I’ve been reading headlines recently about newly hired CFOs at several large companies. Some eye openers to be sure: PayPal delivered a package worth $6 million to their new financial guy. Walmart threw in a $5 million signing bonus, Pfizer paid their new CFO $5 million up front, and Moderna delivered a package worth over $5 million.
What are they thinking? Why do these huge companies think having a strong CFO on board is that important? By contrast, why do the CEOs of so many smaller middle market companies – especially the privately owned ones – think having a CFO at all is unneeded expense when they can do it themselves? The short answer, not surprisingly, is the bigger the numbers the bigger the impact a skilled financial leader can make.
But the longer answer, often unspoken, is that middle market CEOs are often shortsighted by underrating the impact a seasoned CFO can bring to their companies. And yes, it’s true that today’s competitive compensation environment means the good ones are asking premium compensation to come aboard and devote their full-time efforts to a single company. So too many CEOs believe their choice is to either pay the outsized compensation or go without.
Unfortunately, that’s both a bad decision and an unnecessary one.
The fractional CFO business that we created over 30 years ago is thriving today across the country, and while many draw the conclusion that that option is primarily for small, mostly local companies, that just isn’t true. Our client list over the years has ranged from $200 million companies down to $5 million (plus more than a few early stage). Our coaching services have aided CEOs in companies up to a billion in top line, and our current client base stretches from coast to coast. In these days of more frequent remote management, all a company needs to engage a fractional CFO from anywhere in the country is a competent accounting department, or the willingness to enable their CFO to transform a less-than-competent accounting department. We’ve had success both ways.
The call to action: If you are, or know of, a CEO of a middle market, privately owned company that is acting as their own CFO – and doing it poorly while neglecting the real job of being the top level leader their company really needs, consider this: Half a CFO will cost substantially less than a full-time one, even at consulting billing rates, and usually a company will need much less than half to make their critical financial decision making monumentally better. No signing bonuses, no stock options (usually), no company car or paid vacation. Just solid financial guidance from someone in the prime of their career who has been there and done that for companies with issues similar to yours. With great success. Sound worth exploring? Call us.
We are Your CFO for Rent.