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The importance of a good Finance Director

Finance Directors and start-ups

"Entrepreneurs aren't always the best at managing finances - which is why they need a specialist to help.

"In our model, the entrepreneur is surrounded by four cornerstone experts in sales, finance, innovation and delivery. But many start-up teams we meet are lopsided. There are too many technicians, no sales experts and someone quietly doing the books in the background. This background bookkeeping is too passive a role. The money specialist should be at the heart of the business, at the centre of decision making. They don't have to be full time from day one. At The Instruction Set, a computer consultancy, our finance cornerstone was the last of the founding team to join full time - but from the start he was crucial to decision making.

"Finance people who get to the centre of things soon start to bemoan how little feel the rest of the team has for money."

Source: Mike Southon & Chris West "From the beermat", Director November 2002 p25

axiom-e comment: We identified the gap in the market for such an offering and were established to provide part-time (p/t) Finance Directors to start-ups and other small or growing companies.

For more information on selecting a good Finance Director, click here.

The importance of a good Finance Director

Kendall is big on financial control and professional management. He chastises small firms that invest heavily in technology, but scrimp on good people. "You must be willing to invest, paying a higher salary than you'd normally offer. People are everything," says Kendall. "A financial director is fundamental: if you can't afford a good FD, then perhaps you shouldn't be in business"

Source: William Kendall, CEO of Green & Black's, referred to and quoted in "A-Z of business", Director November 2002 p19

axiom-e comment: Because early stage companies may not be able to afford a good full-time FD, axiom-e offers high level support from high quality, experienced, FDs for the time required. Such a service is highly cost effective and adds value to your organisation.

The importance of a good Finance Director

"As businesses grow, they have to professionalise the management team and give it freedom to make changes. In recruiting for key roles, a company needs a finance director. Most growing businesses leave the recruitment of a finance director until far too late. A good one will easily pay for himself in a year. Entrepreneurs understand sales and often understand cash but rarely understand margin. Entrepreneurs should remember that turnover is vanity, but it is only out of the sanity of margin and the reality of cashflow that sustainable growth will be secured. A seasoned finance director is the key to the company's future."

Source: Simon Bevan of BDO Stoy Hayward giving advice to the owner of a company featured in The Sunday Times Enterprise Network case study "Founder cannot let reins go as firm's success stacks up", Sunday Times 9th June 2002 p3.13.

The Entrepreneur's view

To get the interests of a buyer most entrepreneurs will also need to hire a financial manager. "In the early days it is okay to have a financial controller but if you are going to build some real value you need a proper finance director. In a bigger firm the issues become more complex and the information you need is much more than just reports of the figures." Source: John Richards, software entrepreneur and now a business angel, quoted in "How to build a firm, sell it and make a million", Sunday Times 10th February 2002

The view of The Chartered Institute of Management Accountants

"Appointing a finance director with the right skills to match the needs of the business is vital to its success.

He or she will be responsible for:

    * developing successful financial strategies in pursuit of value for money,
    * monitoring and managing all financial flows,
    * ensuring effective internal control and governance and
    * compliance with financial accounting and reporting requirements.

As a member of the senior management team, the finance director will provide financial leadership and direction to the strategic policy, plans and operational activities of the business."

Source: CIMA Appointing the right finance director for your business