Startups at $4.5-$5M ARR don't need an expensive VP of Finance. A $250K base salary actually costs $320K-$350K once you factor in benefits and taxes. You can build an investor-grade finance function without that hire.
What does maybe an investor-grade finance function actually look like? And maybe how can a founder start building one quickly today? How would you say, what would you suggest to them?
I'd say you do not need to go for a very expensive hire for a corporate finance lead if you're doing a revenue that is, you know, $5 million in ARR. I do not know what your conversion, cash conversion cycles are, but I would just take a random, you know, rough ballpark figure that you're able to at least Convert 90% of it in the same year. So if you're doing somewhere around $4.5 million, that is in cash, you cannot afford a single guy who's your VP of finance that starts from a base level salary of $180K to maybe $320K. And then the usual rule of thumb, looking at the 401 and the insurances, the employer tax and everything, the paid leaves, it, you could easily add up 30 to 35% on that. So what might look, you know, that I hired a guy for maybe $250K doesn't look the same anymore. It starts to get towards the level of $320K, $350K given everything.
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Keith Gillispie: Why Most New Investors Fail & How to Avoid the Common Traps #250 | SaaS District
