When is the right time to hire a Finance Director

Oct 14 2019 Financial Management

You’ve launched your business, sales are growing at a healthy rate, customers are lining up and there may even be interest being shown in international markets.

You should be basking in the light of your success, but instead, you have so much to do, that it’s hard enough to find 15 minutes to grab a sandwich at your desk.

You look back almost nostalgically to the days when things moved at a much slower pace. 

While eating your lunch, you pause to take stock of things. Where exactly is all the money you were expecting to follow this level of success? And why is your time being monopolised by tasks that have little to do with growth? 

Sometimes the positives of a growing business (the satisfaction of making great sales and acquiring loyal customers) can mask the negatives (such as poor cash flow, outgrown processes, and generally not having enough hours in the day). 

Eventually, some of those spinning plates will start to drop. Running a business on gut instinct may be fine at the start, but it will only get you so far. There comes a point when your business can no longer operate when you have to be involved in everything. It needs structure, systems, and processes to thrive and grow. 

This is the point where working with a Finance Director can be part of the solution.

What are six clear signs that the time is right to hire a Finance Director:

You’re not getting the financial information you require 

Most businesses will have some accounting system in place, whether it’s software or spreadsheets, at the very least you’ll have an idea of your sales and expenses. However, as your business evolves what had previously worked can become unfit for purpose. Transactions can become more complex, you suddenly need to file your VAT return online, in short, your world is no longer the simple place it used to be. 

Even when you have a system in place that can cope with the new demands being placed upon it, making sense of the numbers coming out of it and understanding what’s important and what isn’t can be frustrating at best, and can ultimately make the difference to the success (or otherwise) of your business. A good FD will not simply print off the standard reports from your accounting system and pronounce “Computer says…” but will explain your financial position and deliver actionable reports that provide you with the information to make crucial, timely decisions based on facts. 

You can’t pin down your cash flow 

At best, your cash flow is unpredictable. At worst, it’s a mystery and your bank manager has your number on speed dial. Cash flow challenges are the number one cause of business collapse, but often, with a little careful planning, they can be avoided. 

Having access to an FD gives you peace of mind that your cash is being tracked and managed; that obstacles are identified before they become a problem and that solutions are identified and executed. 

You know you need a plan 

When you first launched your business, you probably created a business plan. Maybe it was written as a checkbox exercise, or possibly a local authority or bank demanded to see one before providing you with funding. 

Whatever its background, chances are it’s now gathering dust – but still, you know deep down you need a plan to set out where you’re trying to get to and how you’re going to achieve that. Unfortunately, finding the time to pull something meaningful together is proving challenging (yes, we’re back to “not enough hours in the day”). 

An FD can shoulder much of that burden, creating a robust financial business plan based on credible numbers and realistic projections that flow from your vision. A good plan will also let you see how sensitive it is to changes in key assumptions, allowing you to identify weaknesses and consider contingency plans. It can also be key to raising new funding, which is the lifeblood of a growing business. 

Your business needs to raise funding 

You know you need to raise cash for your business, but a quick trawl through the internet leaves you with more questions than answers. There are many different types of funding available – and you may not be clear whether a term loan, equity, factoring, lease finance or simply sticking things on your credit card (tip: using credit cards for long-term funding is not recommended) is right for you. 

You need someone to help you understand how each type of funding works, and how that fits in with the stage of your business and the purpose of the borrowing. An FD can provide the help and support you need to steer through this maze and emerge on the other side with exactly what you need. 

You have questions without answers 

Friends. Family. Twitter followers. Your mates at the pub. They’re all good for a quick chat when it comes to your business, but how many have the time or (more importantly) the expertise to give you the accurate advice you need? 

Instead, you need someone you trust and who knows what they’re talking about to help you understand and solve the various challenges business life throws up. A Finance Director can be on hand when you have questions about pricing, salaries, opportunities, or threats. While they won’t always tell you what you want to hear, they’ll make sure you understand the facts and the options you have in a given situation. 

You want to work on (not in) your business 

As a business owner, it’s your job to shape strategy and drive growth. There comes a time (and if you recognise the points above, you’ve probably reached it) when you need to delegate things and focus on the parts of the business where you add the most value. Otherwise, you run the risk of being sucked back into the day-to-day, spending hours approving invoices or reconciling transactions. And that’s simply not the best use of your time. 

If these issues and concerns look familiar, then a big part of the solution is to hire a Finance Director. They can step in and introduce the necessary systems and workflows that will keep you from the more trivial admin and deliver the reports you need to stop you from hunting for the numbers yourself. All of this combined will free you to work on (not in) your business and allow you to focus on the parts of the business that inspired you to set it up in the first place. 

About EFM 

EFM is a nationwide team of Portfolio Finance Professionals and Business Advisors. We help companies manage all aspects of their day-to-day financial management, so the business value is maximised, and growth achieved. 

Our clients are typically SME businesses or subsidiaries of overseas companies with a strong desire to achieve their goals – we are dedicated to helping them achieve that through part-time, flexible services tailored to our clients’ needs. 

If you’re interested in finding out how our portfolio, a nationwide team of finance professionals can help to support your business, get in touch today! Contact our central team via email or call 01582 256122.

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