Growing Your Business
Solid financial foundations are the key to profitable growth
Over the last couple of Millenia we have learnt that when we want to construct a building that will last through the ages it must be built on solid foundations
If it is not, as many architects and engineers have found out to their great cost, it all comes crashing down, often creating considerable carnage.
And so it is with organisations. If they are not built on solid financial foundations, there is a great risk that as the volume of transactions increases, the ability for them to be correctly processed starts to diminish, and if the correct processes and controls are not in place, risks start to be increased in a number of areas, and it can all come crashing down.
“At the end of the day, as the old adage goes, there are only three reasons businesses fail: cash, cash and cash“
There are five principal stages of a business lifecycle:
- Start-up
- Survival
- Growth
- Maturity
- Renewal/Rebirth/Decline
Start-up
One of the worlds largest retailers had modest beginnings.
It is well documented that Jeff Bezos started his Amazon, his online book business, in the garage of his rented home following a loan from his parents. Even large businesses have small beginnings.
Survival
The next stage of a life cycle is survival.
Products or services are further developed, markets are expanded, and most important of all surviving through those first difficult times.
It is often said that the true definition of an entrepreneur is a business owner who has had to go to a cashpoint to withdraw money from personal sources to pay their employees’ wages. According to the UK’s Office for National Statistics nearly 60% of businesses will fail within their first 5 years.
Growth
This is very much the exciting time within a business lifecycle.
Sales growth, products or services expand, new customers, new employees, but this phase also brings great risk as the right resources are neglected or incorrectly allocated.
However, when properly managed this is a true value creation phase.
Maturity
Businesses mature, they become clunky, they can become inwardly focussed and complacent.
When their markets change, their customers change and they stop listening – their original values change and they become mis-aligned. This biggest single challenge a business will face as they start to mature is complacency and thinking what got us here will keep us here. It won’t.
Renewal / Rebirth / Decline
Every business at some point will need to go through a renewal cycle.
The digital age has brought the ability for disruption quicker and cheaper, resulting in far more fundamental changes to markets, business processes and business models. We are without doubt in an age of significant change.
Big conglomerates are like oil tankers, it takes time and distance to change direction whereas on the other had SME’s are like speedboats, changing direction and accelerating on a six-pence. It is renewal or decline.
What are the challenges faced by growing businesses and how does a cost effective part-time FD really help?
Let us answer some of the questions business owners have:
It was going so well, now its just problem after problem
Answer: An experienced hand to look after the important aspects such as finances, processes and systems gives senior people “bandwidth”.
I think I am running out of money
Answer: Proper cashflow planning will give plenty of notice of what is required by when and where external or internal.
My processes can’t cope
Answer: Expert part-time FD’s have seen most situations before and are aware of what is most likely to work and what isn’t. They will help develop internal processes that will cope with growth.
My key suppliers are getting angry at delayed payments
Answer: A key part of cash flow management is not only suppliers, who can be at the bottom of the list, with dire consequences, but other aspects of working capital management. There are a myriad of financing solutions that may be appropriate to enable continued growth.
My bank seems to have turned on me
Answer: Part-time FD’s will manage external relationships so external parties know what is going on and know what is required, rather than being left in the dark until too late.
It’s all getting too much, I don’t think I can cope anymore
Answer: Having that expert helping hand to turn to who has the experience working in similar businesses will raise the confidence and performance not only of the senior person, but those around them.
This is a lot lonelier than I thought it would be; where do I turn
Answer: Its lonely at the top, and unsurprisingly this is one of the top observations from business leaders. A part-time FD regularly becomes the trusted right-hand person able to impart balanced and unbiased advice when needed.
I can’t cope with everything at once
Answer: How do you eat an elephant? And the answer isn’t a large knife and fork. Breaking your challenges down, delegating key tasks to experts, creates opportunities.
I don’t know where we can get the resources we need to build the business
Answer: There is more than one way to skin a cat and there are a variety of sources to provide the funds to profitably grow. An experienced part-time FD knows where to turn in the right circumstances.
Client’s Who Trusted Us
We turned to FDX to provide some expert help and they were able to provide someone from their network who had the right knowledge and experience to start making a difference straight away.
I now know really quickly what is happening in our business and have clear KPI’s on our present and likely future performance, allowing me to make the right decisions. Our part-time FD has been a real boost to our team.
Initially working 1-2 days per week their wide commercial knowledge and experience of working with other legal firms helped me. They also assisted the other partners manage the firm strategically, and operationally, through challenging times and supported us in planning ahead for wider changes expected in the legal sector.
Our part-time FD’s previous experience enabled me to delegate to them the management of our central service operation, which freed up my time to focus on critical strategic matters including a potential merger, succession planning and the existing partners’ future exits from the firm.