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You shouldn’t be surprised to discover that Meryl Streep, Robert De Niro, Hugh Jackman, Gary Oldman among many other Oscar-winning actors and actresses bear a grudge against Finance Directors.

It’s easy to understand why. For although the likes of Streep and Oldman have achieved fame, fortune and critical acclaim, they can usually only inhabit one role at a time. They take it on for a few months and then move on to the next.

A great FD, by comparison, is the master or mistress of multiple roles and can switch between them easily and effortlessly. What’s more, they perform those multiple roles day in, day out for weeks, months and even years.

That’s because an FD is there to help the business owner achieve the company’s objectives by providing financial and strategic guidance to ensure it meets its financial commitments and to develop policies and procedures to ensure its financial management is sound. The Institute of Directors says the FD is “often viewed as the member of the board who creates a solid foundation upon which a business can grow”.[1]

It’s why a typical FD job advertisement features a huge list of responsibilities. These will often include the following and more:

• Providing strategic financial leadership to optimise the organisation’s medium to long-term financial performance and strategic position
• Contributing fully to the implementation of organisation strategy across all areas of the business, challenging assumptions and decision-making as appropriate and providing financial analysis and guidance on all activities, plans, and targets
• Providing robust financial reporting and analysis to the Board of Directors, Finance, Risk and Governance Board and Corporate Management Team including the provision of financial support to strategic decision-making and transactions
• Working with senior management to steer the business towards the goal of greater financial independence and sustainability
• Providing cash management – monthly cash flow reporting and long-term strategic cash management
• Overseeing the preparation of VAT and other statutory submissions
• Developing and ensuring compliance with financial policies and controls
• Presenting annual accounts to the General Meeting.
• Risk management and reporting – maintenance of the organisation’s risk register ensuring control processes are fit for purpose
• Developing an IT strategy that supports the organisational strategy.

Although FDs aren’t expected to be able to speak in an accent, swordfight or ride a horse as actors are, they are expected to have accountancy qualifications, excellent communication and interpersonal skills, the ability to manage complex stakeholder relationships and to provide strong attention to detail with commercial and strategic acumen.

So, as you can see, at any time during an FD day, the FD will be a sounding board/mentor for the CEO (and sometimes the only one to point out the flaws in a ‘blue sky’ idea), strategic advisor, bookkeeper, financial controller, risk management advisor, finance team leader, recruitment advisor and much more.

Being able to adapt to any one of the roles comes from experience. The FD Centre’s part-time FDs, for instance, have all had years of experience working in large corporations. They’re used to working in complex, demanding environments and switching roles as the need arises.

Unlike actors, FDs don’t perform as they do for applause or for a gold-plated statuette (although many would be very, very happy if you offered to pay them in real gold bullion). They do it to help business owners like you take your fledgeling business to new heights of success.

What’s more, you can be sure that the FD you hire won’t ever pull you aside before or during a meeting to ask, “What’s my motivation?” *

To discover how an FD Centre part-time FD or CFO will help your business, contact us now on 0808 164 8902. To book your free one-to-one call with one of our part-time FDs, just click here.   

* [Note: No Oscar-winning Hollywood actor or actress was harmed during the writing of this article.]

[1] ‘What is the role of the Finance Director?’, Factsheet, Institute of Directors, https://www.iod.com, May 2017

If you’re looking for a quick way to cut costs, boost efficiency and improve productivity then consider outsourcing one or more of your business’ support processes.

Outsourcing has many benefits and can give you a greater competitive edge in your market. It allows you to tap into a large international talent pool and benefit from external expertise. Your outsourced providers can provide services, innovative approaches, and the latest technology along with cutting-edge solutions that your in-house team might be unable to provide.

It also allows full-time employees to focus on your company’s core competencies. And it means you have lower operational and recruitment costs. The cost savings you achieve with outsourcing can help you to release capital for investment in other areas of your business.

But outsourcing does have its downsides. For example, there’s a risk in allowing outsourced providers to handle confidential company data, whether that’s the details of employees or customers or competitive information. Under the GDPR, companies will be held responsible for any third-party data breaches. The penalties for such breaches will be stiff. What’s more, any data breaches will dent your company’s reputation and damage your brand.

Then there’s the risk that the output will be sub-standard or that delivery time frames will be stretched. Both would damage your company’s reputation and possibly result in lost sales. And there’s a danger that unless the outsourcing is carefully managed, the expected cost savings won’t materialise. This was the case for the UK government. Its programme to outsource back-office functions ended up costing taxpayers £4 million. Officials had predicted the programme would save up to £400 million a year, but after two and a half years, it had saved just £90 million but cost £94 million.

It’s for these reasons many companies are still reluctant to consider outsourcing.

That’s a shame because if the outsourcing is well-managed, the benefits will far outweigh the risks. Take the Alibaba.com e-commerce website, for example. Today, it’s known as the world’s biggest global marketplace but in its early days, its founder Jack Ma had to outsource the website development to a US company. At the time, he couldn’t find development talent in China whereas developers in America had the skills he needed. It also allowed him to overcome the Chinese government’s tight internet restrictions.

Google is another giant that also outsources work to IT specialists, developers and virtual assistants. At one point, Google outsourced phone and email support for AdWords, one of its top-grossing products, to about 1,000 external representatives.

The founders of the hugely popular WhatsApp Brian Acton and Jan Koum also hired the services of external providers. In their case, they used the services of an iPhone developer Igor Solomennikov for the core development work on the app.

What can you outsource?

You can outsource any or all of the following:

• Administrative tasks such as data entry, typing, travel arrangements and scheduling.
• Lead generation and customer service including cold calling
• Marketing including content writing, direct marketing, website design, brand development, press releases, social media, blogging and search engine optimisation
• IT Directors
• Sales Directors
• Legal Directors
• Human Resources including recruitment and the management of employee benefits
•  Accounting and financial duties including bookkeeping, invoicing, accounts payable and receivable, payroll processing and financial reporting. You can, for example, hire a part-time Finance Director who knows how to finance a business, deal with growth, present meaningful monthly numbers and get the best deals from banks.

It means you get a highly experienced senior FD with the experience and knowledge to help you plan, manage and control business growth. The FD Centre will provide you with an FD with ‘big business experience’ for a fraction of the cost of a full-time FD.

To discover how an FD Centre part-time FD or CFO will help your business, contact us now on 0808 164 8902. To book your free one-to-one call with one of our part-time FDs, just click here.

Could your company afford to pay a 20 million Euro fine or to lose 4% of your annual global turnover?

It’s a question you should be asking because it’s the penalty that your company will face if you fail to gain your customers’ consent to process their data or deliberately breach their privacy under the EU’s General Data Protection Regulation (GDPR) which comes into effect within weeks. All companies in the EU regardless of size or sector and all those that deal with data from EU citizens wherever those companies are in the world must be compliant with GDPR by May 25 this year.

Less serious violations of the GDPR such as not having records in order or failing to notify supervisory authorities of a data breach within 72 hours of the incident, will incur fines of 2% of the offending company’s global turnover.

Even if your company could shrug off the impact of such fines, the news that it didn’t protect customers’ data could still cause irreparable damage to your reputation and affect your future business.

Then there’s the chance your company may have to compensate your customers. That’s because the purpose of the GDPR is to put individuals in control of their personal data and to empower them to choose how (and if) businesses use their data, so they will have increased rights to legal recourse and even claim compensation.

For these reasons, it’s critical to do everything possible to prepare for the GDPR and to ensure your company is fully compliant by May 25.

Worryingly, many companies are unprepared for the deadline. For example, security chiefs at FTSE 350 and Fortune 500 companies revealed that over half are not ready for the new regulations, according to a survey conducted by international law firm Paul Hastings.[1] Likewise, more than 90% of the UK’s small businesses won’t be compliant come May 25, according to a study carried out by the National Federation of Self Employed & Small Businesses (FSB).[2]

It seems GDPR unpreparedness is a worldwide condition, according to an article entitled ‘GDPR: the numbers don’t lie – the world isn’t ready’.[3] In a round-up of global markets, it revealed Computerwoche, a German IT publication, found only 2% of German companies are prepared; The Independent reported that Irish firms said meeting GDPR compliance would be ‘challenging’ or ‘extremely challenging’ and Le Monde Informatique reported less than 10% of French companies were GDPR-compliant.

Unfortunately, ignorance is no defence in law. If your company is not yet compliant and you know it can’t afford to pay the massive fines for data breaches and their fallout, it’s time to put your skates on—time is running out.

The Steps You Must Take

Analyse the data your company holds and determine where it is, whether you need it, and who in the company has access to it. Find out your core sources of data. You need to know how your company manages the risk of duplicating data, inaccuracies with data, and the failure to delete data that is outdated.

Look at the data you share with third parties—clients, suppliers, partners, and regulators. With GDPR, you must understand and manage the risk of transferring that data. More importantly, you are responsible for ensuring that data is protected by any third party.

Let your customers or clients know the lengths to which your company goes to ensure their personal data is protected. It could be the thing that sets your company apart from your competitors and the reason customers or clients choose you so is well worth doing.

Ensure that your company is not using clients’ personal data for anything more than what they agreed to. If they agreed to sign up for your newsletter, that’s not permission to sell their details to a third party, for example.

Let clients or customers know the ways you use their data. Explain why you need it and with whom you intend to share it. Be aware that your customers or clients may withdraw their consent whenever they like. Make sure you acknowledge their requests for removal from your data bank with an email.

Make every effort possible to protect the data you hold about your clients or customers from organisational and technical risks. You need to ensure everyone within your company is aware of the external forces that could disrupt your business and that you have a strategy to deal with it.

If your organisation deals with large amounts of client data, consider appointing a Data Protection Officer. This person will liaise with regulators, maintain the right level of privacy awareness within your organisation and monitor your company’s GDPR-compliance.

[1] Fortune and FTSE Companies Underestimate GDPR Compliance by May 2018, New Research Shows, Paul Hastings LLP [US], https://www.paulhastings.com, December 15, 2017

[2] ‘Ninety per cent of small firms still not prepared for new data regulation, new research shows, National Federation of Self Employed & Small Businesses Limited, https://www.fsb.org.uk, February 26, 2018

[3] ‘GDPR: the numbers don’t lie – the world isn’t ready’, https://gdpr.report, January 30, 2018

A funny thing happens on January 4^th. It’s the day traditionally when people decide the mammoth New Year goals they set with such high hopes well and truly stuck.

They look in the mirror and see that despite FOUR DAYS of exercising and dieting they are still not marathon or beach-ready.

By January 5^th, the new running shoes will have been pushed to the back of the wardrobe and the bathroom scales will have been shoved out of sight. A new bottle of Prosecco will have been put in the fridge alongside a monster bar of chocolate. And the New Year’s New You’ goals will be quietly shelved for another year.

In business, goals tend to be longer-term and even more audacious, designed to really stretch and motivate employees. So it usually takes months rather than days for the insanity of the ‘stretch goals’ to become apparent to everyone except the person who set them.

Stretch goals are an ineffective management practice, says renowned behavioural psychologist Aubrey Daniels in his book, ‘Oops! 13 Management Practices That Waste Time and Money. Stretch goals are met only 10% of the time, he says.

Failing to reach stretch goals can have a detrimental effect on employee morale, says Daniels. Performance declines when people repeatedly fail to reach stretch goals.

The consequences of setting and then missing stretch goals can be profound, agree to management professors Sim B. Sitkin, C. Chet Miller, and Kelly E. See, who have carried out extensive research on stretch goals.

“Our research suggests that through the use of stretch goals is quite common, successful use is not,” they write in the Harvard Business Review.[1] “Failures can foster employee fear and helplessness, kill motivation, and ultimately damage performance.”

They say only successful companies should tackle stretch goals. If a company has just surpassed an important benchmark in the industry or in its own recent history, for example, it’s well-positioned to tackle a stretch goal.

“Winning affects attitudes and behaviours positively. When confronting an extremely challenging task, the employees of recent winners are more likely to see an opportunity, systematically search for and process information, exhibit optimism, and demonstrate strategic flexibility.”

Companies that are experiencing weak results should steer clear of stretch goals, they say. “Their employees are more likely to see a stretch goal as a threat, grasp for externally sourced quick fixes, exhibit fear or defensiveness, and launch new initiatives in a chaotic and ultimately self-defeating fashion.

Daniels says despite his findings, it’s difficult to convince executives about the danger of using stretch goals.

“I get more push-back from executives about stretch goals being a waste of time and money than any other thing I’ve written. Executives believe stretch goals will motivate people to do more than they would have if they didn’t set goals. It’s not true.”

So, if stretch goals rarely work, what can you use in their place?

How to Set Productive Business Goals

Setting realistic goals that motivate employees to do more is more successful than stretch goals, says Daniels.

The key to setting such goals is to:

• Keep it simple. Focus on one or two things at a time. “Trying to accomplish too many things at once prevents you from being able to do any one of them well,” says Daniels.
• Define clear actionable behaviours. Decide what needs to be done to accomplish the goal. Break down the steps into concise actions that need to be taken.
• Set many mini-goals. To boost the likelihood of success, break the big goals into smaller, more achievable ones. “Positive reinforcement accelerates performance and therefore, the more reinforcement opportunities available, the faster and greater the improvement.”
• Forget stretch goals. If the goal is too high or too difficult to achieve, people will get discouraged and give up.
• Celebrate! Every time that a milestone or goal is reached, reward and recognise your employees. “Recognising even incremental progress towards a goal provides more frequent opportunities for reinforcement,” says Daniels. “The more reinforcement, the greater the likelihood the desired behaviour will be repeated, and the more likely achievement of long-term goals will be made.

“Making accomplishments visible and sharing them publicly—when appropriate–creates more reinforcement from peers, groups, and management teams who recognise and acknowledge your success.”

Set SMART goals

Make sure the goals are small, measurable, achievable, relevant, and timely.

How to set goals for your business

Before embarking on any goal-setting activity for your business, you need to know the current state of your business. Fortunately, the FD Centre offers free financial health checks. You can find out more here or call us at 0800 169499.

[1] ‘The Stretch Goal Paradox’, Sitkin, Sim B., Miller, C. Chet, See, Kelly E, Harvard Business Review, January-February 2017, www.hbr.org

Imagine this: the co-founder of a multi-million-dollar HR management software company with almost 500 employees likes to micromanage to the point he and not the HR department has sole approval over employee benefits.

Likewise, when any of those hundreds of employees requests time off for holidays, it’s he and not the HR department that says ‘yes’ or ‘no’.

The company doesn’t have a dedicated IT employee to fix computers or printers because that same co-founder believes its gifted engineers should be able to resolve any IT problems that occur—no matter if doing so pulls them away from developing products or resolving customer problems.

Far worse, a massive influx of business means the company can’t keep up with licensing its insurance agents in each of the American states in which it operates. News leaks out, and the company is embroiled in a scandal with the prospect of millions of dollars in fines. The CEO co-founder is asked to resign, which he does.

It might sound far-fetched, but these are just a few of the problems the US HR software company Zenefits experienced during its accelerated growth or scale-up stage, according to Claire Suddath and Eric Newcomer of Bloomberg.[1]

Zenefits, founded by entrepreneur Parker Conrad and Laks Srini in 2013, offered free software to automate the payroll, health insurance, and HR services of small US companies. It made most of its money through brokerage commissions that were paid by insurance companies when clients bought one of their plans. The commissions recurred annually so once a business signed up, Zenefits continued to benefit.

That quickly drew the interest of investors—in particular, that of Andreessen Horowitz, one of Silicon Valley’s top venture capital firms.

Within three years, the company had gone from 15 employees to 1,600. During three fundraising rounds, it raised $580m (about £435m). By the end of 2014, it had surpassed a $20m (about £20m) recurring revenue goal and by 2015, was valued at $4.5bn (about £3.3bn).

By then, the company had about 14,000 customers and was in the process of hiring more than 1,000 additional employees. Things were moving at such a pace that a manager said he interviewed and hired people so fast that by the time they turned up to work, he’d forgotten who they were. One entry-level sales rep was told in an interview that the company was expanding so rapidly that he was guaranteed a promotion within a month.

That year, Conrad said in a talk, “There’s a low-level panic that suffuses the organisation, a constant pressure to keep moving faster and faster and faster.”

But then those serious compliance issues came to light and Conrad was advised to resign in early 2016, which he did. The company’s valuation plummeted by 55%.

The new CEO David Sacks wrote later in an internal email to staff, “It is no secret that Zenefits grew too fast, stretching both our culture and our controls.” [2]

Fortunately for the company, it survived and now has more than 20,000 accounts.

The timing was the biggest scale-up challenge for Hyperoptic, which runs its own dedicated Fibre-to-the-Premises (FTTP) network and offers symmetrical gigabit broadband services across 28 cities and towns across the UK.

The company was founded in 2010 by entrepreneurs Boris Ivanovic and Dana Tobak. Two years later the duo secured an equity investment of £50m from Quantum Strategic Partners Ltd, a private investment vehicle managed by Soros Fund Management LLC.

Cofounder Dana Tobak told Alison Coleman of Forbes.com, “Startups, even well-funded ones, need to conserve cash and spend smart. Most companies have multiple ‘engines’ such as sales, marketing, production, and customer support.  We decided to ‘scale up our sales organisation and used progress KPIs to determine when we needed to scale up the other ‘engines’ of the business. Some were faster to scale up than others, and in some cases, the lag negatively impacted customer experience.”[3]

Like Zenefits, Hyperoptic survived its early scale-up challenge. Over the last six years, it’s grown its network fivefold. Its full-fiber broadband now passes 350,000 residential homes and business units.

Tobak credits its growth to customer support as well as external funding.

“We have a 4* Trustpilot rating; the highest in the industry. Our customers have really supported us by sharing their experiences with their neighbours, family and friends, which has meant that we have been able to expedite our rollouts across urban centres.”.

This year Hyperoptic received £100m in funding from a consortium of four ‘tier one’ European banks (BNP Paribas, ING, RBS, and Dutch investment bank NIBC). Last year, the European Investment Bank agreed to provide £21m to fuel Hyperoptic’s rollout and market expansion.

With the new funding, the company plans to grow the network another sixfold and make its hyperfast broadband service available to two million homes by 2022 and five million by 2025.

While your scaling up might not experience all Zenefits’ internal and external challenges Zenefits or even the timing issues that Hyperoptic did, it is likely to face at least one of them. It might be:

• People challenges
• Sales and marketing challenges
• Operational challenges
• Administrative challenges
• Financial challenges.

As the FD Centre’s founder Colin Mills said in his book, ‘Scale Up: How to Take Your Business To The Next Level Without Losing Control and Running out of Cash’, the scale-up stage is when businesses really struggle because they’re growing but don’t have the infrastructure to support their expanded operations.

They might have the necessary revenue, manufacturing base, or customer reach of a substantial business but their controls, processes, personnel, leadership and culture are often still that of the much smaller business they were a short time before, he said.

Worse, they often don’t have the resources to create and maintain such an infrastructure.

During the scale-up stage, they face running out of cash or simply getting stuck, he said.

It’s only possible to avoid such problems by revising your entire business model. If you don’t, then all the small problems that niggle at you now are likely to become major issues once you begin scaling up.

Even if your business is already going through the scaling up stage, it’s still possible to retrofit, design, and redesign it, he said.

“In many ways, like most things in life, scaling up is not rocket science. No genius is required, said Mills. It can often be about common sense. “But common sense isn’t always common practice, and being able to focus on the most important things as you scale up is a skill that can get lost in the complexity of the whole process.”

The easiest way to focus on what’s important during the scaling up stage is to have expert help from a part-time FD who has big business experience.

And for a fraction of the cost of a full-time FD, the FD Centre will provide you with a highly experienced senior FD who will work with you on a part-time basis to help you with scaling up your business. To discover how the FD Centre will help your company to scale up, please call us on 0800 169 1499 or contact us here now.

[1] ‘Zenefits Was the Perfect Startup. Then It Self-Disrupted: What happened when an HR firm had some epic HR problems.’, Suddath, Claire, Newcomer, Eric, Bloomberg.com, May 9, 2016

[2] ‘Why Successful Startups Stumble’, Virgillito, Dan, Shopify.com, October 11, 2017

[3] ‘The Scale-Up Challenges Every Audacious Startup Must Face’, Coleman, Alison, Forbes.com, September 13, 2015