By James Nicholson-Smith, Business Development Director & Managing Principal, West Midlands Region, The FD Centre

Read 'FDs Or FCs Considering The Composition Of Their Finance Team - Part 1'

Recognising the needs of ambitious businesses

For FDs that are really FCs, the ambition of the business you are working for, is the critical factor. For businesses that are essentially a mechanism for the delivery of an income and lifestyle to the management team of the business, the FC role that is currently being carried out, is likely to be sufficient for some time. However, when the ambition of the management is to build a business to deliver ever-increasing profits and equity value, the need for strategic financial planning, rolling forecasts and the ability to raise debt and equity capital, is essential.

In such circumstances, the FD who is actually fulfilling a FC role needs to ask themselves a question “do I want to be a real FD or not?” For those that say yes, you will almost certainly need to have a mentor/coach to help you grow into the role. For those that recognise their own inabilities but see the business’s need, it takes real grown up to say that something else is required and not to feel threatened. Unfortunately, for some businesses, this gap is not dealt with until the need is so desperate, that the FD is dismissed and replaced, through a costly and time-consuming route, by a more experienced FD with all the right commercial knowledge and skills.

Specialist FD advice and guidance for businesses

Over recent years, the emergence of part-time FDs has grown to fill this gap. Mentoring an FD requires considerable experience both as an FD and as a coach. Only a small proportion of part-time FDs have both skills.

Similarly a part time FD in a business that has a good FC, requires the same balance of FD skill and experience as well as coaching. As a part time FD, you need to develop the financial skills of both the FC and the rest of the management team, to enable financial controls and forecasting to be effective whilst the part time FD is not on site. This process also allows the business to extract the maximum value from his/her experience for the time they spend in the business. Therefore the difference between the 2 roles is effectively the level of “doing” the part-time FDs actually implements themselves.

Whilst it is difficult to set any hard and fast guidelines, the download to the right of this article is a reasonable guide to the basic composition of a finance team of businesses at different stages of their lifecycle.

In summary, the size and composition of the finance team is generally a product of the businesses needs and the skill, experience and ability of the head of finance to deliver those needs.

As the largest provider of part-time Finance Directors in the UK, the FD Centre can help businesses achieve their strategic objectives. To find out if your business could benefit from a FREE Business Strategic Review and receive valuable advice for your business’s financial planning, visit www.thefdcentre.co.uk

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