The Cfo Skill Set Homebuilding Founders Too Often Underestimate

I’ve worked in a variety of capacities in and around home building and land development for 40 years (argh).  One constant over the years has been the undervaluing of Chief Financial Officers. 

I thought about this while working with a client on a hire for this position.

On one level, it’s understandable. Entrepreneurs start homebuilding or land development companies, and right off the bat, it’s all about finding and putting together deals and securing capital. After all, as a client once said, “You know, all the company management is hypothetical if we don’t have deals.” I can’t argue with that. From that stems “find ’em and finance ’em.” If the founder was also the initial capital raiser, they probably hired a bookkeeper to get started. That person grew over time into a controller. If the founder had an initial fundraising employee, that person probably grew into the VP Finance/Treasurer role. Great at raising money and working with partners and bankers, but accounting was secondary.

Then the company grows and becomes more complex. Accounting is often given insufficient attention when the Treasurer is in charge, and there is a tendency to believe that capital must be raised today and that systems can be improved tomorrow. But tomorrow never comes.

If the controller is in charge, a strategic view of capital may be lacking. As you advance in your career and get the numbers perfect, it’s hard to put on the hat that says “good enough to make a hard decision.” So, they are sometimes slow to be true thought partners for the founder. Every question leads to trying to give the perfect answer, not just the quick, good-enough answer for the hard question at hand.

Often, while they might not admit it out loud, the founder can’t help but think, “How hard can accounting be? It’s a bunch of rules to follow!” But it’s not. Sure, there are rules, but they don’t provide all the answers. And they certainly don’t help you interpret the financials and pro forma statements produced. Like all other parts of our business, it’s part science, part art. Let’s face it, mastering systems of any kind is just plain hard, grinding work. And it takes lots of practice.

So, the CFO we want really understands accounting and its nuances, systems, procedures, and capital – debt, equity, mezzanine, etc. It’s not easy to be good at all of that.

The intangibles

Then we layer in the key intangibles that further narrow the field:

The ability to be a thought partner and push back against the founder. If there is anyone in the company who is going to stand up to the CEO and say, “We are not doing that. We swore we would not take those risks, and we’re not going to start,” it’s the CFO. A CFO who owns the numbers, can think quickly and conceptually, and is prepared to push back when everyone wants to say what the owner wants to hear is worth their weight in gold.

It’s arguably the most stressful position in the company, along with the founder’s. Let me be clear, all positions in a company can be difficult and stressful. But no other position, again, other than the founder/CEO, is responsible for everyone else’s mistakes, miscalculations, and poor estimates. The CFO is responsible for all the numbers presented to banks, equity partners, owner groups, etc., and for explaining, when the numbers are missed, why.

But they can’t say, “Bob in construction constantly underestimates costs. Call him.” Despite being reliant on purchasing, construction, land development, sales, etc., they bear the brunt of any miss.

So, CFOs have to be demanding, precise, and thick-skinned. And it probably explains why I’ve seen more burnout in this position than in any other. You’re reliant on everyone, resented for questioning whether people in the company can really deliver on what they say, and then held responsible when they can’t.

Here’s what founders and entrepreneurs often miss: this isn’t a role that rewards a single skill set. You need someone who can walk into a lender’s office with genuine optimism and a compelling story, then return to their desk and ruthlessly scrutinize every number behind that story. And then – perhaps hardest of all – be willing to be the company’s conscience when everyone else, including you, wants to charge ahead. That combination – an optimistic fundraiser, a precise accountant, and a trusted truth-teller – is genuinely rare.

Underestimating how rare it is and what it’s worth isn’t just a missed opportunity. It’s a risk you can’t afford.