VisionFR is a specialist financial and HR recruitment consultancy, owned and run by former CFOs from the marketing and creative sectors. Deborah and Greg Broadbent have first-hand experience of the pleasures and the ongoing challenges of running agencies, and so are well placed to consult with you should you be looking to recruit into your finance or HR teams at any level.
When should a creative agency employ its own Finance Director?
DBA Annual Survey Report sponsor, VisionFR takes a look at the right time to employ an in-house Finance Director.
Having a member of the leadership team with a keen eye on the financials to help drive the commercial success of an agency is key, whatever the size of a creative agency.
Some start-up ventures may set out with a finance director as part of their founding team, but this is probably the exception to the norm and what follows is more applicable to those agencies that don’t start out with that luxury.
Typically, most young agencies either engage a partner from an accountancy firm – often someone who has given them invaluable advice and support during their set-up – or benefit from having of one of the owner/founders having a particular flare for the financial side of the business.
As any business grows and develops, thought will be given as to whether the senior finance support they’re getting is the most appropriate route and whether a dedicated in-house Finance Director might be a better solution. But how do you know when it’s the right time for an employed or consultant FD?
This isn’t something that’s clear-cut and may vary from agency to agency but, ultimately, it’s a combination of:
Business size/growth – when does the volume of financial activity and transactions dictate the need for some in-house senior specialist support? We think this is likely to be when the business is operating at around the £2-3m fee income (or gross profit) level but the business also probably needs to be anticipating growth for the FD to help manage as well.
Business complexity – does the business operate from multiple locations, in multiple currencies or with multiple revenue streams, entities or divisions? Obviously, the more complex the business the earlier the specialist support will be needed.
How can an FD benefit your business?
There is likely to be more dedicated time given to understanding the overall business strategy and how this translates into financial planning, forecasting and goals – monthly, annual and longer term.
This additional time and understanding engenders a stronger connectivity and emotional engagement from the FD – with a full appreciation of the monthly targets, the people involved in the business and the creative proposals, they will live and breathe every pitch outcome as they recognise the impact of wins and losses.
They will business partner with the wider (non-finance) staff members within the agency and engage with issues they are facing on a timely basis; they are at hand to help with client and new business proposals, pricing, procurement issues as they arise meaning less delay and an ability to act quickly.
Supporting the efficient running of the agency in terms of resourcing, reporting and systems, cost control & risk management; leading or supporting other operational functions (e.g. IT, Facilities, HR); developing relevant financial management information and KPIs, and improving commercial acumen of account handlers should all be further responsibilities of the Finance Director.
Running an SME business throws ad hoc issues at you all the time – things can blind side you, for example matters with suppliers, landlords, cashflow, staff, utilisation, overservicing, potential M&A, taxation and Inland Revenue, legal matters, transfer pricing, R&D claims to name a few. As a business grows, having access to a senior Finance Director to support resolution of these issues becomes a necessity rather than a luxury.
In most instances, the Finance Director should more than cover their overhead by improving your profitability from clients or projects and/or also controlling costs and risk; or by freeing up other senior leadership time to do more income generating client work.
Also bear in mind the alternative to a full-time FD. A portfolio or fractional FD will work with you on a part-time basis. This provides much of the above support in say, 2-3 days per week, and obviously limits the financial outlay.
However, the fractional/portfolio FD route – valuable as it is in terms getting the ball rolling and supporting strategy and key financial decision-making – may not always suit.
The fractional FD will not always be available at the ‘drop of a hat’ as they will have other commitments – you may have to wait a day or two to get comments on client contracts, for example and such delays may not work for all businesses. And you may find that as the business grows, they may not have the capacity to provide more time. It’s therefore important the rest of the finance team is well structured below such a fractional FD to ensure the day to day running standards are maintained and that it can scale up as/when the business does grow.
For a more detailed conversation on your agency requirements and options for Finance Director support, as well as any other needs in your finance team, please contact Deborah or Greg at VisionFR.