When I started, the world of accounts and tax profiles were as foreign to me as, well, a foreign country. Probably more foreign actually because you can take a holiday to foreign countries but you can’t take a holiday to tax profile spreadsheets. Why would you?
In our early years we had a relatively short-term approach to finances and it was much more about clocking where we were rather than planning where we wanted to be. I had a finance manager in place, but she wasn’t qualified and had simply learnt on the job under guidance from our accountants, who we were very reliant on. While they had steered us through some storms I was fed up with the short-termism of how we were doing business. Whenever we started to build up a cash reserve I would get clobbered with something unexpected.
Nothing was planned, we managed everything day-to-day, which is a very time consuming way of running a business. Boring as it sounds you need goals, targets and a strategy; something to aim for around which you can make the big decisions.
In 2012 two new directors invested in Giggle Group and that made me feel a real duty to get our finances in order. While we probably could have carried on as we were for another 10 years, at the end of it I suspect we’d have ended up with very little value in the business. We needed someone, but I had reservations about how much control a financial director might take from me. One of our key strengths at that point was taking decisive action when opportunities arose, and would hiring an FD complicate that?
Still, I needed help and it was time for a change. We chose to hire a part-time FD and that came with its own concerns around integration and communication. How could we help him to truly understand the business and our culture? Would we get the full value from him, would he deliver and show a return on investment? The part-time hiring was a compromise on those worries as Giggle Group was still pretty small and I couldn’t justify another full salary commitment at that point.
We had some clear goals for the FD, namely to stabilise the business and ensure we had the correct systems to generate forecasting data. We also hoped an FD could help us analyse the jobs we undertook, to determine which were making money and which weren’t.
We’ve now had our FD for about a year and the biggest change has been a cultural one. Numbers matter a lot more now, and we have management accounts every month that are about half an inch thick! With all this data we can track trends, see the costs and then tweak them here and there. In finance, nothing ever seems to happen quickly and it will take a year to really see the effects on the bottom line, but I can already feel the effects in the way we work.
I think that what I took away from the whole process was to spend your time finding the right FD and be very clear about what you want them to do. If you don’t have a plan how can you measure their success?
But keep it simple: improve profitability, increase gross margin by X%, reduce overheads – that sort of thing.
They will tell you what’s possible and what isn’t. We also discovered that it doesn’t really matter if your FD is from outside of the creative sector.
Numbers are numbers, gross margin is always gross margin and profit is always what’s left after everything else has been paid. What matters is getting someone who fits you rather than someone who’s cool. Our FD wears a suit but he swears a lot and gets the job done!
The biggest shock was realising that an FD isn’t there to do all the work for you. In fact, you’re likely to find yourself with more to do after hiring one because you probably weren’t doing enough to start with!
Bristol-based Giggle Group specialise in film for broadcast and corporate clients alike, including JP Morgan, BBC, HSBC and twofour.
Illustrated by Ollie Hoff
- One Thing I Know