outsourced financial director Archives

In some shape or form, this has happened to you. You’re in a city that isn’t home, sitting in a restaurant, coffee shop or walking through a great store. You’re loving the service and the vibe, and then it hits you: this place would do so well at home! “Hey!” you say to whoever you’re with, “we should open a franchise!”

Sometimes the thought stops with a couple of “nice idea!”-type comments and a few good-humoured smiles. Sometimes it translates into late night googling and a few jotted notes. But occasionally those thoughts become meetings, market research, fund-raising and a trip to head office. For Joanna Meiseles, a fruitless search for a hairdresser that catered to her children became the latter. Now, as the owner of Snip-its Salon franchise, she offers some insights around sussing out a good franchise opportunity. We’ve taken some of her advice and coupled it with our own.

As an entrepreneur or business owner, it’s a good idea to rope in a finance expert to help you work through the maths upfront. For cost reasons, we recommend bringing on a part time financial director – someone with the strategic understanding you need who doesn’t come coupled with a full time salary. These thoughts are given with that assumption in mind.

Determine the (estimated) return on investment. Upfront, your part time financial director will need to get a feel for the anticipated ROI. “This is the key factor — without a proven and strong economic model, there is no point in going any further,” says Meiseles. It differs from one industry to the next, but generally, business owners will be looking for a 15% ROI. If you’re outlaying R500 000, that means you should expect to receive at least R75 000 in profits by the end of the second or third year. “Also, keep in mind that a franchisee has to pay royalties, so that [money] is harder to come by for a franchisee than it is for a non-franchised business,” says Meiseles. Your franchisor will have historical figures to offer, but it’s a good idea to run your own evaluations.
Make sure the base model has been tested. Advice website for franchise owners, FranChoice.com, makes this point: “Before New York Broadway producers bring a production on the road, they’ll test it in a few smaller cities to see if the humor or pathos translates well to different audiences. After all, not every town sees life in the same way as New Yorkers. A similar comparison could be made with franchised businesses. A concept that does extremely well in one location may not have the same appeal in a different part of the country.”

Meiseles’s opinion mirrors this. Great success in one unit is not enough to guarantee success in another. She recommends that franchisors test the concept in at least three different locations. In every instance, your part time financial director should estimate ROI, margins and how long they think the company will take to start bringing in a profit.

Have a realistic idea of your access to capital. Your head office will provide you with a certain leg-up to get the ball rolling. But just because your start up is somewhat less capital-intensive than others, don’t underestimate the amount of money you’ll need. Have your part time financial director determine approximate costs for legal fees, marketing fees and setting up inventory and computer systems. Then, enlist your part time financial director in making a strong case (through a business plan and investor marketing material) to raise the capital needed.
Explore what it will mean to be in a 10-year relationship with your franchisor. “Franchising is really all about relationships, and most franchise agreements are 10 years in length, so you should be sure you are committed to long-term relationships — both good and bad,” says Meiseles. As a business owner, start out by making sure you have things working well internally. The part time financial director who gives you advice upfront should ultimately be the person who sticks with you for the duration of the agreement, and whose insight grows along with the franchise. Do you work together well enough for this to be the case? After this, consider your collective relationship with the franchisor. Not only will you need the resolve to stay steady in that relationship despite all difficulties, your part time financial director will need to be able to do the same.

If you’re looking for a part time financial director who can help you make the right call about franchising options and establish relationships that will last throughout the period, contact The Finance Team. Our finance executives can assist you on a part-time, interim or ongoing basis depending on your needs.

The ability to “hit the ground running” is probably the most important skill that an outsourced financial director requires. To do this, the outsourced financial director needs to obtain a good understanding of the client’s business and related critical success factors, action areas and reporting requirements in as short a space of time as possible. This skill comes with years of on the job experience coupled with extensive technical training and professional proficiency.
There are two types of outsourced financial director’s. The first is a financial director that is currently between full time positions and is outsourcing their skills whilst looking for permanent employment and the other, is an outsourced financial director that does interim or part time financial work as their preferred means of income and lifestyle choice.
If you want to engage an outsourced financial director on a part time or interim basis we would recommend only engaging with the latter. As a company owner, you do not want an outsourced financial director that will not be there to see projects through and who is not wholly committed to your business or who would rather be employed full time. There is a substantial investment of financial resources and time committed by a business in a Financial director and one must be as convinced as possible that he / she is involved with your business for the right reasons.

Here are some common traits of a typical outsourced financial director:

Gets up to speed quickly

As a professional outsourced financial director, this person needs to be adept at getting up to speed quickly and effectively with the various facets and systems within the business. They need a keen sense of being able to see the company activities as a whole and to implement strategies for areas that are lacking, whether it be reporting, accounting processes or margin management. The ability to identify weaknesses in human resources, systems, processes and strategy is critical but the ability to find solutions and implement these solutions is even more so.

Adaptability and Flexibility

An outsourced financial director needs to be adaptable especially when it comes to smaller clients. He / She must be happy to get in the trenches with less senior staff who may not have the necessary skills or who are having a hard time coping with their workload. While the role of the financial director is not necessarily a “hands on” one, there is generally a period of time where a more operational role needs to be fulfilled. This role does transition back towards a more strategic involvement as junior staff are up skilled and procedures, processes and systems are updated and/or implemented.

As mentioned earlier in this article, an outsourced financial director needs to be flexible. By its very nature, an outsourced / interim / part time resource demands flexibility. This type of flexibility can only be provided by individuals that are at a particular stage of their careers or don’t require the financial stability that permanent employment provides and are lucky enough to make lifestyle choices in relation to their income streams. In our opinion, this type of service offering is best provided by those individuals that are semi –retired, currently run their own small business ( and can still provide services in their spare time) or are not the primary income earner within their family unit.

A collaborative personality

To be effective as an outsourced financial director, the resource needs to be able to rely on those staff members reporting to him / her and be able to extract the very best out of these members. This sounds a lot easier than it is and requires a particular personality type as well as a lot of real life experience. Dealing with an existing finance team as an outsourced financial director can be difficult as people can feel threatened and do resist change. Having said that, a seasoned financial director would be expected to come with a certain level of experience that would command respect and have the personality and experience to deal with these issues.

The incumbent would obviously require the personality and experience to interact and communicate with all levels within an organisation including Bankers. Directors and Shareholders.

Time Management and Delegation

Lastly but certainly not least is the art of time management. As an outsourced resource, this skill becomes critically important as the time constraints involved with this type of engagement are highlighted. There is no time for mistakes, learning curves and Golf as an outsourced financial director. The client is watching the clock and demands results in a short space of time. Invoices and time are monitored on a monthly basis and perceived effectiveness can make or break the engagement. The financial director must therefore be a master at identifying weaknesses and implementing solutions which can only be done with clever planning and delegation.

Surrounding yourself with good people and then delegating work to these people is very important. As an outsourced resource it becomes even more important as you are not physically present on the ground 24/7. A lot of the operational work load needs to be performed by qualified / competent / experienced staff members. Without good people below the financial director level, the outsourced financial director role can never be fulfilled and you will find that most part time / interim financial directors will start any engagement by making a thorough assessment of the individuals reporting to him / her. It is amazing how often dramatic changes need to be made at these lower levels during engagements.

You will find that most credible outsourced financial director’s have had many years’ experience and have been involved in a variety of industries in senior financial roles over their careers. The outsourced financial director’s that make up our team at The Finance Team have had a minimum of 15 years’ experience in senior positions. They are successful business people in their own right and have made the decision to be an outsourced financial director as they enjoy the variety and flexibility of being an outsourced financial director, whether it is on an interim or part time basis. They do not want a full time placement and are extremely dedicated and committed to helping and advising the clients on their path to success. Your success means their success.