A long-term colleague of mine recently approached me to discuss engaging me as part time FD for a few days a month to support her business. She asked me during our catch-up “what do you do?”.After nearly spitting out my tea, I probed what she meant by the question. As CEO and business owner of her business, she felt that she needed some support over and above the day-to-day accounting function that she already had in the business doing the vital job of preparing monthly P&L statements and keeping all the financial gears (transactions) of the business moving, but she couldn’t put her finger on what that support was.
This caused me to pause and think, what is the role of an FD or CFO over and above this, and how does a small business benefit from having a part time FD or CFO when it isn’t yet in the position to afford a role of that gravity full time.
Small and medium-sized enterprises (SMEs) often face financial challenges as they grow and expand. While many business owners have the skills to manage their finances, it can be challenging to handle every aspect of finance. This is where a part-time senior finance role can make a valuable contribution.
In this blog, our very own Martin Ridgeway explores the value a part-time FD or CFO could bring to an SME business owner.
Expert financial support
First a foremost, a part time senior finance appointment should more than pay for themselves in terms of the improvements and oversight that the bring to your business which should enable both top line and bottom-line improvements.
An FD or CFO will provide a more strategic approach to ensuring that financial planning, analysis and reporting is helping to drive your business forward by asking question like:
Are you getting the right numbers in the right format to allow you to plan and make business decisions based on what you are seeing?
Do you go behind the deadline profit and loss statement that you receive each month to understand what is driving the numbers?
How are you doing against your plan, and what are things ahead or behind where we thought we would be?
What key performance indicators should the business be measuring itself against as well as the headline P&L?
More time will be spent analysing the financial performance of the business and providing recommendations to improve revenue, margins and ultimately profitability. The FD/CFO will pick up the baton passed on by the finance team and take what they produce to identify trends in the financial data, forecast cash flows and work with the management team to improve the financial health of the business.
Strategic planning
SME business owners often focus on the day-to-day running of the business, leaving little time for strategic planning. A part-time FD or CFO can help with the development of long-term business plans and supporting financial strategies, identifying opportunities for growth and expansion, and working with the management team to ensure the financial goals align with the overall business objectives.
Improved financial management
A part-time FD or CFO can help SME business owners with financial management, ensuring that they have accurate financial records, that cash flow is managed effectively and that they have the necessary financial controls in place. They can also help with the preparation of financial statements, budgets, and forecasts.
Access to networks
A part-time FD or CFO may have useful connections to other finance and other professionals, such as accountants, bankers, lawyers, and investors, all of which will be required by a small business at some point during its growth.
Improved credibility
Having a part-time FD or FCO can improve the credibility of the business. Financial institutions, such as banks, are more likely to lend money to a business that has a senior finance representative, as they view it as a sign of good financial management. It can also be reassuring to potential investors, customers, suppliers, or other business partners, as it demonstrates that the business is being run professionally and with an eye on financial success.
Other business skills
Push the boat out for a CFO who has worked in an SME environment, and you will engage someone will have picked up a lot of broader experience along the way which can be applied to a growing business. Often a CFO in a smaller business will have gained experience in leading other strategic business support services such as People (HR), IT, procurement and contracting, and other critical functions. Ask your part time CFO what else they can bring to the table.
Critical friend
Running a business can be a lonely place. Having an experienced peer that a business owner can turn to as a sounding board, to provide challenge to business decisions and just be a point of support and counsel can be invaluable to a business owner/leader.
There you go, that’s what I do, (or some of it anyway), I’ve not even talked about business sales or acquisitions, raising debt or other big-ticket stuff. Maybe I’ll save that for another blog…….
