SMEs seeking sustainable growth should hire a finance director quickly but remember it’s not all about the numbers, says Anita Tweats, CEO of finance recruitment firm, The Finance People.
Companies big or small need to keep a keen eye on cash flow. A finance director isn’t just a fancy title for bigger companies; even SMEs need that one person in charge of managing overheads, balancing the P&L and more.
SMEs need to anticipate their growing financial needs and hire in stages, as well as considering part-time or temporary appointments in the short-term, says Tweats.
But how do you find the right person for the job? Start by knowing exactly what the job role entails.
According to Tweats, getting another finance director in to assist with the technical side of interviews could help.
Relevant battle scars that show the ability to deal with problems a business could encounter can also make a candidate stand out, so company owners should be prepared to pay above the going rate for the highest quality hires.
Here are her 20 top tips for hiring a finance director.
1. Don’t wait around
According to Tweats, you should recruit a financial director as soon as possible. Don’t wait until you get to a size where not having a proper finance department holds you back.
“If you don’t have an FD, the CEO ends up knee-deep in finances instead of spending time driving the business forward,” she warns.
2. Hire in stages
Each stage of business growth requires different skill levels from the finance function.
“Using a very rough rule of thumb, from nought-15 employees, a competent book-keeper should suffice; from 15-50 employees you’ll need an accountant plus some support from a finance director,” she explains.
“Your needs will increase from purely keeping the books to a broader commercial role covering management information, forecasting, IT, tax, financing and back-office support.”
The key is to anticipate the next stage well before you reach it, as failure to do so can be painful for you and the business.
“There are too many horror stories of successful businesses running out of cash or entering onerous contracts.”
3. Know the numbers
A good FD will help you to better understand the profitability of all your individual activities and reward your talent according to their contribution.
“Everyone should know their break-even point each month and what they need to do so that they hit company goals.”
4. Consider part-time appointments
“If you don’t need a top FD right away, hire a super-hot FD on a part-time basis: Start with a one-day-a-month input from an independent FD,” says Tweats.
“Through their expertise in negotiating with banks, invoice discounting rates and other contractual expenditure, they’ll more than cover what can on the face of it appear to be an outrageous cost.”
“On reflection, employing then on a part time will be one of the best investments you’ll ever make.”
5. Get another FD involved
Ask another financial director to join you in part of the interview to ask the technical questions. “It takes one to know one,” she says.
6. Make sure they develop their skills
For an FD to remain on top of their game, ongoing development is essential. All members of professional accounting bodies are required to undertake relevant Continuing Professional Development each year to make sure they maintain and develop their knowledge and skills.
7. Check their connections
A sound FD will also have useful contacts, including relationships with bank managers, external finance providers, legal advisers and potential investors.
8. Personality counts
A really good FD should be number two to the CEO or managing director – so personal chemistry is vital. Being a sound bean-counter, however well qualified, is not enough.
“You need someone with a strong personality who isn’t afraid to challenge the head honchos – someone who will spot the small black dot on the horizon signalling bad weather on days when everybody else is enjoying the sunshine of business growth.”
9. Sense of humour
Tweats said: “Yes, FDs do have them. You both need to feel good about the chemistry. Make sure you get that warm and fuzzy feeling in the first five minutes of the interview.”
“Try to imagine yourself on a ten-hour car journey with your FD as driver. Would you survive and be talking at the end of the journey?”
10. Look for passion
Make sure your FD is someone with a genuine passion for fast growth. The classic trap is to assume someone with an outstanding large blue-chip record is what you need.
“Paying for advice from a 30-year veteran with lots of experience isn’t going to work out if there’s no longer the appetite to roll up their sleeves and get stuff done.”
11. Genuine experience
Make sure your FD can hit the ground running on day one. Your business isn’t a proving ground for an FD looking for a career change, unless the chemistry is outstanding.
“Drill hard during the interview on specific examples of supporting entrepreneurs, ideally in your sector.”
12. The extra responsibilities
Give them HR, IT and admin – it comes with the turf. “A good FD will typically pick up these back-office functions, allowing you to focus on sales, marketing and business development,” Tweats says.
13. Check their references
“The most successful FD hires have been through personal recommendations from business contacts you trust and admire. Nevertheless, reference-check candidates very thoroughly.”
14. … and their battle scars
A financial director who’s been there and done that (and has the battle scars to prove it) is always an advantage.
“Look for someone who has dealt with cash-flow problems, legal disputes, and low-margin businesses. You never know when you might just need that relevant experience.”
15. Match them up with your business plan
“Hire someone whose experience fits with the growth plan you have for the business, be it organic, through acquisition, overseas expansion, IPO or merger,” she adds.
16. Beware of the cost of getting it wrong
The cost of getting this level of hire wrong has got to be the first consideration for any board. An FD is a high-profile hire. Get it wrong and it will impact the entire company.
“Cost implications are not just the time spent interviewing; they include the recruitment agency’s fees, the negative brand impact, team disengagement, potential lost opportunity, the fees for hiring a replacement and the exit cost for the wrongly hired director.”
17. Know the going rate
Salaries can vary widely according to region, industry and company size, so do your research and find out what competitors are paying to make sure your offer is competitive.
“Look at job sites, newspapers and the many salary surveys that are published every year.”
18. … and pay above it
“Don’t be tempted to scrimp on salary. Good-quality candidates don’t come cheap,” Tweats says.
19. Offer them added incentives
To attract the best FDs put together a package that includes additional lifestyle benefits as well as a competitive salary to ensure the candidate will have ‘stickability’ with your firm.
“Remember to include performance bonuses and share options.”
20. Road test your FD
If you’re unsure about settling on a financial director, consider recruiting on a temporary-to-permanent basis.
“This will give you time to gauge the candidate’s ability and how they work alongside the rest of the team. If they’re any good, you can hire them on a permanent basis. If they’re unsuitable for the role, you can let them go at the end of the temporary period.”
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