Why do some growth businesses keep on growing while others falter?

• Growth in revenue doesn't always translate into net profit growth?
• How can one company achieve 50% greater profitability than its competitors without (apparently) doing anything differently?
• Why is it that excellent products, great people and loyal customers don't necessarily result in great profitability?

The Finance Director can tell you

The fact is that excellent business performance doesn't automatically translate into excellent financial performance. This is a real issue if you want to grow: being successful doesn't generate the money you need to expand or the financial track record that enables you to raise money from banks or investors.

The right Finance Director will:

• Look into which projects and customers are contributing the most profit and highligh the ones that are not.
• Help you more accurately assess risk on new ventures so you can be bold when you can afford to be and cautious when you need to be.
• Help you to find the finance to expand, possibly from within your business, avoiding the need for onerous bank loans or new investors.
• Generally keep you out of trouble. Sometimes you need someone experienced who can sniff the air and tell you if something isn't quite right.

Do you recognise these symptoms of growth and increased complexity?

• Your customers, products and services are more diverse. As you grow, you pick up not just more customers but more diverse customers. Some of them want different things or have special requirements you hadn't thought of. As you accommodate these new demands you are slowly being pulled in the direction of unprofitable business. Some of the new work is fine but some could be losing you money.
• You are finding it harder and harder to agree on the right direction. In the early days it was simple to see what worked and what didn't; now it is more complicated. You spend more time debating the issues and less time working on solutions.
• Great efforts don't always produce great results. You are working as hard as ever but the results don't seem to follow. Margins are being squeezed, staff numbers are increasing, but you are still struggling to deal with the work.
• Management accounts don't help. You are not an accountant you need help to interpret the results and focus on the Key Performance Indicators.

The Financial Controller can't help you

If you have a good Financial Controller, cherish them. You absolutely do need someone who can get the invoices out, get them paid, pay the suppliers and the salaries on time and produce management accounts. A controller will help you know where you are but can't help you get where you want to go. I have worked with some excellent Financial Controllers who would have fainted if you had asked them into the boardroom to discuss strategy, but that is what you need your Financial Director to do.

Some Financial Controllers of course have the potential to develop into a good Financial Director but this takes time and effective mentoring – and even if you can provide the mentoring, you can't afford the time.

Your auditors can't help you

Running an accounting firm is really hard. You need to keep on top of a huge mass of rapidly changing knowledge in tax and financial reporting. You need to organise lots of junior staff to do the work cost effectively. You need to maintain continuity whilst employing some of the most fickle and mobile workers anywhere, and then you need to communicate highly technical issues in a way that non-accountants can understand. If your accounting firm can do all this, be grateful and congratulate yourself on your choice.

You would likely be going too far to expect detailed commercial and strategic advice from them however. The partner could help you but how many other clients does he or she handle, after the demands of managing the firm, delivering audits and giving tax advice? How much time does this leave? You need more than this.

How does a small or medium-sized firm afford a full-size Finance Director?

Venture capitalists, whose minimum requirement is exceptional financial performance, understand the need for first class financial management. They won't do a deal if the right person isn't in place, and they won't hesitate to replace them if they don't measure up. Why would you accept less than this in your business if you have ambitions for it? However these people could be paid way more than your MD or CEO!

Financial Growth Consultants have the answer

In all our projects we have found that the Pareto principle the 80/20 rule applies: 80% of the value I have brought to the company has come from 20% of the time spent. Our solutions can turn this phenomenon to your advantage. It's not a part-time arrangement; We are available to you full-time every day by telephone or email. We agree a schedule of onsite days and regular telephone conferences and at other times we are available as and when you need us. We factor some time into our schedule so that we can respond quickly to any crisis or urgent project.