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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.

What if Bill Hewlett and David Packard had never got out of that famous Palo Alto garage? If they’d stayed a two-person company, we’d likely never have heard of them – and the history of Silicon Valley would have been very different. Instead, at its peak in 2011, Hewlett Packard had nearly 350,000 employees around the world.

There are many small startups of the size Hewlett Packard was back in that garage, and it’s important for governments to encourage entrepreneurs to found companies. But the economic value of entrepreneurship isn’t in two-person startups. It’s in “scale ups” – companies that have hit a growth curve. Scale-up companies have particular value because:

Skilled workers have a chance to shine: Successful scale-ups are able to offer secure, well-paid jobs to highly skilled professionals, giving them a chance to build their skills even more.

Reliable jobs: Scale-up companies also need workers for a wide range of roles – ranging from payroll managers to marketing, sales and other support functions – and this provides work for people who work in the background to keep the company functioning.

Spinoff economic activity: Successfully scaled-up companies provide more than direct employment. They create spinoff activity, requiring support from their own supplier base while supporting their customers’ growth. They also become reliable tenants for property owners, and through their payrolls, they boost the tax base in their community.

Technological advancement: They can gather the financial resources and skills to invest in developing and commercializing new technologies.

Building other companies: Scale-ups also become reliable customers for companies that supply them with parts, components, and other inputs. This allows these vendors to provide reliable jobs, and they too create their own spinoff activity.

Our book “Scale Up” quotes business guru and venture capitalist Daniel Isenberg, “One venture that grows to 100 people in 5 years is probably more beneficial to entrepreneurs, shareholders, employees and governments alike, than 50 which stagnate at two years.”

This book points out that in many parts of the world, the focus for business growth is on helping start-ups succeed. People wanting to found companies find financial help, coaching, and other support through incubators and other institutions. “Scale Up” points out that startups are fun, exciting and sexy.

By contrast, the growth process is more of a hard slog. It’s not that common for a company to have a winning combination of a good idea or technology, along with the vision and determination, to grow past the “garage” stage into mid-size, scale-up stage. But when they do, there has not been the support network to help them successfully grow.  Governments and organizations are now recognizing the need to create an eco-system for start-ups to help enable them to Scale-Up.

The CFO Centre has worked with thousands of companies over the past 17 years. Using this experience and the experience of our clients in Scaling Up, we have identified the key attributes and requirements for a company to successfully Scale.  Over the coming weeks we will explore and explain our Scale-Up Framework.

Because so many companies either fail or have trouble scaling, you need to have every possible advantage on your side.

So maybe you’re not working out of a garage, as Hewlett and Packard were when they started. But to follow their success path, you need to change your thinking from a startup mentality to a scale-up. Success isn’t a matter of predestination – HP’s founders hit many failures before they found what worked for them – but it does help to have a roadmap –to help you on your journey.

The result is a company that is much more valuable when it comes time to move on to the next stage of your life and career.

Is your company ready for rapid growth and positioned to Scale-Up?

“First mover advantage doesn’t go to the first company that launches, it goes to the first company that scales.”   – Reid Hoffman, co-founder of LinkedIn

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

Author: Steve Settle MA (Cantab) MBA FCA, Managing Director—Asia, CFO Centre

Despite what you may have heard, working on a contingent or freelance basis has many advantages that are just not available to full-time employees.

It’s easy to get despondent about your future job security and finances these days with doomsday predictions of the impact artificial intelligence (AI), Big Data, machine-learning, robotics and nanotechnology will have on the world of work.

Back in 2013, two Oxford University researchers sounded the alarm for the future of work by predicting that 47% of US employment was in the high-risk category for being automated within two decades. That included jobs in transportation, logistics, office and administrative support, and the service sector.

Since then, barely a month goes by without an expert issuing a dire forecast about how the work we do now will soon be carried out by machines or robots, making us redundant long before we reach the statutory retirement age.

This fear of automation is nothing new of course. In the 17^th century, for example, England’s Queen Elizabeth I refused to grant Reverend William Lee a patent for his revolutionary knitting machine for fear it would destroy the traditional hand-knitting industry. (Despite this, Lee’s machine would go on to improve rather than decimate the knitting industry. Parts of his design are still used in machines today.)

People also feared the worst when the first railways opened, believing they posed a threat to the social order of the day (poor people would be able to travel—nothing good would surely come of that!). They even suspected train travel was a danger to human life (people might die of asphyxiation or melt travelling at 20 miles an hour).

Likewise, the invention of the telephone terrified some people. In Sweden, for instance, preachers were convinced it was the instrument of the Devil and others feared telephone lines were conduits for evil spirits.

These stories just illustrate the point that our fears of innovation and change have always been with us.

It’s up to us whether we see them as a threat or an opportunity.

And let’s face it—it’s easier to accept innovation and change as opportunities than try to resist them. Trying to fight them is like standing on a beach and attempting to stop the waves coming in.

Unless we want to give up work altogether and live ‘off-grid’ in grim survival-mode, the best thing we can do is prepare for and take advantage of whatever innovation and change comes along.

Take, for instance, the ‘on-demand workforce’ or ‘gig economy’, in which the labour market is characterised by a plethora of short-term contracts or freelance projects rather than permanent jobs. It’s already a reality for many: a McKinsey Global Institute 2016 study found that 20-30% of the labour force in both the US and the EU are independent workers who are self-employed or do temporary work.

It will become a reality for so many more in the next few years, according to a 2015 study by the financial management software company Intuit.

To some, the prospect of leaving employment and working on one freelance project after another for a stream of different employers is terrifying. Where’s the financial security, they ask.

But to others like our team at The CFO Centre, working in a gig economy is the closest we will come to total freedom. We contingent workers see ourselves as being liberated from the constraints of paid employment. We are free to pick and choose our ‘gigs’ or assignments.

As with most things, of course, there are benefits, and there are drawbacks. Fortunately, the benefits of working on a contingent basis tend to outweigh the drawbacks.

Granted, we can no longer depend on the security of a monthly salary and the usual benefits of employment—the paid annual leave and sickness pay, the bonuses, and medical insurance, and other perks like company cars—are a thing of the past. So too is the protection of our workers’ rights by unions.

The career training we undertake to keep up with developments in our fields we now pay for rather having it come out of an HR budget.

And to some extent, we don’t have the pleasure of working with the same team of colleagues for prolonged periods like we once did.

But on the plus side, we enjoy a sense of autonomy that full-time employees will never have. We decide when we work, how long we work and for whom.

Our lifestyles are more flexible than they ever were as full-time employees. Suddenly, there’s more time to spend with family and even to follow a great passion, like travel, golf or photography.

We don’t have to commute to the same office day in, day out. We can hold meetings in a Starbucks if we want. Or sit on our couches at home and speak with clients wherever they are located in the world.

The financial rewards we receive are dictated by the amount of effort we put into securing and retaining contracts with individuals and companies and the value we subsequently provide, not by a job position or title.

You might think there’s no financial security working in this way but having five or six clients means that if for any reason we lose one, we still have the remainder – and, importantly, the skills with which to find new ones. There’s no doubt that this way of working takes some getting used to. It can be challenging in the beginning, especially when it comes to attracting and retaining clients. It’s not something we historically have experience of.

One of my overseas colleagues at The CFO Centre, for example, said his biggest challenge early on as a part-time CFO was learning to adapt from working as a Finance Director in a multi-national to working in a consultative, strategic role for SME clients. He realised after losing one or two contracts that his ‘full-on’ big corporate style was perceived as being too dictatorial by the owners of the medium-sized family-owned businesses.

Like so many of us working on a contingent basis, he had to adapt very quickly to survive. He learnt to offer advice rather than issue directives and work in a more relaxed style. Since accepting that things move slower in small organisations, he’s built up a portfolio of loyal clients.

And like so many of us working in this new way, he gets huge job satisfaction and fulfilment. Like us, he’s confident that in his role as a part-time CFO he’s helping many more companies to succeed than he would have done had he still been working for one multinational company.

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