Hiring a finance director might seem like an unnecessary expense for a start up company struggling to get a new business off the ground, but bringing a financial expert on board from the beginning could make the difference between success and failure. While a full time hire would be out of the question for most start ups, a part time financial director (FD) can be the perfect compromise, bringing blue chip experience for an affordable cost.
Theodoros Koutroukides certainly believes that Andrew Taylor from MyBusinessFD has been an invaluable asset to his start up hot yoga studio, Ethos, in Cambridge. “Bringing a part time financial director from the start was a no brainer for us. I would recommend it to any new company, because if you leave this piece of the puzzle out it could ruin your business in a competitive market,” he explains.
Small business owners and managers show impressive entrepreneurial skills, but often lack the financial knowledge to ensure that they are developing a robust and viable business model. Taylor says that one vital role a part time FD can play is to identify potential problems, and more importantly come up with solutions.
“Too many business say that they can’t do something because finances won’t allow it. The job of an experienced financial director is not to say no, but to find a realistic way to say yes. For example if a business is paying £15,000 per month in costs, but only bringing in £10,000 month in revenue, it is the finance director’s job to help find a way to bridge that gap. With a company like Ethos that might mean looking at raising the cost of classes or putting on extra classes to earn that extra £5,000 per month,” explains Taylor.
A part time FD isn’t just there to look for solutions to day-to-day problems, but also to ensure that the processes are put in place to allow the company to grow. “If a company is looking towards expansion then it is essential to make sure what we do now is done with a view to the future, so that when an investor does due diligence in 12-18 months they will see that everything has been done properly right from the start,” says Taylor.
Koutroukides feels that the wealth of experience Taylor offered to Ethos has been crucial to their plans to grow in the future. “Andrew understood from the beginning that we had an aggressive plan to expand in the future, initially to London and then further afield. Thanks to his financial experience he ensured we stayed focused not just on short term survival, but also laid the foundations for us to replicate our business in the future as easily as possible.”
Typically Andrew meets with Ethos once or twice a month and one of the most important functions of these conversations is to provide an unbiased and expert opinion on the business strategy. This is a key benefit to opting for an external FD as they can bring a fresh pair of eyes to the business. “Andrew brings an unbiased view and continually develops financial models that have been an invaluable tool for testing the viability of the business as well as helping us to time our next steps forward,’ explains Koutroukides.
The combination of a part time FD and an entrepreneur is a recipe for business success as Taylor explains: “An entrepreneur will drive the business forward, but a part time FD can support them in realistically achieving their goals”.
The core benefits that a part time FD brings to a start up like Ethos is a depth of financial experience that would otherwise be unaffordable, a sounding board for current and future business strategy from a financial point of view and a critical structure that ensure that entrepreneurial flair translates into real results.
For further information visit www.mybusinessfd.com