Startup Success: When to Hire a CFO
Navigating the complexities of a growing business often demands financial expertise — discover when hiring a CFO becomes essential.
Recognizing the Signs: Is It Time for a CFO?
Is your business growing, but your finances feel more complex than ever? You’re not alone. Many companies reach a point where financial expertise becomes critical—but how do you know when the time has come to hire a CFO?
Every company can benefit from financial expertise, but there comes a point when the absence of a CFO can become a liability to growth. Fortunately, there are identifiable characteristics that can help you know when it’s time to hire a CFO. If you’re asking the question or reading this, trust that you’re near the point of needing to hire a CFO.
Revenue Benchmarks: When Does Financial Leadership Become Necessary?
A common way to assess the need for dedicated financial leadership is by looking at annual revenue. While there’s no universal threshold, companies often start considering CFO-level expertise as they surpass $1 million in revenue. In the $1 million to $10 million range, financial complexity increases, and many organizations benefit from hiring a fractional CFO. Around the $10 million mark, businesses may want to transition to a full-time CFO to support more sophisticated financial strategies.
However, revenue alone isn’t the determining factor. Many companies need CFO-level guidance well before reaching $10 million, while others may continue operating efficiently without a full-time CFO even beyond that point. The right timing depends on factors such as:
Financial Complexity: Businesses with intricate cash flow management, high transaction volumes, or international operations may need a CFO sooner.
Growth Trajectory: Rapidly scaling companies—especially those seeking funding, M&A opportunities, or IPO readiness—often require CFO leadership earlier.
Regulatory and Compliance Demands: Companies in heavily regulated industries (e.g., healthcare, fintech) may need a CFO earlier to ensure compliance.
Investor and Board Expectations: VC-backed startups or private equity-owned concepts may need to bring in a CFO earlier to meet investor expectations.
For companies between $5 million and $10 million in annual revenue, the decision often comes down to the scope of financial oversight required. If your business demands in-depth forecasting, fundraising support, or complex reporting, a full-time CFO may be the right move. If your needs are more periodic—such as optimizing financial processes or preparing for a capital raise—a fractional CFO may be a cost-effective solution.
While revenue benchmarks provide a useful starting point, they don’t tell the full story. The decision to hire a CFO should ultimately be driven by strategic goals, operational complexity, and long-term financial needs.
Strategic Initiatives That Demand CFO Expertise
Certain strategic initiatives can accelerate the need for a CFO. Financial leadership and expertise can make the difference between the success of endeavors that are critical for your company’s growth. The presence of one or a combination of these could signal that it’s time to hire a CFO.
Investing for future growth - When you are spending money early and want to see future growth, a CFO can manage cash flow and forecasting to provide financial stability as you await your returns.
Raising Capital - A CFO can be a game-changer for fundraising, handling financial modeling, negotiations, and risk management while boosting investor confidence. A Series A raise often marks the need for a full-time CFO, as larger capital rounds require stronger financial leadership. Ideally, a CFO should be in place before fundraising to demonstrate readiness to investors.
Upon Securing Financing - Another point at which the need for a full-time CFO becomes apparent is after your Series A capital raise. Once you have secured funding, you have a fiduciary responsibility to properly steward this outside capital. Having a CFO in seat to manage the complexity that comes with scaling your business is part of fulfilling this responsibility. Obtaining this level of financing comes with new reporting requirements and covenants – all of which are best suited for the hands of a CFO.
Day-to-Day Financial Needs That Indicate It's Time for a CFO
Another way to detect your need to hire a CFO is through your day-to-day needs. As an entrepreneur, you are constantly juggling working on the business versus working in the business. As you experience an increasing imbalance that draws your focus away from the core of your business, this could be pointing to a need for greater financial leadership.
Cash flow management, cost savings, decision-making and managing decisions are on the to-do list of every growing company. The need for more dedicated financial expertise will be felt as these four areas become more complex and require more frequent attention.
A CFO can tend to the daily demands such as:
Managing cash flow and gross margin
Knowing which levers to pull to save money
Financial forecasting to inform decisions
Managing decisions from a strategic finance lens
The day-to-day needs that require the involvement of a CFO will increase as the number of employees grow. As you face a consistent increase of needs from your team, consider whether the presence of a CFO would offset some of the requests coming across your desk.
The Need for a CFO to Manage Complexity and Risk
As your business grows and scales, you will encounter growing complexities. With this complexity comes increased risk. Even if your business model or operations have largely stayed the same, increased volume, customers, contracts, employees and simulations adds complexity and nuance that calls for greater financial expertise.
Indicators: It’s Time to Hire a CFO
You may have gathered several indicators as you have considered when to hire a CFO. Do any of these describe where you are? If they do, it might be time to hire a CFO.
Your revenue is growing year over year but your profitability and cash flow do not reflect that
You spend more time working in the business versus on the business
You feel handcuffed by a lack of dedicated financial expertise
Your company has become more complex requiring greater nuance and more sophistication in your solutions
You are preparing for a Series A fundraise
You have secured funding and need strong financial leadership to manage that funding
You want to manage costs more effectively but aren’t sure which levers to pull
Your revenue is growing but you are concerned about financial stability
If you’re seeing the signs but aren’t ready to commit to a full-time CFO, a fractional CFO can be the perfect solution. A fractional CFO can give you leadership for both strategic initiatives and day-to-day needs while giving you freedom and flexibility to scale as your needs evolve. Don’t let financial complexity slow your growth—explore how a fractional CFO can provide the expertise you need, exactly when you need it.
Key Takeaways: When to Hire a CFO
✅ Revenue Benchmarks Matter—But They Aren’t Everything
Companies with annual revenue over $1M can benefit greatly from CFO expertise.
Businesses nearing $10M likely need a full-time CFO or a fractional CFO.
✅ Strategic Initiatives Can Accelerate the Need
If you’re raising capital, investing in growth, or managing new financing, CFO leadership is crucial.
A Series A raise is a key moment to hire a full-time CFO.
Securing Series A funding is also a key moment to hire a full-time CFO.
✅ Operational Complexity Signals the Need for Financial Leadership
Rapidly growing companies face cash flow challenges, cost management issues, and strategic decision-making gaps that a CFO can solve.
The more employees, customers, and contracts you manage, the greater the need for sophisticated financial oversight.
✅ Common Signs It’s Time to Hire a CFO
Your profitability and cash flow don’t align with revenue growth.
You’re spending more time on financial tasks than on business strategy.
You feel limited by a lack of financial expertise.
Your company’s financial stability and cost management need improvement.
Not ready for a full-time CFO? A fractional CFO can bridge the gap, providing financial leadership without the commitment of a full-time hire.
