Play around with these figures Dave. I have given you the total I want them to add up to.

He had excluded a Finance Director from his starting management team and it brought back some very painful memories!

Most start ups bring in a FD at a later stage and start off with a book-keeper and then feel they can bring someone else on once the business has got to a certain stage to be able to afford an FD.

My advice is to get an FD as soon as possible. Even if it is on a part-time basis - they will prove their weight in gold. It is the one appointment that I always look for - (after having made many mistakes in the past!) An FD will give you a really good grip of the business and let you know what is going on.

You will be amazed at the amount of companies that do not know until the end of the year that they have not been making a profit! I invested in a company last year which looked very profitable and I assumed all was going well as I kept getting good sales reports.

Then I realised that we were constantly having cash flow problems and it was only when an experienced FD went in that we realised to our horror that the business had real problems and was not making any money! The FD sorted the situation out and the business is slowly being restored back to health.

We (the shareholders) were very lucky in this case. We realised that the business had a problem soon enough. Had it gone on for a further two or three months - it would have been beyond hope.

When I look back at most of the investments that have failed for me, I notice that one of the issues is that the companies did not have good FD’s in place (or any!). A good FD may not have saved the company - but they would have prevented further shareholder loss by warning against further fund raising rounds!

No FD no commitment!

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• Financials – why only cashflow matters in the first two years (2)
• Which structure? (4)
• Where do I start in raising money? (3)
• What should you earn? (2)