If your spouse is an owner of a growing SME the chances are that you are fed up with him/her bringing home the paperwork and pulling his/her hair out when they should be spending quality time with the family.
This all too familiar scenario is caused by owners taking on more responsibilities in more areas of the business, even when they do not have the skills to do it properly. The ‘paperwork’ or the finance function is a classic example of this. The reason why many owners take it home is firstly because it’s so boring it’s always last on the list, secondly it’s because they do not want their staff to see them make a mess of it.
Of course this is only the tip of the iceberg; the finance function in a large company has a much wider role than simply keeping the books up to date. Experienced Finance Directors play a key role in the strategic planning of the business which is totally missing in most small companies. In addition to ensuring that the books or accounts are up to date and the management accounts are prepared, the FD will continually review the opportunities facing the business and channel its efforts into a narrow focus which delivers the best profits and value for the shareholders – the business plan.
Many SME owners think that the business plan is a document that is prepared once for their bank and then locked away in a draw. The reality is that it should be continually reviewed and updated as the company grows and new opportunities arise. The second key role the large company FD plays is to predict what the results will be for a business under different action plans. Companies cannot do everything they want to, they have to make choices. This allows the other members of the management team to see the outcome of those choices and then the decision is made more easily. This process also enables the FD to ensure the necessary finances are in place to execute the revised business plan.
In a large business this function enables the other parts of the business to focus on those activities that drive profitable growth. The owner of the SME wants to do exactly the same with his time; he wants to make informed decisions about the strategic planning of his business and then he wants to lead from the front achieving profitable growth and maximising the potential of his business.
Of course, finding an FD that has all the necessary skills and experience to enable small company owners to run their business in this way is not cheap. In fact they are very expensive. Typically costing £60,000 to £100,000 before they ask for bonuses, benefits and equity, it is simply not a viable option for a small company. Invariably they go for a cheaper ‘FD’ who does not have all the right skills or experience and is really an expensive bookkeeper. Sometimes they pay their professional accountants to advise them although as one SME owner put it, “You want solid practical solutions to thorny and complex problems not a host of text book options”. This is when the experience and skill of an experienced FD really proves its worth.
One solution that has worked really well for small and rapidly growing companies is the part-time FD. The FD Centre is one of the country’s leading providers of part-time FDs. Its CEO, Colin Mills said, “We are an odd breed of professionals and should not be confused with bookkeepers, interim contract workers, consultants or firms of accountants. As individuals we want to work as part of the management team in the SME sector because growing small businesses is much more exciting than running large finance functions in a PLC. We have been FDs, and probably MDs, of much larger businesses as well as SMEs, raised funding for companies at different stages of development, have sold businesses and probably been involved with turnarounds as well. Simply because of this skill and experience, we can fulfil the FD role for an SME in 4-5 days a month and therefore we can spread our total cost across 3-4 companies. It’s exciting for us and affordable for the company”.
This is a win win win for the company, the FD and the owner’s family; the company gets all the skills and experience it needs to keep control of the business, the part-time FD gets the challenging and rewarding life he/she wants and the family get a dad/mum who feels in control of their business and enjoys spending more time with the family.