The Chair You Cannot Afford Yet

Here is the standard configuration of a business past £30k a month, and I describe it without criticism because it arises for entirely sensible reasons. There is a bookkeeper, competent and reliable. There is an accountant, who appears at year end and for the VAT. The books are accurate, the filings are on time, and the finance function, as built, does everything it was built to do.

The difficulty is that everything it was built to do faces backwards. The function grew out of compliance, one necessary task at a time, and compliance is the recording of what has already happened. Nobody ever sat down and designed a forward facing finance capability, because at £5k a month there was nothing to design. The business simply grew past its own finance function without anyone noticing, because the backward facing work continued to be done well, so the seat looked filled.

Meanwhile the questions changed. What should the price actually be, and what happens to demand if it rises? Which of the three growth paths in front of you can the cash actually fund, and in what order? What should the investor update say, and what will the sharpest person on the cap table ask when they read it? When can you afford the next senior hire, and what does the cash position look like if revenue slips twenty per cent the month after they start?

These are CFO questions. They are forward facing, they interact with each other, and answered well they compound, because a business that prices correctly funds its own growth, and a business that sees a cash problem two quarters early has ten options instead of two. At the moment, in your business, every one of them is being answered by a single person with no finance training for it, in their head, on the drive home. You.

The conventional answer is to hire the chair, and the conventional answer is right about the need and wrong about the timing. A genuinely experienced CFO costs £150k or more, and at £30k a month that number is not a stretch, it is a distortion; it would consume the very cash it exists to manage. So most founders conclude, reasonably, that the chair must wait, and carry on answering alone. What they have actually concluded is that the only way to buy a chair is whole, and that assumption is the thing that is wrong.

A fractional CFO is the chair, bought at the size of the business. Two days a month, sometimes three: the forecast built and maintained, the pricing tested properly, the investor pack owned, the cash watched by someone whose career has been cash. I sat in the full time version of this chair at dotdigital Group, a listed company, and across private technology businesses before that, and I can tell you what the fractional buyer receives: the same judgement, applied to fewer, better chosen days. The work that matters at your stage does not need five days a week. It needs the right two, from someone who has done it at every stage you are heading towards.

The questions in this essay are a reasonable test. If they are currently being answered by you, alone, at speed, then the chair is already needed, whatever the budget says, and the fractional version is how the two facts get reconciled. The conversation is straightforward and costs nothing: paraag@aionadvisory.co.uk. Or map the whole picture first, all eight chairs, with the free ten minute Entrepreneur Gap scan.

Continue reading: After the Raise, the Adults Arrive →

Or start the conversation: paraag@aionadvisory.co.uk →