89. What Is A “Pivotal Moment” – And What Might It Mean For You?

Whatever stage of growth or maturity of your business you will at some point experience what we might call “pivotal moments”.

Typically, signing a substantial new contract, taking on a new shareholder, opening a new facility – exciting and all potentially taking your business in a new direction.

But one such moment which does not necessarily mean “new” is the insightful decision to get a firmer hold of your finances.  It’s never too late to put your hand up and confess to not quite understanding what all those numbers mean.

It is quite clear that at some stage, professional management is needed to complement the entrepreneurial zest of the founder – this wisdom often arrives in the form of a finance director.  Either a full time or, as more and more businesses are finding, a part time role works remarkably well.

At the very least you get robust internal controls which will help you sleep easier at night.  And you stand to benefit in a plethora of other ways.

By the time a business reaches a turnover of £50 million it is likely to need a full time finance director.  So, if you are not quite there yet, and want to be, read on…

At Tectona we totally get that there needs to be a compelling reason to take that first step to get serious about finance.  “Burning Platforms” can be brigaded around a few key triggers:

  1. Buying a business or selling part/all of yours
  2. Selling loads but the bank balance hovers stubbornly close to where it was 6 months ago (a robust analysis of where you are making money – and, just as importantly where you are not, is needed)
  3. You want, and probably need, control of your business
  4. You are changing your business strategy.

If you have never had someone taking the financial weight off your shoulders it is interesting to note that finance directors in smaller companies are likely to be heavily involved in aspects of the business beyond the finance function – IT, property, HR and legal will quickly tend to land on an FD’s desk.  And you will still probably not have enough pure finance stuff to occupy a full time FD.

I remember Robert Holland – then partner and now managing partner of Thames Valley based accountancy practice James Cowper Kreston – telling me (and I know his thinking has not changed):

“It can be quite a broad role.  You do the financial advising, then you may end up doing quite a lot of the contract negotiations and absorbing any of the other back office departments such as compliance, IT or facilities, simply because there’s no one else to do it.”

And these are wise words.

Robert continues, “One option for those at the smaller end of the “squeezed middle” – (squeezed middle is businesses with turnover of between £5 million and £100 million) – is to use either a part time FD or take on someone on a consultancy basis.

“Companies with a turnover of up to £15 million might only have someone in one or two days a week.  The difficulty arises when the change to a full time finance director takes place.  You have got someone you know and trust, but as there is more of a time commitment you often find your business outstripping resources.   For many entrepreneurs and owners finance departments are never really the first call of expenditure in a business anyway.”

So his message is clear – Get finance help, Get a finance director.

As Robert says, do consider the part time option – basically a finance director with you when you need them (and not when you don’t).  It is frequently the right solution for businesses just like yours.

Having made the decision, at the end of the day you have got to find the right person for you and for your business.

“Fit” is crucial and breaks down into the following areas:

  1. Skills Fit
  2. Experience Fit
  3. Personality Fit

All the Tectona team are highly experienced and commercial FDs – so the first 2 are a given.

But it is the last one of these – the personality – that often proves to be the most critical.  That is why at Tectona we go the extra mile to get this right.  At our cost we will offer you the chance to test the chemistry outside the office environment – pint, dinner, golf – or whatever gives you that comfort that the fit works.

Our first desire is to understand you and your business – we do this by investing up to half a day of our time (cost free) so that we thoroughly understand your challenge/s, identify any other potential dangers and then (and only then) provide specific recommendations.

Drop us a quick email and we promise to help you find the right solution – for you.

So, if you are seeing some imminent “pivotal moments” looming and would like us to help you scope out what you need, why not give us a call?

And it may just lead to that free dinner…

(By the way, you may be interested in one of our case studies – it shows you how Tectona got it right – where other FD providers had manifestly failed.)

Posted in People and Leadership.

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