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Posted by Helen Lumb - 24 th June 2013
Now there’s an interesting combination!
This is 4th in our recent series of articles, a business partnering approach with the businesses in high growth, entrepreneurial and/or family run SME’s and the importance of communication and engagement that leads to higher business performance.
No matter what the size of the organisation and in particular in a very fast paced, entrepreneurial, high growth or start up situation, Finance Business Partnering delivers excellent financial business performance.
But, if it’s a start up, surely there won’t be an Accountant in the business?
There will just be the accountancy firm who will provide the statutory accounts and tax computations at the end of the year? Right?
Well not necessarily so. One of my colleagues at Jenson Solutions has recently written
a blog “Why is the Finance Director the last hire and not the first?” In his article
he demonstrates that in any self respecting Development Capital/ MBO/ MBI situation,
no investor would look at any business that had no internal finance support, yet
in many start-
Yet…..
There is well researched evidence that businesses who have a finance professional on their team will most certainly perform financially more successful than one that doesn’t. The finance professional often brings strategy building skills to the table and is able to transform those strategies into good, solid financial forecasts that lead to organisational goals and targets for the members of the business. A culture of communication of those goals and targets that are aligned with business strategy and engagement amongst all parties leads to an enhanced financial business performance culture.
So how can the start up business or fledgling SME work with a finance business partner without it breaking the bank?
There has never been so many options available to small businesses as today? The key stages are:
Create a business plan and/or strategy
Set goals and targets and financial performance indicators
Prepare financial forecasts
Measure against those financial forecasts
Work with and embrace a collaborative finance professional who is skilled in communicating effectively and driven to help the business succeed by getting involved and understanding the business as a whole.
Many small businesses will pay/ employ a bookkeeper and or use an accountancy firm to provide all their statutory accounts and taxation and this is generally done at the end of the year.
However, another option is to outsource this. A cost effective route for the business is to outsource not only bookkeeping, but outsource preparation of management accounts that are reported back on a monthly basis. This has an added advantage, that the year end work is three quarters complete by the end of the year.
Strategic coaches can work with the business, entrepreneur and other management, to provide the business strategy. If you work with one who is also a finance professional (and they are out there – I’m one of them!) as well as strategy it may be possible for financial key performance indicators to be driven from the strategy building exercise.
However, one of the best ways to produce financial forecasts and introduce a finance business partner is to work with a part time FD. Professionals who have huge experience of working as corporate finance directors and made a conscious decision to work with a portfolio of SME businesses. This could range from working one day per month and attending Board Meetings to scaling as the company grows. These people are seasoned communicators, often entrepreneurial and adopt a business partnering methodology.
A combination of these methods provides the scaled solution at an extremely cost effective rate that will pay dividends in financial performance for the future.
My next post covers in detail the benefits of having finance business partners and I will then go on to explain what must be in place to successfully implement a finance business partner methodology.
Please read my blogs, give me your comments and feedback, follow me on Twitter where I will post when I have added new information or send me your email address to Helen.lumb@indigoperformance.co.uk and I will contact you when a new post has been added.
Helen Lumb is director and co-
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