What myFD is all about

There's a big problem at the heart of smaller businesses and whilst there is a cottage industry developing around it, no-one yet has made a real noise about it.

What's the problem? Finance people - boring, negative, risk-averse, backward-looking, retentive, repressed, accountants. The trouble is that's all a smaller company can afford. Or so they thought until now.........

And I reckon it's costing millions and creating heartache for owners of small businesses all over the place.

How do I come to this conclusion? Well I was a finance director in very large company and because I'm an entrepreneurial sort of chap I used to go and see customers - much better than adding up numbers all day. I was looking to increase credit limits and sell more stuff. And after I'd seen 30 or 40, I could see that although they were dead keen to share information and tell me what was going on, their financials were utter rubbish! I frequently found myself wondering, "how the hell do these guys make decisions?"

One chap running a shopfitting company in Manchester had gone bust once before and ran a £5 million business based on a list of customers who owed him money and suppliers who he owed money to. If the total on the left was bigger he slept, if the one on the right was bigger he went and got another contract quick. How daft is that? I recently came across a £4 million contracting company that has no idea which contracts are profitable.

It wasn't what I was used to in big companies, where proper information, with balance sheets and cashflows and forecasts were done by day 5 of the month, and we talked about the future and how to make more money or new products and markets. The businesses I was meeting (and they were anything from a million £ up to £30 or 40 million in size) were just existing and said that their auditors "did the depreciation so we only have a balance sheet once a year", that they struggled to get invoices out and didn't really know what was going on.

There was a pattern - I could see that businesses go through a seemingly inevitable cycle - they get set up, need some basic stuff like invoicing and paying suppliers done, so they go to some local accountant with a beard and a copy of Sage.

And it goes haywire from then on. The numbers bit of the business is set up for the benefit of Mr Beard -he gets the VAT done and the PAYE paid on time, but nothing of any commercial use comes out. A friend of mine suffered from a local Beard who was so slow in "writing up" (whatever that means) the sales ledger that my friend was not aware that it was taking on average 90 days for customers to pay. So his profitable business was running out of cash.

How about making sure that products and services are priced properly so you make a decent margin? Making sure everything you deliver gets invoiced? Avoiding entering the same information twice? Getting decent reports off the system without resorting to spreadsheets (don't get me started..)

No- businesses have to struggle on until they can afford the holy grail - a finance director (or FD). But, and it's a big but, most FDs who want to work in smaller businesses are basically Mr Beards with a shiny suit and a slightly posher accent. Useless, and get turfed out after a couple of years of sitting in the office not speaking to anyone.

So, a couple of years back, having done a buyout and exited, I thought, "there has to be a better way".

What is needed, went my thinking, is a way of making the smaller company role attractive to senior, experienced finance execs who want a bit of variety and to get closer to the coalface. People who don't go jungly after a week and start to agree that it really is difficult to get invoices done on time after all.

So with some help from a couple of people I set up myFD, to do exactly that. It's a service based around key features that deal with the main issues that arise from the traditional solutions. We replicate the big company environment in miniature. So we

• manage the service delivery closely at company level rather than rely on the individuals' party pieces
• work as a team to support each other and share knowledge
• have tools and methodologies so we don't reinvent wheels all the time
• get the right resource on the job - financial controllers and finance directors
• call customers customers (why? - well I could go into esoteric arguments about service but it's basically so we act differently to the accountancy brigade)
• are as entrepreneurial as our customers (but scrub up nicely when we meet the bank managers)

Like it? Run a business between £3m and £30 million turnover? Or just very ambitious and looking to get moving? see our website http://www.myfd.co.uk/

One of the people who has helped is a chap called Robert Craven. We realised that one of the main issues for finance folk is that they speak another language - we needed to express ourselves in ways that our customers would relate to and Robert was supremely helpful.

We also do a lot of work with the Institute of Directors (IoD) - if you're running a smaller company I'd recommend joining, if nothing else for the free use of the premises. Hey and if you decide to join give them my membership number E134488 - I'll split a case of champagne with you.

Cheers

Fred Edwards

July 2007

Relevant Links

Robert Craven - see http://www.thedc.co.uk/

IoD: http://www.iod.com/