First time? If your start-up has been managing without a finance director, a time will come when you need one. 'There's usually a light-bulb moment when the CEO or chairman realise they don't have enough grip on the finances,' says Phil Scott, director of FD Recruit. A specific event such as an injection of capital can also trigger the need for an FD or CFO.
Dip your toe. A smaller business might not need someone full time initially and in that case it makes sense to bring in a part-time individual as an interim solution. 'You might have a financial controller or management accountant who does the numbers and a part-time finance director who comes in and contributes the strategic element,' says Scott. 'At £20m, you probably need someone full time and permanent.'
The brief? 'Getting the job description right is critical,' says Karen Young, director at Hays Accountancy and Finance. 'In a smaller organisation it can include a gamut of responsibilities, including secretary, insurance, HR and contact centre operation. But it's just as important you are clear in what you are looking for them to achieve over six months, a year, five years, and what you expect their strategic input to be.'
Know what you really want. An accountancy qualification is essential, an MBA a bonus, but the track record is critical in determining if the candidate can meet the needs of your forward strategy - particularly if you plan something like an IPO. Your interviews must be competency based to establish if they have what you are looking for, says Young.
Look for the X factor. Research by Hays found that 'commercial awareness' is the most important attribute for an FD. Scott adds: 'What we find most sought-after is someone who can be proactive with the numbers, and apply them strategically to the business.'
Cast your net. Recruiting within your sector offers a safety factor, but has a downside. 'Someone from your industry will often maintain the status quo and fail to look for new ideas,' says Ian Wright of NonExecutiveDirectors.com.
Test the chemistry. The FD is typically number two to the CEO in more established businesses, so it's vital that you get on. 'If you can't work with the FD, the appointment is doomed,' says Wright. Invite them for a meal where you'll have the time to figure out if you click.
Be honest. If there are any skeletons in your balance sheet, air them before you make the appointment or it might prove short-lived. 'If the individual is any good whatsoever, they will have discovered them within a month or two and they will probably leave,' says Young. 'You have to establish trust from the outset.'
Reel in the talent. Finance directors will be more savvy than just about any other employee in negotiating the package they want. Their drivers might involve pay and benefits, opportunity and in some cases equity in the business. 'Equity is great but only in a business poised for exit,' says Wright. 'If you know the FD is driven by financial rewards, set up a realistic but challenging bonus scheme.'
'I'm looking for a financial leader who can help me formulate strategy and drive this business forward.'
'We've got Pat doing the bookkeeping - why would we need anyone else?'