Great questions, and ones we've probably all struggled with or struggled through. I am not sure I can give the best advice, as I struggle with this challenge too, but I have done my research, talked with some other agency people, my attorney, CPA and a few other advisors and are honing in on some answers, implemented some others, that work well for me. And "work well for me" is my first piece of advice. Take all the responses you get on this with a grain of salt. Our agencies, goals, growth rates, profitability goals etc. are as unique as we are, and while there are some industry standard metrics on AGI/FTE, % of Revenue for Salaries, Net Profit etc. not every answer is right for each of us.
1. When is time to hire someone like this?
(What brought this to light for us was that as we keep growing, it seems appealing to have someone who "owns" the financial growth and management of the agency.)
We are pretty open book at evok. With 32 FTEs in the Orlando headquarters, maybe a little too open, but my first response is that everyone should own the financials, or at least know what impacts them. You should do an annual forecast and that forecast, to be competitive for for the best talent, will more than likely include a profit share, and if you're wise, it will be an annual profit share based on a % of NET profit, serving as golden handcuffs.
When should ONE person own them, probably when you find that your time is better spent doing other things in your agency and you're (1) working on the bsuiness more than in it and (2) you're in unfamiliar territory when it comes to finances - are you maximizing your cash on hand? A true financial professional should be able to both save and make your money - they are not a draw against the bottom line, but should help add to it.
2. How involved do you get with the financial side of the organization?
As the majority owner, very, but all owners should be transparent with the financials. Should you be calling on bad debt?...probably not. But should you be developing a collections policy that is in line with your corporate culture?...probably so. I believe you, as an owner, should know which clients are profitable, and not just in gross revenue, but also in net revenue and net profit. We are saddled with a large client that is a big biller for our agency but has low profitability and and a really low realized hourly rate. We are struggling with the steps we need to take to either work with this client to make them a true valuable client or to migrate away from them in steps that won't hurt the agency with the loss of the gross revenue.
3. How much does your finance leader "own" that side of the business?
(Meaning, how responsible are they for seeing profit goals through, revenue goals through, labor cost control, etc.)
100% - they may not be able to control them all, but they better be able to report on them al, with accuracy. Without a heading, you're flying blind.
4. What's your relationship like with your finance leader? What should it be like?
Close...very. At one of our sister agency's, the "finance leader" signs off on all estimates over X amount and when jobs close over budget but within scope, the AE provides to the finance leader a written explanation of why and it's analyzed across the agency - bad estimating? scope creep? capacity issues? complacency? Your relationship should be open and honest. You have to trust that the information s/he is giving you is honest, fair and accurate.
5. What does the team look like underneath your finance leader?
Accounting Director - we call our a Director or Operations, I believe? She is responsible for all invoicing, AR, AP etc., but does not pull quarterly financials, nor does she estimate taxes. She is supported by a receptionist who also serves as a bookkeeper with 20-30% of her capacity.
6. How much autonomy do they have over your financials?
None. You have to trust them, but you also have to ensure the welfare of your organization and your team. have your CPA audit the books every 6 months, at least. Who knows, they may even provide some insight on some tax savings or revenue realization. Plus, you should get a discounted rate on your annual tax preparation if they are doing mid-year audits.
I hope some of this helped - feel free to call me anytime.