DO YOU NEED A CFO?
Sponsored by:
Presented by Judith Miller, J. Miller & Company
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I - INTRODUCTIONS
 Who am I?
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In construction since 1985
2nd Master Builder national trainer
Written “Benchmark” column for Remodeling Magazine since 2005
Facilitator for Business Networks for 6 years, including 3
restoration peer groups
Facilitator for Remodelers Advantage since 2002
Speaker at National construction conferences
Author of 2 QuickBooks manuals for construction – published
Author of RSI – The Remodelers Success Index – in final edit
 My goals for this hour:
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To clarify the considerations involved in hiring a CFO
To identify the primary & secondary benefits of such a hire
To define a good hiring/training/evaluation process
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BUT FIRST, WHERE IS YOUR COMPANY?
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5 STAGES & 2 PHASES - no matter what you make or how
every company goes through (up to) 5 predictable stages of
growth:
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Stage 1: owner does it all
Stage 2: owner begins to delegate
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Stage 3: owner delegates everything except sales
Stage 4: owner delegates everything
Stage 5: owner handles strategy
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5 STAGES – continued
 Each stage consists of 2 phases:
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Evolutionary - systems are developed to manage
effectively at that stage
Revolutionary - systems become insufficient for current
level of activity
Revolutionary
Evolutionary
 This is important because the complexity of the
systems you develop increases with each stage
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STAGE 3: the sweet spot!
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Owners of mature Stage 3
companies ONLY sell, maybe
estimate
All other company functions
are successfully delegated to
‘right’ employees with the
‘right’ skills & attitudes &
trained using company
developed standard systems
Owner then manages
customer & employee
relations, maintaining high
satisfaction in each
Owner, & company, can enjoy
significant profits & success
OWNER–only Sells/Estimates
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FOUNDATION=SYSTEMS
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STAGE 4: complexity increases
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Owners of mature Stage 4
companies ONLY coach, train
& mentor the departmental
heads
The department heads then
manage, hire, train &
motivate their reports
A successful sales force
manages customer relations,
maintaining high satisfaction
A successful Board of
Directors manages company
culture, expectations & profits
through department heads.
FOUNDATION=SYSTEMS
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PARETO’S PRINCIPLE  Also known as “the 80 / 20 rule” or “the
rule of the vital few” states that 80% of
the value is derived from 20% of the input
 Define the 20% in every department &
establish standardized systems to
produce predictable results over time
 Manage the rest by exception
 For example: if you use
labor/materials/subs/equipment/other to
produce the work, which 20% produces
the greatest risk?
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II - THE HEART OF THE MATTER
 Financial literacy, the ability to make
informed personal & business
decisions based on financial
information, is vital to both personal
& business success
 However, it is the rare entrepreneur
who started a restoration company
because they loved finance
 Hiring & training financial managers
appropriate to the company stage of
growth is vital to long term success
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THE BIG ?-DO YOU NEED A CFO?
 Is your banker (or are you) confused by
your financial reports?
 Can you define profitability by product
line, sales person, lead or line item of
work?
 Are sales up but cash flow down?
 Are you getting the numbers you need
from your accounting department?
 Do you need a new accounting or
estimating system but don’t know how
to start?
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5 FINANCIAL POSITIONS  There are 5 primary types of financial positions:
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DATA ENTRY CLERK – enters data into a pre-defined system;
typically has 2 years of experience & a working vocabulary of
the industry. Works under immediate supervision & does not
require exercising independent judgment. Salary range:
$24K - $30K [source: Salary.com]
FULL CHARGE BOOKKEEPER – maintains records, balances
ledgers & prepares reports. Typically has associate degree &
>5 years experience in the industry. Relies on experience &
judgment to accomplish goals. Works under general
supervision. Salary range: $33K - $43 K
ACCOUNTANT – prepares profit/loss, balance sheet & other
financial reports; analyzes costs & trends. Typically has
Bachelor’s Degree > 10 years experience in the industry.
Works under general supervision. Salary range: $40K-$49K
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& FINALLY, A REAL CFO
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CHIEF FINANCIAL OFFICER –
responsible for directing entire
organization’s financial policies;
oversees all financial functions including
accounting, budgeting, trend analysis,
asset protection, statistical data
reliability & reporting. Typically has
Bachelor’s Degree, often a CPA &/or
MBA, & over 15 years experience in the
industry. Enjoys a wide degree of
latitude & is expected to act creatively to
bring the financial performance of the
company to its optimum levels. Salary
range: $250K - $400K - WOW!
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WAIT THERE’S MORE If $250,000 to $400,000 sounds like a lot of money (and at
40% gross profit margin you’d need to sell an
additional $812,500 to cover the salary alone before
burden) –
CONSIDER a …..
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SENIOR ACCOUNTANT – prepares all financial reports;
also analyzes trends to predict future revenues &
expenses; reports company finances to management &
suggests strategies. Bachelor’s Degree with > 8 years
experience in the industry. Reports to management &
enjoys a great detail of latitude. $57K - $72K
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DO YOU NEED A CFO ? 
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You probably don’t need a
CFO but might well need a
Senior Accountant
This is important: the ability
to clearly define the position,
write a good job description
& develop clear expectations
will produce better results.
Next, let’s answer the vital
questions: why/when/who &
how?
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WHEN?
 When the degree of financial
complexity & amount of data flowing
through the system requires greater
control:
 Stage 1 – the owner can do it all
 Stage 2 – data entry clerk
 Stage 3 – full charge bookkeeper with
the owner reviewing all reporting &
handling strategic financial issues
 Stage 4 – senior accountant
 Stage 5 – senior accountant OR CFO
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WHY?
 Ask yourself a few questions?
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Has the economic landscape changed, for better or for
worse, in the last 2 years?
How much time do I spend wondering if my financial & job
cost reports are correct?
Do I use more than 5 spreadsheets to manage the
company or jobs?
What’s the trend for profitability for the next 3 years?
Does the company intend to grow?
How much cash do I need to grow double my business?
Which component of my business is most profitable?
Which is least?
Do I want to sell or transfer ownership?
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BECAUSE  A seasoned Senior Accountant can:
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Develop financial controls that work;
Create & update business plans & budgets;
Write processes and procedures for his/her position & others
in the department;
Develop key metrics & dashboards;
Manage cash – both receivables, payables and lines of credit;
Analyze risk management strategies & suggest methods for
mitigating the most dangerous;
And last but not least: protect one of the company’s most
vital assets – CASH!
“An accountant can tell you something’s wrong – a Senior
Accountant or CFO can tell you how to fix it.”
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WHO?
 Such a sensitive position requires
concerted efforts to define the
personal qualities of the right
applicant as well as the job
description
 Personality types play a big role:
 DISC testing defines 4 personal
behavioral styles & anticipates how each
style ‘blends’ with others.
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WHO INDEED  D = dominant: these people want to be in control. Many
entrepreneurs are high D personalities.
 I = influencing: these people want to be liked. Many
successful sales people are high I.
 S = steady: these people want to take care of others.
Many good teachers are high S.
 C = compliant: these people want to be right. Good
accountants are high C.
 Therefore, the perfect Senior Accountant would be high
C; a bit of D would assure that the work begun was
finished.
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WHO INDEED, redeux  Company culture and personality fit:
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The best applicant with the best skills,
properly vetted, tested and interviewed will
FAIL if the company culture exhibits signs of
dysfunction.
 Read Patrick Lencioni’s “The FIVE
Dysfunctions of a Team” to see if your
team exhibits any of the 5 problematic
dysfunctions:
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Absence of trust
Fear of conflict
Lack of commitment
Avoidance of accountability
Inattention to results.
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HOW?
 5 steps to the right hire:
 Define the job description as
well as the personality
characteristics
 Write a good ad & place it
appropriately
 Script the interview to be sure
you’re asking all the important
questions
 Develop a system to choose the
best from among all candidates
 Set up an effective on-boarding
& training process
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STEP #1  Define the job description:
 Position title
 Reports to
 Primary accountabilities:
 Management
 Transaction control
 Reporting
 Compliance
 Qualifications
 Personal attributes
 Salary & benefit range
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STEP #2  Write a good ad:
 Job Summary: this position is responsible for
general bookkeeping, applying accounting
principles and procedures to analyze financial
information, prepare accurate and timely financial
reports and statements and ensure appropriate
accounting control for Company X and associated
operating companies.
 Essential functions
 Education and experience
 Key competencies
 Salary & benefit range
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STEP #3  Script the interview:
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Why do you want this job?
What are the most valuable skills you would bring to our
company?
If you stayed with your current company, what would be
your next move?
Tell me your greatest accomplishment
How many hours a week do you need to work to get your
job done?
Give me an example of a time when you took the time to
share a co-worker's achievement with others.
What makes you stand out from others?"
Source: “The Hiring & Firing Question & Answer Book” by
Paul Falcone
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STEP #4  Develop a system to choose the best candidate:
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Build a matrix to grade the following, on a scale of 1 to 5, 5
being the best:
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Letter – clear, concise and direct
Resume – appropriate for job
Responsibility #1 – manage all accounting functions
Responsibility #2 – produce accurate/complete reports
Responsibility #3 – analyze & predict future
Duty #1 – assure timely processing of AR/AP
Duty #2 – produce weekly payroll & manage pr taxes
Duty #3 – reconcile bank/credit card/vendor statements
Skills #1 – QuickBooks/Exactimate/ExactAccount
Skills #2 – Excel proficiency
Skills #3 – strong communication abilities
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STEP #5  Set up an effective on-boarding & training process
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On boarding: the process by which a new employee is
brought into the company
 Offer letter
 Employee manual
 Office tour, introductions; mentors (?)
Training & expectations
 Week 1 & 2
 Weeks 3 & 4
 Month 2
 Month 3
 Review and evaluation; next steps
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AND FINALLY “Don't ever hire on the spot.
Withhold your decision until you
can review enough information
to make a rational decision. If
you don't, you might end up
putting someone in a job where
they're just going to fail.“
Most hiring decisions are made in
the first 7 to 9 minutes,
according to an HR expert. Take
your time & hire the right
person.
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NOW WHAT?
 Hiring is difficult, training is
even more so.
 With the new hire, establish
specific accountabilities for the
90 day probationary period:
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First week – meet and learn about
the key players in the
management team; understand
company mission, vision, learn
vocabulary, the filing systems
Second week – review historic
financial records, work with
current accounting staff to learn
their methods – what works, what
doesn’t and why
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TRAINING, CONTINUED 
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Third & fourth weeks – learn the
basics of accounting processes:
AR/AP/Payroll – determine specific
system training requirements
Month 2 – learn month end close
processes, including current
reporting capabilities
Month 3 – begin to develop
suggestions for system
improvements; write report re
state of company financial
management for end of
probationary period/evaluation &
goal setting for next 3 months
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III – IN SUMMARY
 Do you need a CFO?
 Maybe, maybe not.
 What you do need is a “numbers guru” who
lives and breathes financial and job cost
information, who can anticipate the future
based on the past, who can hire, train and
fire, when necessary, good employees for this
very important department!
 This person will change the entire company!
 You need this person, regardless of title!
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QUESTIONS & ANSWERS  Thank you for your attention!
 Thank you to Business
Mentors for inviting me to
speak with you today.
 Contact me at:
 jfmiller@remodelservices.
com
 www.remodelservices.com
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