THE ROLE of the finance director in entrepreneurial and fast-growing businesses has had to change and move away from just keeping the score to addressing pro-active management of cash, creating visibility for the owner to drive and manage growth, and developing the longer-term strategy of the business.
The modern FD should be actively participating in enabling the growth process of a business. While the entrepreneur is the leader, the modern finance director is the key part of the senior team within a business, and must be able to make a difference.
Bean-counting is no longer good enough. The FD needs to help grow the beans as well.
Fundamentally, the role of a modern FD is to make a difference to an enterprise, and this includes helping and enabling the business to grow.
What makes the sort of FD that helps businesses grow?
The bean grower FD isn’t going to do marketing or selling. However, to grow a business, the entrepreneur needs to decide what to direct the sales and marketing teams to sell, what’s likely to make the best profits, what products or contracts will help improve or destroy cashflow, and which customers are likely to pay on time.
Consider all this, and then roll in the fact that the entrepreneur is going to need to understand what to do and where to go in order to to generate cash from within the business and possibly outside. The entrepreneur will begin to see the benefits of engaging a bean grower as an FD.
Remember that this is not an either/or. It’s not a choice to be the bean counter or bean grower. After all, we must keep the score on what’s going on in the business. That’s a pre-requisite for success.
Our contention at the FD Centre is that entrepreneurs should have and even deserve a bean counter who can grow beans as well as count them. This is what the modern FD should all be about.
How to spot a bean grower
So what does a modern FD, or bean grower, look like?
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Here’s my short list of the main things for which entrepreneurs are looking.
First, however: does the entrepreneur like you? You can check all the other items on the list, but the entrepreneur must feel comfortable with the FD. You will probably go through a lot together. Best to do this with someone with whom you can get along.
1. You should come with a set of business, commercial and strategic skills that are very strong.
2. You will have been there, seen it and done it a number of times over. Possibly in your entrepreneur’s industry and definitely in others.
3. Your track record should show you’ve done things as opposed to just doing a job. There’s a big difference. Entrepreneurs want you to do things for them.
4. You will bring with you relationships that will get your entrepreneur speaking to the right people, immediately and at the right cost. This will include the obvious contacts like finance providers, legal professionals, accountants and the like, but also marketing experts, IT experts, recruitment firms and all the other sources of support the entrepreneur will need to grow their business.
5. You should come with a set of contacts that can help the business grow.
6. If there are specific issues (such as the need to raise funds), have you got the demonstrable experience to fix them?
7. You should be able to speak the entrepreneur’s language. You need to know what makes the industry tick. You need the relevant experience.
8. When they speak to you about their business, do you get it? Can you speak freely and are you at ease? Can they see you understand what they mean? Do you show empathy about the big picture in their business? Have you got insight on the profit drivers that will help them grow their business?
9. Finally, the pre-requisite bean counter items:
a. Qualified from one of the major institutes.
b. Been a real-life FD once, twice and several times over.
c. Able to talk too. (Note: Some bean counters find communicating difficult!)
These are the types of FDs that can really make a difference, and it’s what you need to be if you want to be modern.
Sara Daw is co-founder and MD of The FD Centre