Finance Insights

New CFOs: Keys to success for first-time finance leaders

Sebastian Janus Founder, ScaleupLab

Sebastian Janus knows what it’s like to be in the CFO role for the first time, and the excitement & fear that can come along with it.

At just 17 years old, Sebastian founded a successful e-commerce business, Tredex GmbH, which was acquired by the Runners Point Group in 2010. Sebastian became a first-time CFO at Tredex after the acquisition. Three years later, he became CFO at Foot Locker Europe, specializing in their e-commerce business — all at the age of 25.

Fast forward to today: Sebastian has worked with numerous startups as an Interim CFO and founder of ScaleupLab, a boutique consultancy based in Germany, which provides strategic and operative consulting to startups & scale-ups.

After navigating his own CFO journey, and having helped many startups build their finance foundations, we asked Sebastian what he believes new CFOs need to know when entering the role for the first time. Read on for his advice...

What are the key questions a new CFO should ask themselves?

1. Where are you headed?

As a first-time CFO, you should have a clear vision of what you want to achieve in your role — including specific goals and a personal roadmap. For long-term success, identifying possible risks is also crucial.

For example, your long-term goals may be increasing the velocity of your company's cash flow, paying down debt, or discovering ways to boost revenue. And the potential risks could be financial or operational:

Financial risks can include liquidity or debt
Operational risks could relate to personnel or supply chain issues. These are the internal operations (processes) a company and its CFO need to manage.

Risk management is one of a CFO’s main duties. So you should always be aware of potential threats to the business’ long-term goals.

2. Who are you working with? (People skills)

Excellent communication is essential for finance executives. You’ll interface with internal or external stakeholders, establish relationships with the CEO, board and investors, speak at international conventions — not to mention creating a strong relationship with your team. All are vital for succeeding as a first-time CFO.

Your role is to be responsive, and to ensure the wider company understands the role of finance. You’ll be delegating, allocating resources, and even providing moral support. So don’t underestimate the power of social and communication skills.

A specific example: try to interact and communicate with your finance team on a regular basis. Schedule a weekly meeting with each staff member individually, or as a collective group. And be sure to integrate praise and clear feedback to create an atmosphere of comfort, where they can share the challenges of their week.

Remember to consciously make time for these conversations, and your team will thank you in the long run.

3. What are you responsible for? (Financial governance)

Many CEOs are looking for a CFO with industry-specific expertise, which is helpful for understanding the sales pipeline. As a first time CFO, investing time to understand the sales process and sales forecast of your business is a necessity.

Be an active partner to the sales leaders, and participate in the sales forecasting process. This is clearly better than being a passive recipient of sales projections.

Your biggest priorities as a new CFO should be around profit and loss, as well as cost controls. Anytime you spot issues with certain financials, you should be confident enough to reveal them right away to colleagues and stakeholders.

Here, it becomes very important to work closely with auditors to determine whether financial statements follow generally accepted accounting principles, and portray the company in the best light.

4. How can you increase your own value?

It pays to think about how you can invest in your own abilities and offer more value to the company. For example, modern CFOs need technology fundamentals to facilitate complex strategic and operational issues. Not only knowledge of industry standard software or Enterprise Resource Planning (ERP) systems, but also:

Travel and expense management
Purchasing software
Financial budgeting
Planning and forecasting
Financial close and consolidation
Management reporting

Your familiarity with these tools will help to promote the future growth of your organization, so take the time to learn about the latest tools.

Conferences are also a great way to stay up to date on new tools and emerging technologies. You’ll find them on social networks such as LinkedIn, finance newsletters, or even via new networks like Clubhouse.

The importance of continually growing your skill set

The best way to up-skill is simply by doing and learning from mistakes. Analyze your failures to prevent them from happening again. This is what characterizes progress and growth in your personal development as a first-time CFO.

Another way to learn is by talking with peers or experts who can advise you on best practices and what to avoid — this was very helpful to me, as a new CFO.

Networking is a must if you want to stay up to date with new technology. This is what we’re trying to achieve with ScaleupLab, by supporting, consulting and prepping small businesses and startups with our expertise, until they manage their financial concerns naturally from within.

Finance reports are better and more comprehensible for everybody using clear visuals. These make it easier and faster for non-experts to follow your reporting.

I recommend that new CFOs create a financial dashboard. Spreadsheet software can sometimes lack the key features that dashboard reports provide.

A dashboard collects your company’s most relevant data from multiple sources in real time, collates it, and presents it visually.

Conclusion

Doing business in the digital era requires adaptability and having alternative plans prepared in case of unexpected surprises.

The first step to strategic development is understanding how business environments work. Visualize business models, examine business portfolios, SWOT analyses, and so on.

And then aim to put good software to use. Automation tools and cloud platforms such as sevDesk, CAYA, SMACC, Spendesk, Google Drive, Salesforce, and a lot more will support growth processes immensely.

Contributors

Sebastian Janus is an interim CFO and founder of ScaleupLab, a boutique consultancy specialized in providing strategic & operative consulting, support and leadership to startups, scale-ups & grown-ups.