The success or failure of a new startup or small business is largely down to the experience, commitment, and knowledge that the founding team possesses. While for larger corporations it is easy to rely on revenue streams while team members can be replaced, for a startup hiring the wrong team member can cause the business to collapse in a short space of time. Hiring your first financial team member is an important step as it is ultimately financials that will make your business grow. Below, we look at the key traits to look out for when hiring your first finance team member.
Your new finance hire will be working with figures, projections, estimations and all other kinds of financial numbers. They need to be able to easily analyse where the financials are going, if unnecessary money is being spent and where improvements can be made.
This will require forward-thinking, intuition, great analytical skills and, of course, a great knowledge of working with money. From this, they can provide the team with important figures such as a business’ burn rate, the current cash position of the company and when this money will run out if that burn rate continues.
Good communication and board reports
Taking this analytical skill further, it is highly likely that much of the financial language will be confusing to the rest of the team. The new financial hire needs to be able to not only analyse the state of the finances of the company, but to also be able to effectively communicate this back to the other members of the team; whether that be the CEO, a manager or a regular employee.
Someone that is able to produce monthly board reports with up-to-date numbers can keep everyone aware of the current state of the business.
Your new hire will need to be able to work with technology with ease. Not only is financial information now primarily stored digitally, but it helps to keep the whole process streamlined. Such technological knowledge includes things such as whether the potential hire knows Structured Query Language (SQL); a quality that many firms now look for.
Knowledge of fundraising sources
Not only is it useful for your hire to have inside-out knowledge of the finance industry, but also if they have knowledge of fundraising or investment opportunities. There are many government grants and research and development tax credits available to businesses which can sometimes return millions of pounds’ worth of cash. Someone with this knowledge could be invaluable.
Employee stock ownership plan (ESOP) management
If you have ESOPs in your business, which is employees that have stocks within the company, then it can be useful if your finance hire has knowledge of this field; therefore, meaning they can help to manage this for you in-house rather than handing it to a law firm.
As a new startup you may have equity options being handed out, but as this is your first financal hire, it may be that the team is not that large, therefore having a candidate with ESOP knowledge is not essential. However, it does not hurt to think about these things for the future.
Honesty and independence
Money and cash flow is the most important factor in keeping your business alive, and so you need someone that you can trust and that is honest. Your cash will determine exactly what state your business is in, and it is highly likely that your financial person will be working independently much of the time.
With this, you need someone that is good at working independently, but will still report in on the exact figures. And, of course, they need to work effectively in the team as well.
Your financial candidate will need to take their analytical skills one step further and ensure that they offer solutions to any problems that may arise. As the first finance hire in a team, the responsibility falls on them to solve these problems, and in a fast-moving startup this may need to be done quickly or risk causing further damage to the business.
Making your first financial hire can be a challenging decision, especially if you aren’t knowledgeable in this field yourself. However, it is an important decision, so be sure to take into account the factors listed above to continue building your successful team.