From Zero to Hero: The FD Centre Outlines How Part Time Finance Directors Can Provide Business Control -- At Both Ends of the Business Spectrum

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After the first flush of start-up, many business owners find themselves faced with common problems caused by business control according to the FD Centre. Those problems tend to polarise into coping with potential failure or run-away success -- the 'zero or hero' scenario.

been there seen it and done it

The heroes are fast-growing, successful businesses, usually with considerable drive and enthusiasm from business owners. Heroes have gathered speed from a standing start, they are clearly going in the right direction, and appear to be getting there rapidly. However, like a fast train, without good control systems, knowing when to slow down or accelerate and understanding all the signals -- a hero-business can easily run out of track and suffer a spectacular crash.

The zeros are those businesses that for some reason are finding life difficult. These can often be potentially great businesses, but they find themselves in a situation where their viability maybe threatened, again by poor business control.

Both situations can be 'life threatening' -- threatening for business life, and life style threatening for the business owner. It is immaterial whether businesses fail with a huge fall or sink slowly and uncontrollably, the result is always the same.

Issues facing the business hero

Hero-business owners are often extremely enthusiastic, have great business ideas, products or services and are consumed with ambitions for growth. Such businesses, led by their highly driven business owners, are usually great to work in, customers and suppliers alike are impressed with the positive talk and never say die attitudes.

However, there can be a number of financial issues that put the existence of these businesses under pressure. Prime amongst these for the fast growing start up is being under capitalised -- or in simple terms -- not enough cash to start with. The great idea can often die as a result of just not having enough cash. If the business survives this cash issue, the problem of over trading usually rears its head - not having enough cash to keep the business going.

The enthusiastic owner whose vision drives the business can often suffer from a lack of vision for coping with growth. This results in a lack of visibility and not knowing how much cash is required for growth.

All these issues combine to create poor business control. Regardless of how successful the business may be, unless the management knows and understands in profit and cash terms how the business is performing, there is a problem waiting to become a crisis.

Dealing with the zero scenario

Zero businesses are strugglers. They can be fallen heroes; however they are usually businesses that have striven to survive almost from day one. They often adopt a wait and see policy, hoping that things will get better. Typically, they are less exciting places to work, they can feel more dour and depressing as customers and suppliers become increasingly nervous about relationships.

They are usually characterised by a lack of profitability and cash. The constant pressure of trying to juggle cash to make ends meet overshadows the viability of the business and the potential success that lies within. The paradox is that these businesses tend to suffer from similar financial problems to their hero counterparts - lack of cash, poor visibility, little direction to plan a way forward and overall lack of control

Driving up the zero and controlling the hero

Both hero and zero scenarios can threaten business survival, but not necessarily. As with the medical profession, prevention is always better than cure. However, even business cases that may appear terminal can often be rescued.

The solution lies in business-based financial support and advice. The problem facing both heroes and zeros is finding and funding that advice. Frequently, business owners bemoan not just the difficulty in finding the advice but sourcing affordable advice. However, in some cases they cannot afford to be without that advice. When potentially threatening symptoms are recognised, seek out the best advice - the sooner the better.

Finding advisors with the right track record

As with so many other things, the business owner should go for experience. Someone who has "been there seen it and done it". One immediate response is to hand the problem to the accountant. This can provide a solution, but in reality, most external accountants are not experienced in running a business, or the realities of managing a finance function.

Larger businesses employ a finance director, unfortunately, individuals with the necessary experience do not come cheap and smaller businesses, especially the heroes or zeros, probably can't afford a finance director.

An experienced finance director is invaluable in recognising the danger signals and providing solutions, they know how to finance a business, deal with growth, present meaningful monthly numbers and get the best deals from banks. At some point both heroes and zeros need this experience but they probably don't need that skill set full time -- this is where a part time finance director provides the best solution.

Access financial management skills at a fraction of the cost of a full time resource

Owners of hero to zero businesses are prime candidates for a part time finance director solution. With the part time FD option, business owners can access a financial management skill set that is experienced in dealing with problems and opportunities, able to organise both the in-house and external accounts functions, and provide the necessary business advice.

The part time finance director has the skill set to plan and implement the controls needed to help the zero business survive and the hero business to grow positively. Additionally, a part time FD solution does not impact payroll or headcount with the business only charged for the days worked -- which may only be a few days per month.

Business owners -- zeros or heroes - cannot afford to be without business-based financial advice. Part time financial directors should be their first priority, before they hit the problems, after all the more time a business has to rectify a situation the more chance of success.

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Colin Mills
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