The role of the CFO within small to mid-sized scale up businesses is critical to the success of the growth journey.  The demands on the CFO can be significant and the intensity and complexity of the environment is often challenging to operate within.  Fully understanding the importance of the CFO role and the expectations on it is a key priority that can set the tone for the rest of the journey.

A scale up business is one with ambitious leaders at the helm that have made a conscious decision to embark upon a new growth trajectory.  Such companies are often confused for new start-ups but this is not a prerequisite of a scale up business – far from it in fact.  A scale up is, more often than not, an established business; it can be a long-standing family business, a spin out from a larger corporate, a business that has recently expanded through acquisition or simply a company with a renewed ambition following a change in or addition to the leadership team.

A key difference from a new start-up is that a scale up business already has an identified and operational business model, whereas the fundamental hurdle for any new start-up is identifying the right business model that will allow it to scale beyond the start-up phase.

With a proven business model already in place and ambitious leaders in the driving seat, the key strategic goal of a scale up is to create a step up in value from an accelerated period of growth.  Of key importance in demonstrating such value creation is consistent and strong profit growth, particularly if the ultimate objective of the scale up journey is to crystallise the value created through some form of liquidity event in the medium to longer term future.  As such, having an accurate, consistent and robust EBITDA metric reported on a monthly basis can be a key success factor in facilitating such value creation through a future funding or sale process.

The importance of quarter-on-quarter (and often month-on-month) profit growth over the journey can also bring unique challenges to a high growth business – making sizeable investments in the latter stages of the growth journey can diminish the ability to convert such investments into suitable EBITDA returns in an appropriate timescale so timing of spend is critical; it is about knowing when to spend as well as when to curtail expenditure.

With accelerated growth being a key feature of a scale up business, there is an inevitable requirement for management to focus on understanding working capital pressures, liquidity and free cash flow.  Given how important managing cash is to a rapidly growing business, the focus needs to extend all the way up to Board level; it’s not just the domain of the finance team or the credit control department.  Where banking covenants are involved, this immersion in cash management is taken to a whole new level of importance.

A further differentiating factor in a scale up SME business is the management of stakeholders.  Within stable family-owned or SME corporates, reporting and interaction with owners and other stakeholders can at times be irregular and unstructured, while at the opposite end of the spectrum, listed companies have formal and well prescribed engagement with their shareholders on a regimented quarterly basis.  Scale ups are different. Continual dialogue and interaction with all stakeholders is an absolute must and having accurate, granular and robust data to inform those conversations at any point in the month can often bring an intensity and pressure not always experienced before by those not familiar to life in a high growth business.

The role of the CFO in an SME scale-up business has some key differences to the CFO role within a more stable corporate.  Within a scaling business, the CFO is right at ground zero alongside the CEO in defining the ultimate vision, setting the strategy to achieve the vision and transforming the operating model to deliver success.

A crucial overriding principle for the scaling CFO role is the need for a relentless focus and mild obsession on scale.  All decisions and actions should be taken with an eye on the value creation opportunity and potential impact on scale.  Being completely focused on scale and how best to achieve it increases the probability of success and minimises the likelihood of blockers derailing the journey.

And more so than ever before, technology can be leveraged to facilitate the focus on scale.  Understanding and adopting digital technology to simplify the complexities associated with rapid growth is very much on the CFO’s shoulders in a high growth business.  Being able to transform significant volumes of available data into relevant business intelligence can inform and accelerate the CFO’s decision making and drive growth further and faster.

The intensity and pace of the scale up journey can create a challenging and often stressful environment in which to operate; not all CFOs relish this shift and many don’t succeed but for those that understand and fulfil the scale up expectations, the rewards of the journey can be significant and not just in personal wealth creation terms.

With a role that extends to driving revenue growth, delivering transformational projects, implementing new systems and driving operational improvements, CFOs of high growth businesses have an all-encompassing remit.  However, of fundamental importance to stakeholders in a scale up business is the CFO’s core responsibility for robust financial stewardship.  Getting this core requirement wrong will render all successes on the non-core aspects of the role meaningless.