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Staffing Your Startup: What Should Your Chief Financial Officer Salary Be?

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When you’re running a startup, there will invariably come a time when you must decide whether you need a chief financial officer (CFO). Hiring one too soon can often be as bad as hiring one too late.

In this article, we’ll cover what a CFO is, what their responsibilities are, why you might need one, and when it’s time to start hiring. 

What’s a CFO?

A CFO is the highest level financial executive in a company.

The CFO is a C-suite member, a term used to describe the executives at the top echelons of an organisation. The C-suite is also composed of the chief executive officer (CEO), the chief operating officer (COO), and the chief information officer (CIO).

What are the responsibilities of a CFO?

CFOs track cash flow, create fiscal plans, and analyse the enterprise’s financial strengths and weaknesses.

A CFO also oversees a company’s investments, capital structure, and income and expenses. A CFO acts as a strategic advisor to the CEO by helping them carry out financial forecasting, obtain funding for corporate initiatives, and formulate cost-benefit analyses.

Why your startup might need a CFO

Unfortunately, many founders still fail to see the benefit of bringing in a CFO. This causes them to hire one much too late in their evolutionary journey, and their enterprise may suffer financially as a result.

When your startup is small, taking care of business tax returns and other financial affairs is a relatively straightforward process that can be handled by a part-time accountant. However, there comes a stage in a company’s life where doing things this way is no longer feasible.

That’s because eventually, a business’s finances will become too complicated for a bookkeeper, and you’ll need to bring in a CFO to manage your company’s financial affairs. In fact, you’ll probably need a CFO as early as your fundraising stages, to make sure the money you’re raising to start your company is being spent responsibly. 

When to hire a CFO for your startup

When exactly to switch from having a bookkeeper steer your financial ship to hiring a CFO is going to be slightly different for each company. 

It could be when you’ve raised a significant amount in a venture capital fundraising round. Or, maybe it’s at the point at which your finances are complex enough that you and your bookkeeper feel like you’re in over your head.

Some of the most common triggers for hiring a startup CFO include:

  • Having an increased volume of sales
  • Receiving significant fundraising from venture capital firms
  • Accounts receivable becomes difficult to collect
  • Finance-related tasks like document prep and vendor negotiations become too resource-heavy to handle

Does your CFO need to be full-time?

Flexible work options are rapidly becoming accepted practice all over the world. 

That’s why it’s not exactly surprising to find that hiring a part-time CFO is becoming an increasingly popular choice for early-stage companies.

By hiring a CFO on a part-time basis, you’ll get the high-quality financial talent your startup needs at an affordable price. This can be a terrific alternative for cash-strapped early-stage enterprises that need reasonably priced fiscal know-how.

Hiring a full-time CFO can be prohibitively expensive for startups. 

The average salary for a chief financial officer in London is approximately £125,000. Paying this could stretch the financial capabilities of an early-stage company trying to get its feet off the ground to the breaking point.

Of course, there are hiring costs beyond the CFO’s salary. For example, using a traditional recruitment service can be outrageously expensive. The typical recruiter charges 25 to 30% of the annual first year’s salary of the position.

However, if you use a flexible hiring platform, you’ll eliminate these exorbitant upfront expenses.

You might not be generating enough revenue to pay a CFO salary or a traditional recruiter’s fees when you’re just starting out. But arguably, a good CFO will make it worth their while by helping you grow your revenue beyond that initial point, whether modeling/forecasting new opportunities or providing access to more financial resources. 

You’ll probably want a CFO with the keen expertise and background to take care of these mission-critical tasks. The rest of the time, in-house financial knowledge or a part-time accountant should suffice.

Access to a more diverse talent pool

One fantastic non-financial benefit of hiring a CFO part-time is that it gives you access to a more diverse talent pool. These might be individuals who aren’t able to do or are interested in a full-time position.

Hiring part-time doesn’t mean you have to sacrifice quality. In fact, there are lots of highly qualified CFOs who only want to undertake part-time assignments.

Chief Financial Officer salary and benefits

A CFO salary in the UK has a midrange of £125,000. 

The average London CFO salary is £154,400, which is the highest in the UK. However, CFOs can earn anywhere between £100,000 and £200,000. What they make depends on their experience, skillset, and geographic location of the job.

How to attract high-calibre CFO candidates

Create a robust workplace culture

Nowadays, top-tier executive talent typically wants more from an organisation than great pay and benefits––they long to be part of a vibrant company culture where they can cultivate a sense of mission.

You can help foster an environment like this by being abundantly clear about your company’s vision and that it’s not merely words on paper to make the company look good. Show candidates that you have a team of passionate individuals who possess a keen conviction that what the business does matters.

Find ways to authentically express these things through video, career pages, and personal communications from senior leaders.

Diversify your recruitment process

Most HR experts would say that a diverse team helps enterprises be more innovative and creative, thus achieving better results. 

This can translate into everything from greater profitability and revenue growth to more productive collaboration.

This is the kind of workplace where differences between people are not only understood and accepted, but valued. Word soon gets around that the company is a bastion of affirmative work values. When it does, it can’t help but attract high-calibre CFO candidates.

Offer flexible work options

Flexible work options are part of a new workplace landscape that’s rapidly growing into a long-term movement. There are multiple studies to suggest that not only does it boost company productivity, but it also gives employers a keen recruitment edge.

Employees typically love flexibility in their work schedules because it offers a better work-life balance. It allows them to balance commitments in their personal lives with the demands of their career.

The most widely used type of flexible working is “flexitime.” This involves setting core hours that team members are required to work. However, they’re free to put in the time that makes the best sense for them outside of that.

Of course, the pandemic has also transformed the way we work, with more people than ever opting to work from home. This is yet another way an enterprise can build in flexible work options. Team members don’t have to make a stressful commute back and forth from an office, and can manage competing commitments from their home base.

Take Microsoft Japan, who switched to a 4-day work week and saw a 40% increase in productivity; this level of flexibility allows workers to feel more engaged and productive, which also helps with retention. In the end, offering flexible work options is a win/win. 

How to set a salary range for your CFO

When figuring out the CFO salary range, begin with how much your CEO makes. Because the CFO directly reports to this member of the C-suite, a CFO’s salary should fall below it while allowing enough room for raises and bonuses.

Next, look at the salaries of the CFO’s direct reports. Your CFO should make more than their subordinates by a significant margin.

Here are some other factors to consider:

  • Your sector (some industries pay more than others)
  • Your geographical location
  • The overall calibre of candidate
  • Prior experience
  • Qualifications

Looking to hire your next CFO?

Using a flexible recruiting solution to hire a CFO makes a lot of sense for a smaller enterprise. 

That’s because by doing so, you’ll be able to harness the expertise of a seasoned financial professional without having to undergo the tedious and expensive process of paying for a legacy recruiter’s services.

If you feel your startup is ready to hire its first CFO, visit Juggle Jobs to post the position. It doesn’t cost anything to do so. After posting the job, you’ll receive a carefully selected list of top-tier possibilities within 24 hours.

Get started today!

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