what he can and should do if he were there. Or would it be better to hire another sales representative or a marketing manager? Founders and small teams will know this conflict well. For most successful startups, hiring a CFO becomes a priority when investors begin to embrace more significant funding. Positive progress creates good problems to solve — the startup has matured enough that it needs more formalized roles, responsibilities and operations to keep moving forward.

The role of startup CFOs goes well beyond managing the company’s finances. They are responsible for the path of growth, form new relationships, drive measurable value, and establish core financial processes and reporting requirements. In the beginning, most of the startups hire an external accountant, who takes ownership of all numbers. The CEO or COO often just checks the P&L of last month to make sure the company still has enough money and that the losses are not “too” big.

The Start-up CFO influences the rest of the C-suite by driving the metrics and presentation of results. They hold the management team accountable with facts. CFOs need to be able to balance the role of being the CEO’s ‘enforcer’ against being a trusted advisor to the rest of the C-suite.

Once you have a Venture capital investors involved, they expect to see the numbers more often than just the board meetings. That’s how a CFO avoid surprises, provide context and ensure that board meetings are as productive as possible.

High-growth companies expect their new CFO to deliver immediate value and contribute to long-term objectives — while finding the right mix of business flexibility to bridge the two.

The big challenge for a CFO is, when it comes to financial processes and controls, CFO needs to be able to look across multiple horizons. He needs to know what you have today, what you will need in the medium term, and how you will get from here to there. You need a really smart and well-integrated roadmap.

In conclusion, startup CFOs have very different jobs than ones at large corporations.

The job of a startup CFO is very different from one at a “big” company. The role is much more of a hands-off role focused on investor relations, deal-making (financing, M & A), governance, reporting and other back-office matters. In stark contrast, the startup CFO is much more hands-on and integrated into the day-to-day of the business.

The CFO title signals, “finance person”, because for a long time that’s what we were. But that’s not who we are now.

We’re rapidly leaving that behind for a role that’s become much more complex and strategic. I think it’s only a matter of time before titles and org charts change to reflect that.

What is your experience with being a CFO at a company? How would you define the role of a modern CFO? Which differences do you see between Startup and corporate CFO?

I’m always interested in hearing from business owners, entrepreneurs, as well as economic development professionals. Please contact me via InMail on my LinkedIn profile: https://www.linkedin.com/in/sebjanus/ or you can just visit my website: https://www.sebastian-janus.com .