How to become CFO
So a month ago I managed to escape from Spanish commercial banking and I am now in financial consulting (not Big4, not endless workdays, but centered in startups and SMEs.)
My final goal remains the same: to become a CFO (I don't need to be the CFO of a Fortune 500 firm though.) The obvious movement seems to seize the external CFO service my new employer offers to firms and get to be the internal CFO in an enterprise that eventually needs it. Nevertheless, I'd like to know if you guys have seen other ways to do so from a similar point.
That is the pathway I used to get into a CFO chair. I was in commercial banking and they were a client of ours and kept needing to borrow more money to finance growth but they couldn't produce financial statements that told a coherent story.
That said; be very thoughtful and careful about what kind of CFO you want to become. What kind you need to be will depend a lot on the kind and size of business but those needs may not align well with your passions, opinions, and interests. Generally, the two styles are going to be the true "finance-manager" CFO that has a full staff of professionals doing the actual work of getting the laundry done. Your job would then be strategic in nature.
At a smaller business (in my experience, less than$100MM revenues); you would be much more of an "accounting-oriented" manager involved in the daily churning of raw materials (invoices, receipts, expenses) into finished goods (financial statements) and focused far more on process, systems, and administration. Depending on your temperament; this latter type is much more tactical and far less enjoyable. Particularly if you've never been a true accountant or dont have the headspace to just sit and digest raw trial balance data... this could be dreadful.
Indeed, one role could evolve into the other (and not necessarily just one-way) based on the needs of the business but you should be prepared to discern what type of role is needed today, what could be needed tomorrow, and what kind you'd be best at. Small businesses are hard, man. Really hard. Happy to discuss further if any specific questions, either in this thread or via PM. I can only speak about US-based business though.
Good for you man, I'm really glad you made it. Just out of curiosity, how many years did you spend in banking before leaping forward?
In my case, I decided to take this consulting job because it is much more leaned to firms (instead of retail customers) and I directly carry out corporate finance tasks, instead of commercial work which is actually becoming less finance by the day. My future plan resembles yours: strengthen ties with the proper client and in the end naturally become their CFO.
Edit: I was in banking for 10 years before making the move. Have spent a total of 13 years in banking and 4 years in other industries.
Just to be clear - I am not currently in a CFO chair and don't expect to be again.
The first CFO gig I got (as described above) ended when the owner and I had a falling out because it was 2020 and he refused to pay bonuses owed based on 2019 performance (as contractually spelled out in my offer letter and employment agreement). His excuse was "COVID!!!!1" but we were doing just as well as we ever had (largely thanks to my fortress balance sheet) including starting two new affiliate companies. So I took my ball and went home. This role was one of those more "strategic" gigs as described above. We went from $3MM in revenues to $20MM (consolidated across all companies) so I was much more focused on broad-based financial strategy rather than financial operations. The concern (at the time) was more about inertia and directional profitability/cash flow metrics rather than granular analysis. Had I stayed, I think the role would have continued in that vein where I would have just hired CPAs to be controllers and worked to ensure access to capital, ERP integrations, and smooth administrative functions just to keep the ball rolling rather than trying to build a fighter jet of a performer.
I got back into banking and then eventually was recruited back into another CFO gig for a high-growth start-up that went from $4MM to $30MM in revenues. This role was much more the other way where there weren't other companies and we did one activity at a very rapid growth rate. The job was far more focused on the pure accounting function so we could really zero in on profitability at single digit percentage points at a product/job level rather than at the enterprise level. Due to competitive and industry-specific considerations needed to be built into a fighter jet in order to scale and grow and the other management team just wasn't ready to do that and the rapid growth materially constrained capital so it just wasn't very pleasant work and my heart was not in it.
I interviewed at a couple other places for their CFO gigs but am just wasn't feeling it so I went back into banking. I don't know if I'd do it again (though I would consider it) but can say that I am infinitely better at being a banker because I know how the operations of a company actually work and the enormous amount of compliance, regulation, and other hurdles that exist to do business is America. Many of my commercial banking peers simply cannot conceive of this and think that financial statements actually reflect reality (lol).
Wow, doing that twice is another story.
If you eventually stay in banking, do you consider playing a corporate role inside the bank? According to what you said, your peers don't have your know-how, expertise, skills... so why don't just climb the corporate ladder in the banking industry?
Lol, for several reasons.
Understood, thanks for all the information!
Any advice for an incoming commercial banking intern this summer at a big bank in nyc? My team is client facing and has a focused on international middle market business. Def interested in becoming a CFO of a company one day
Thanks
You’re in a great position since your firm already offers CFO services externally. Consider volunteering to lead a short-term, high-visibility project - perhaps streamlining cash flow forecasts or redesigning the budgeting process for one portfolio company.
Document the before-and-after improvements, then present those results as a case study to your CEO or PE sponsors. That track record can justify creating an internal CFO slot. For structured guidance on designing and selling that pilot, you might explore NEXT New Growth’s proven playbooks which cover everything from stakeholder alignment to ROI metrics
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