COMING UP FAST: Building to last - Time to bite the finance bullet?

COMING UP FAST: Building to last - Time to bite the finance bullet? - DILEMMA: We've got by perfectly well without a full-time finance director so far. However, it is all getting a bit much for the current accountant and there have been some unfortunate s

by PATRICK DUNNE, who works with 3i
Last Updated: 31 Aug 2010

DILEMMA: We've got by perfectly well without a full-time finance director so far. However, it is all getting a bit much for the current accountant and there have been some unfortunate surprises recently.

Perhaps it's time to bite the bullet, but how do we go about finding an FD?

ISSUES: Ever met a successful entrepreneur who recruited a decent finance director too early? Me neither, but I've met many frustrated entrepreneurs who regretted doing it too late. So the first issue is one of attitude.

A 'getting by' attitude is weak. If you want to build a significant business, you must have a decent FD.

But what do FDs do? This is hard to answer if you're not clear on the board's role. For me it is 'Right strategy, right resources and keep out of jail', and the FD can contribute to all three areas. Good FDs will want to contribute and will be deterred if you see them simply as chief guardian of the cash or monitor of performance. Yet you should avoid the one-dimensional control freaks, who want input on everything but lack the skills to contribute constructively.

So what's your strategy? Don't start looking until that's clear, because you need an FD that suits it. What should you look for? Professional competence goes without saying, but are you the right person to judge? If not, then who is? Relying completely on a search firm may be misguided. If you do, pick a firm that is used to handling FD appointments, make them pitch against others, and be clear on who and what is involved in the selection process.

Remember, you need a soul mate, so chemistry and communication skills count as much as competence. The soft option is to employ your auditor.

Although many former auditors have made great FDs, it doesn't always work, so pitch them against other candidates.

What should you pay? Ask around and read the ads to work out the going rate. FDs don't come cheap and you should consider what you're going to do in terms of equity incentives. A cheap FD is an expensive option.

ACTION

- Get clarity over your strategy.

- Be clear about the role of the board. The FD role then becomes easier to see.

- Be prepared to spend time on recruitment.

- Create a rigorous selection process

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