Welcome
To the blog for small and medium sized business (SME) owners.
A report from PricewaterhouseCoopers finds that British family firms are failing to adequately plan for succession in their businesses.
Some 1454 family businesses from 28 countries were surveyed and only 30% of British family firms had chosen a successor compared with the international average of 50%.
Government policy, legislation and a shortage of senior skilled staff were identified as areas of concern by UK family businesses.
Read the report here and for further details on business planning and resolving the skill shortages visit DAW Consulting website.
When is it a good time to appoint a Virtual Financial Director?
The easy answer maybe 'When you start your business.' However, a reality check needs to be taken. Funds may not be available to pay for the service or indeed there may be insufficient workload to justify such an appointment.
Although it may be a condition of a third party investor that a FD be appointed by the business, even in these circumstances the Finance Director may only be part time.
So it is most common for businesses to grow (or contract) until a point is reached when the missing skill set that a part time finance director should possess is required to safeguard the future.
What are these situations that may trigger the appointment of a part time finance director?
There may be many but typically any list would include:
- The owner losing control of the business – not knowing how the business is performing – no management accounts – no cash management
- Rapid business growth without a senior financial professional to assist in setting a robust strategy and plan for the future
- Businesses that absorb all available cash with increases in working capital potentially restricting growth and capital expenditure.
- Established businesses with poor profitability and/or with an unacceptable cash generative history.
- Businesses facing external pressures to make financial improvements to satisfy personal or corporate commitments from banks or investors.
- Business owners that plan to exit and seek help to maximize the business value.
Business owners should, whenever possible, be proactive in the appointment of a part time FD; see the appointment as part of the strategeic development of the business and for it not to be a reactionary move dictated by problems within the organisation.
Whatever the circumstances in your business if you need more information on the appointment of a part-time finance director contact DAW Consulting for an informal discussion.
What are the factors that determine the success, or otherwise, of the part time finance director in a small (SME) business.
It is becoming more accepted that many business owners require the skill set that a finance professional can bring to their organisation, but they are unable to afford the person on a full time basis. Hence the increase in demand for the part-time FD.
The person should offer much more than the business accountant who may be focused only on reporting the numbers (the history). The part time finance director should be more active in making the history, implementing plans, improving systems and creating value.
Discover the factors that determine the success of the part time FD.
The importance of controlling working capital becomes evident to many business owners only when cash flow is negative and little or no cash is freely available to sustain day to day operations.
To address this situation the reaction may include the robust chasing of all receivable overdues and the delaying of payment to creditors for as long as possible. Work to perhaps reduce inventory levels may be undertaken, but this may not immediately reflect in improving the cash position.
The SME business owner should take steps to safe guard the business position. Plan to avoid cash flow shortages and implement those plans. If the work is outside the skill set of the small business owner - seek professional help and protect your business.
Related Topics
The Benefits of Using a part time FD
Manage your Cash
Business owners must accept from starting up their business they hold responsibility for the financial well being and development of the business.
The business owners are expected immediately to be capable of resolving all business concerns in an expert and efficient manner. Some business owners may be adept at handling different problems, but for many it would be unreasonable to assume they have acquired sufficient skills to address the commercial issues.
This is particularly true in the area of finance.
The result is that:
- an inadequate and incomplete attempt at addressing the financial concerns is undertaken
- the financial issues absorb an ever increasing amount of time
- the business owner works increasingly outside his/her area of expertise, adding little value to the business
- the control over the business wanes
If these symptoms are recognized seek expert financial help to refocus your business, relieve the anxiety and avoid your business becoming out of control.
Discover the benefits of engaging a part time FD. Resolve your problems and create wealth for your business.
