Words Emma-Jane Willan & Simon Wheeldon
October 26th 2023 / 8 min read
As founder or part of a founding team, you’ll likely pick up the slack across various functions of your business before you’re able to hire in for those roles. Finance will likely be one of these positions, as founders will take on or look to outsource day-to-day financial operations.
But this comes at great cost to your role as a founder, where your time is much better spent on higher level strategy and key decision making. And while hiring is always a case of prioritisation, at some point you’ll reach a point where building a dedicated finance function is necessary.
Financial complexity increases with any startup as it scales (banking and payments, treasury, payroll, tax, invoicing, credit control, statutory filing requirements). The real benefits of financial expertise, however, come from high-quality reporting and planning to empower you and your team to mitigate risks, harness opportunities, and power growth. Your initial finance hire should be your co-pilot and business partner, someone to give you strategic insight and sensible pushback without blocking what you are doing.
Here’s what you need to know about making your first finance hire, including when to hire, who to look for, where to look, and how to attract the right candidate.
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This will of course be different for every startup. You need to weigh up how much benefit you get from doing finance yourself as opposed to bringing a specialist in, and to hire as soon as the benefit starts to outweigh the cost.
The longer you leave it, the more problems you may encounter later on. Without a finance specialist, you’ll take on a certain amount of technical debt, which becomes harder to unpick as you grow and scale.
Ashleigh Otter, COO of Perlego, explains, "Initially, we used a shared finance approach with different roles handling strategic forecasting, control, and fundraising. This was effective in the early stages, providing visibility to our core management team. However, rapid post-COVID growth made it unmanageable. We required centralised finance ownership, particularly for controls. It took us a few months to onboard the right finance manager, setting us back 6-7 months as they tackled technical debt to catch up the systems to our growing revenue size."
Certain types of business may require financial support earlier on. These include:
More regulated industries (finance, legal, health, travel)
Data-intensive sectors such as SaaS where there is a lot of scrutiny on KPIs and Metrics. The role will be much more focused on modelling, and manipulation of data
Physical products, retail and manufacturing—it’s so important to get the unit economics right and make sure you are selling something profitable
Professional services—essentially a business model built around billing and utilisation, where financial expertise can really inform decision making
Cat Jones, CEO & founder of flight free travel startup Byway, operated for longer than most without a finance team. By the point she hired, Byway had raised £2 million and reached a £10m annual run rate, and she was still having to balance her role as CEO with financial responsibilities. It had its benefits—”It helped me build enough knowledge to contextualise the finance conversation within the business conversation”—but equally pulled her attention away from other strategic areas.
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Full time, part time, fractional—finance hires come in many shapes or sizes. Indeed, finance as a term is so broad, that your ‘first finance hire’ can mean a number of things.
Set out clear expectations for what you need. “Do you want someone to manage accounting and control? Do you want a strategic thought partner who uses a financial lens to challenge the business and inform key decisions?” says Ashleigh from Perlego.
If you are looking for someone more senior and strategic, you can expect to be hiring a CFO or Finance Director who will sit as a key-decision maker in the business. If more operational, this may be a more junior hire at Finance Manager or Financial Controller level to work closely with your outsourced professional service providers.
There are a number of key factors that will influence who you look to hire:
The profile of your top team (and what gaps you have there)
When you are looking to fundraise
Whether you are looking to expand internationally
Whether you are looking to open a new revenue line
Ashleigh recommends that at the startup stage you should hire for a 12 month period (“Two years is far too long, who knows where you’ll be.”) Take into account your needs for the next year (fundraising, expansion, etc), and build a job description off that. Then, sense-check that JD with the market externally (on LinkedIn, Otta, other job platforms) to understand the level of seniority you’ll want to be speaking to.
So what characteristics should you be looking for? Cat from Byway’s advice—”Look for attitude over technical competency.” You’ll find plenty of people with the right experience and qualifications. “These people might be too rigid, we need someone who could deal with uncertainty,” Cat adds. To really thrive in a startup, you want somebody who can absorb imperfect ways of working, see opportunities to improve, and invent new processes. This flexibility is the mindset Byway hired for.
Should you consider a fractional hire (part time consultant who occupies multiple positions at once)? Generally, this is great for flexibility, as it may allow you to adjust how many days a week they work. And the right fractional hire will see themselves out of a job—they’ll know when you need to make a full-time hire, and should tell you this.
Making a finance hire should follow many of the same processes as any other hire, with some added elements to ensure you get both the proficiency and the characteristics you desire. This should be as thorough whether you’re hiring full time, part time, or fractional.
You could secure the help of an agency, who can get you access to a much wider pool of candidates, as well as using your own network, which can often accelerate access to suitable candidates.
Properly onboarding your finance hire into the business is crucial. Whoever you hire, you need to be really specific about what you want your finance function to be, as well as closely aligning with them on your plans for the next twelve months. At the same time, you need to build a finance function in a way that is flexible and open to change. Your finance needs will change, and your function will need to adapt to meet these needs.
And ultimately, ensure that you are setting up your finance function for success. To emphasise, whoever leads this function should be your co-pilot, someone who can help define the course for the business.
Emma-Jane Willan is CFO at Founders Factory. She works closely with our executive and operations team, investors and founders across the Studio & Accelerator. Prior to Factory, she worked in financial management across different industries, including roles at John Lewis and as Finance Director at Vardags, a fast-growth city law firm. She also enjoys contributing her finance skills as a charity trustee.
Simon Wheeldon is Head of Finance at Founders Factory. A qualified Chartered Accountant, he trained at EY and spent a number of years in their financial assurance department, before moving to Sky as a commercial financial analyst.
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