How Can A SME Owner Work And Have a Life?
If you are an owner of a growing SME, chances are you and those around you feel the effects of constantly bringing home paperwork and not having time to engage in quality off-hours activity.
This all too familiar scenario is caused by owners taking on more responsibilities in more areas of the business, even when they do not have the skills to do it properly. The ‘paperwork’ or the ‘books’ is a classic example of this. The reason why many owners take it home is firstly because it’s so boring it’s always last on the list, secondly because they do not want their staff to see them make a mess of it.
Of course this is only the tip of the iceberg; the finances in a large company have a much wider role than simply keeping the books up to date. Experienced CFOs play a key role in the strategic planning of the business which is totally missing in most small companies. In addition to ensuring that the books or accounts are up to date and the management accounts are prepared, the CFO will continually review the opportunities facing the business and channel its efforts into a narrow focus which delivers the best profits and value for the shareholders – the business plan.
Many SME owners think that the business plan is a document that is prepared once for their bank and then locked away in a draw. The reality is that it should be continually reviewed and updated as the company grows and new opportunities arise. The second key role the large company CFO plays is to predict what the results will be for a business under different action plans. Companies cannot do everything they want to: they have to make choices. This allows the other members of the management team to see the outcome of those choices and then easily make a decision. This process also enables the chief financial officer to ensure the necessary finances are in place to execute the revised business plan.
In a large business this function enables the other parts of the business to focus on those activities that drive profitable growth. The owner of the SME wants to do exactly the same with their time: he/she wants to make informed decisions about the strategic planning of the business, thus leading from the front to achieve profitable growth and maximizing the potential of the business.
Of course, finding a CFO that has all the necessary skills and experience to enable small company owners to run their business in this way is not cheap. In fact, they are very expensive. With the salary, bonuses and benefits, it is simply not a viable option for a small company. Invariably they go for a cheaper ‘CFO’ who does not have the right skills or experience and is really an expensive bookkeeper. Sometimes they pay their professional accountants to advise them although as one SME owner put it, “You want solid practical solutions to thorny and complex problems, not a host of text book options”. This is when the experience and skill of an experienced CFO really proves its worth.
One solution that has worked really well for small and rapidly growing companies is the part-time CFO. The CFO Centre is one of the country’s leading providers of part-time CFOs. CEO Ian Young states, “We are an odd breed of professionals and should not be confused with bookkeepers, interim contract workers, consultants or firms of accountants. As individuals we want to work as part of the management team in the SME sector because growing small businesses is much more exciting than running large finance functions in a PLC. We have been CFOs, of much larger businesses as well as SMEs, raised funding for companies at different stages of development, have sold businesses and probably been involved with turnarounds as well. Simply because of this skill and experience, we can fulfil the CFO role for an SME in 4-5 days a month and therefore we can spread our total cost across 3-4 companies. It’s exciting for us and affordable for the company”. This is a win win win for the company, the CFO and the owner’s family: the company gets all the skills and experience it needs to keep control of the business, the part-time CFO gets the challenging and rewarding life he/she wants and the owner gets feels in control of his/her business and enjoys spending more time doing what they want to do.