At EFM we like to get our Associates to share their client activities and why the portfolio lifestyle is so beneficial to their personal lives. Stepping out of a full-time role and into the position of a flexible, part-time Finance Director brings many advantages to the Associate.
They will no longer be tied to one company and sector but have the opportunity to work as much or as little as they see fit, with many different entrepreneurs in a multi-sector environment. No month, week or day is ever the same when you become a Portfolio Finance Director at EFM.
To share his experiences since joining the EFM Network, Associate FD Andrew Sugden, will be sharing his client experiences by going over a typical working month, how this lifestyle change has helped balance his work & personal life, and why he wanted to change his career from 9am – 5pm to portfolio.
The following article describes my experiences in the pre-Covid world and is based around typical experiences over the first few months when I started out as a portfolio FD.
Had a good start to the month with Client A (a niche B2B / B2C service provider, looking to launch a new product). Client A is a recent acquisition, and I’ve been working through a number of legacy issues they have. Ahead of meeting with them, I logged on to Xero (their cloud based accounting package) and had a quick review of the accounts – I love being able to do this from home and at a time that suits me. The bank reconciliation was now looking more meaningful – thankfully we’d worked through what was missing and now it’s a lot easier to see what cash is really on hand. The work on the accounts receivable balances is now also paying off – using a part time credit controller to chase up the older balances has paid off (as was indicated by the healthier looking cash balance) – and having written off those balances that were irrecoverable (still managed to get most of the VAT back, so not a total loss!). Now just need to make sure we stay on top of things.
Met with the owners and discussed how the business was performing. They were pleased with the improvement in the cash position and were feeling more confident working with Xero now we’d talked through what each of the reports was for, and in particular the difference between the profit and loss account and cash balances. We talked a bit about the cash flow difficulties her business had been experiencing and it became clear that another issue they had was they were always late in sending out invoices (not least because there were only so many hours in the day, and they were being run ragged running the business). We agreed that one of their team was capable of raising invoices, and that they could review them before they went out (I also made a mental note to check in with them around the start of each month to make sure the invoices had been released).
Agreed to catch up later in the month when their accountant had pulled together some reports so we could confirm what VAT, PAYE and Corporation tax liabilities the business actually had, as the balances sitting in Xero didn’t feel right, and it was hard to assess future cash flows without having a firm handle on these areas.
As it was a nice afternoon, I stopped off at a local micro brewery that had opened not too far from their office – well, I’d been keen to try it and as the meeting had gone well, I felt I’d earned a treat.
Later in the month I was due to meet with Client B (an early stage tech business). Client B is a looking to raise more funding in order to develop the product they are working on. Given where they are in their evolution, we’d recognised that debt funding wasn’t going to be an option, and so we needed to look at the equity market. Before the meeting, I’d had had a chat with EFM MD regarding possible sources of funding – so had a sense of who to approach, what their appetite might be, and what we needed to emphasise in any pitch deck, which really helped me frame the meeting . Being part of a loose team has also made a big difference to me – I’d worked on interim assignments prior to joining EFM and had found it to be quite a lonely experience, so having access to colleagues you could use as sounding boards has been a big plus for me.
Having some idea of which potential investors might be interested in the company also expanded the discussion to look at ways of making the investment more attractive to them, and I’d been able to explain that his business would be able to take advantage of the EIS scheme (and as no good deed goes unpunished, that meant I needed to pull together an action plan for putting this in place once the fund raising got under way).
We’d been working on building an integrated forecasting model (a forecasting tool that produces profit and loss accounts, balance sheets and cash flow workings) which enable owners and investors to assess the likely funding needs of a business and, by running a series of different scenarios (sometimes referred to as sensitivity analysis) could see which were the key drivers within the business, and get a feel for how the funding needs moved in response to changes in the assumptions.
I’d spent time explaining how the model worked and the client had really engaged with the process, and had clearly spent some time changing parameters and seeing what that did to the outputs. In playing with the model, the owner had come up with a scenario that he wasn’t sure how to simulate given the levers available, and we agreed that I would re-work the coding to allow him the ability to run this combination. I didn’t think it would take much work to add the logic to do this so was confident I’d be able to send an updated version of the model to him quite quickly.
As we were wrapping up our discussion, the owner mentioned he had a bit of a dilemma, in that he wanted to reward his staff for their hard work, but given how tight the company’s finances were at the moment, he wasn’t sure how best to achieve this. Given he was looking to issue new shares; I suggested share options might be a way of achieving this, particularly if he set up an EMI scheme, as this was tax efficient for employees. Again, more homework went on to my “to do” list, but this was a nice problem to have. Helpfully I knew one of the other associates had recently worked on an EMI scheme, so I had a call with him to pick up any tips, and reassured myself my understanding was correct
Later on in the month I had an online meeting with Client C (a consultancy business looking to diversify), a company that was looking to launch a new service. In our discussions we started with a high level summary of the service and then began to break things down so we could see exactly what was needed to deliver it. At the end of the call I had most of what I needed to begin pulling costings together while the client also needed to do a bit more research in to how some aspects would work.
I’d begun work on the costing model as soon as the call was over as I wanted to get going while things were fresh in my mind. Thankfully the model wasn’t too complex, and I was able to drop in the final assumptions later in the week when the owner got back to me with his findings. We then had a face to face meeting where we talked about how to price the service – being careful to remember that the business only kept the ex-VAT price.
In between my dealings with Clients B and C I also had a call with a potential client that Client B had kindly referred to me (a retail business experiencing cash flow challenges). We spent some time talking about their business; in particular the problems they were facing and what they were intending to do to address them. It became clear during the call that the manager had a solid grip on her business, and that her plans for dealing with the challenges she was facing were spot on, and more importantly, at this point she probably didn’t need my help, as she was quite capable of implementing the necessary changes herself. We agreed to stay in contact as she could see that in the future, when she was ready to take her business to the next level, having someone like me around would add value.
During the month I also found a some time to work on marketing activities – it had initially seemed uncomfortable promoting myself but now I felt more comfortable with this (thankfully I believe in the core product!). Talking to the head office team at EFM, I’d begun to develop a better understanding of how best to interact with LinkedIn, and as part of their ongoing support, they were helping me produce a series of short articles trying to help business owners understand finance related issues that could impact them and what steps they could take to help their businesses. This month’s article was on ways of improving cash flow, and as part of their support, the team had reviewed my initial draft and fed back some constructive thoughts on how to improve the piece.
During the session we also spent time catching up on how things were going generally. I was certainly feeling more confident about posting and commenting on the site – initially I’d found myself liking random posts in the hope that that would somehow help, but over time I gained the confidence to add comments to those posts where I either had a personal interest or felt I had something to add and that seemed to help determine what showed up in my feed.
Getting “likes” from members of the network also gave me a boost in the early weeks, and now I made sure that I returned the favour when I could. I’d also had a couple of interesting conversations that might yet turn in to leads, as well as a very enthusiastic testimonial from a client that certainly made my day. It was actually very helpful to talk through those things that had worked and those which hadn’t, and gave me food for thought as to how to approach the next few months.
Still on the marketing front, during the month I’d also helped a more established associate host a workshop on what investors look for in a business plan. I found the experience really informative, as I’d initially talked to the slides as I would have giving a corporate presentation, but immediately saw a more enthusiastic response from the audience when my colleague got attendees to talk about their experiences in relation to the messages on the slides.
The level of engagement was significantly greater, and I made sure to alter my approach going forwards. Had some good one to one chats with some of the delegates afterwards, so I guess my part of the presentation hadn’t been that bad!
Overall it’d been a good month. I really enjoyed the variety of activity, and the ability to shift and prioritise work to fit around both my clients’ deadlines and things going on in my life.
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