7 ways Start-Ups and Scale-Ups can benefit from a Part-Time Finance Director

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Are you the CEO of a Start-Up or Fast Growing Company? If so, this is for YOU.

Funds might be limited and cash may  be tight, but spending some of your hard earned money on a flexible Finance Director is a good investment.  An FD for a Start-Up or Scale-Up can help out on a part-time, flexible basis, saving the business from committing to a higher cost base.

Here are 7 ways an FD can help you.

  1. Price. Setting out the right pricing structure from the start.  Are your products or services selling at market value? Will people pay for what you are selling? Equally, are you making enough profit margin on what you’re selling? Shockingly few businesses know which products are making them money and which are burning a hole in the business.
  1. Negotiation. The business is your baby and your clients, your lifeblood. So it’s understandable why you wouldn’t want to be the bad guy and fight back on the discounts they’re requesting, as well as push back on prices on your purchases. Let the FD do it for you. Keep the good guy image for yourself.
  1. Business planning. An essential part of any business plan is the Financial Plan.  The financial section of your business plan determines whether or not your business is viable and will be the focus of any investors who may be attracted to your business idea.  This section is comprised of the Income Statement, the Cashflow and the Balance Sheet along with a brief explanation of each.  Your Finance Director will write this section and ensure it coordinates with your vision, market opportunities and business strategy explained in the rest of your business plan.  I have heard the Finance Plan in the investor community being referred to as the GOD sheet. It must reflect growth, and the right use of money.
  1. Raising funds. Whether you are looking for a startup loan, some cash to help you grow, a facility to enable you to go into production, or outside investors in exchange for equity, a Finance Director can assess your needs and guide through the best way forward for your business.
  1. Cashflow. You may be keeping one eye on the bank account at all times, but can you predict where your bank balance will be 3 months from now? An FD will devise a cashflow forecast which projects forward and is updated regularly. You can sleep at night, knowing where you stand. This process also allows you to see in advance if you are going to run out of money, allowing you to fix the problem ahead of time.
  1. Business modelling. Business modelling and analytics are essential in order to see what will work and what your limitations are as a business. An FD can create worst case, probable and best case scenarios for instance.  Do you know the very least amount of revenue needed in order to break even? Do you know how much you would need to earn, to be able to invest back into the business to grow it?  Your FD can work this out for you, allowing you to concentrate on your business goals.
  1. Investors. If you decide to go down the investor route, don’t go it alone. Bring your FD. When you seek funds for your new venture, you need to know how to present your case in the best possible way. You will also need a realistic but promising valuation.

Don’t wait too long. When it comes to bringing in a Finance Director, the earlier the better.  If you’ve held off until the moment you have an IPO or other milestones you have in sight, you have waited too long.

Sophie Wright is a Portfolio Finance Director and the Founder of WrightCFO, the niche FD consultancy for SMEs. If you would like to read more articles like this, please sign up to the monthly newsletter here.