What if The Apprentice (UK) was actually a credit based show rather than a strategy play? Below, Cato Syverson, CEO of Creditsafe, discusses for Finance Monthly the ‘real winner of the show’, if the win depended solely on the contestants’ past dues, credit history and debt.
This year’s series of the popular television show, The Apprentice is now in full swing. The reality TV show - now in its thirteenth series – sees 18 hopeful businessmen and women compete to become Lord Alan Sugar’s latest business partner, with the eventual winner scooping a £250,000 investment into their proposed business venture. But how does Lord Sugar whittle the 18 potential candidates down to one? What is he looking for in a business partner? By the looks of the latest series, it’s not their business or credit history.
Using Creditsafe data, we have analysed who the real winner of the Apprentice 2017 should be and who the riskiest investment would be for Lord Sugar, based purely on the contestants’ financial and business history, past success and acumen. We devised a simple scoring model to rank the candidates, considering factors such as the profitability of current businesses they own, credit ratings and whether they’ve received any County Court Judgments (CCJs).
The results indicate that interestingly, week three casualty Elliot Van Emden was the safest bet for Lord Sugar and should have been the real winner of this year’s series. With a credit rating of 95, a net worth of £27,006 and no CCJs to his name, Elliot was a strong contender and the least risky candidate in this year’s competition.
Most surprisingly, Elizabeth McKenna, one of this year’s most talked about and controversial candidates, is now the least risky candidate for Lord Sugar to enter into business with. Elizabeth has a net worth of £36,940, no CCJs and five current business appointments making her a solid choice, even though the florist has irritated a number of candidates on the show. Luckily, this week, she managed to dodge being firing by Lord Sugar when she was brought back into the boardroom as sub-team leader. At the other end of the spectrum, Bushra Shaikh has two dissolved companies under her belt, a very low credit score of 49 and one CCJ to her name, making her the least advisable selection for Lord Sugar.
While there isn’t a strict set of rules about choosing a business partner, there are warning signs to be aware of when faced with this decision: For example, if a director has any previous failures buried in their business history. Our data shows that if a director has been involved in a company that has failed in the last three years, they are nine times more likely to fail again compared to a director who has never been involved with a business collapse.
In addition, it is wise to check whether candidates have links to any businesses with low credit scores. Many businesses are owned by or have links with other companies, and how they’re performing financially can have a knock-on effect. This means it’s sensible to look at all linked companies credit reports to check you won’t be impacted by a low credit score or poor payment history of another business in the future.
We have a few more weeks to wait and see who Lord Sugar chooses as his next business partner, but it will be interesting to see if he takes a risk or makes a safe bet. Who you enter business with can have a significant impact on both your financial performance and reputation, and therefore doing your homework on potential candidates is critical for success.
Lord Alan Sugar is best known for his long tenure as host of the BBC’s hugely successful show The Apprentice.
His qualifications to sit across from hopeful candidates in the boardroom have been built up through years of diverse business experience from heading up an early computing giant (Amstrad) to more recently acquiring a lucrative property empire.
A self-made man with an innate sense of corporate strategy, Sugar rose from humble beginnings in a council flat to being appointed the UK’s Enterprise Tsar through tenacity, savvy and a tell-it-like-it-is attitude.
However, his rise from obscurity to celebrity wasn’t without its setbacks and stumbles. Here is the story of one of Britain’s most influential businessmen.
(Source: ABC FINANCE LTD)
Right from the beginning decision makers in business played a vital part in progressing revenue, whether in ancient Greece or today, but they weren’t always the same guy that took care of the books. Here Tim Vine, Head of European Trade Credit at Dun & Bradstreet delves with Finance Monthly into the history of the CFO, and the prospects of financial management for the future.
Corporate structures have changed dramatically over the last 150 years – and so too have executive roles. Even in the last few decades, we’ve seen CIOs go from being a rarity to a mainstay in the board room, and now we’re even seeing the growth of new positions like the Chief Digital Officer and Chief Information Security Officer. The CFO role has changed dramatically, as well. From financial guardian to strategic partner and key adviser on the future direction of the business: the role of the CFO has come a long way in a short space of time. So, how is the current business environment shaping the role of the CFO and what will financial directors need to focus on in the future to secure business success?
The history of the CFO
How has the CFO role shifted over the years? For most of the twentieth century, the CFO position didn’t actually exist. Instead, financial managers oversaw bookkeeping and were responsible for annual budgets. They were, for the most part, removed from the decision-making process, and only became more influential when financial regulations became more complex. The position of CFO first emerged in the 1960s and became much more common in the decades that followed. Financial leaders now occupy a key role at the heart of most organisations, and are expected to keep tabs on the big picture as well as the minutiae of every department. No other senior position offers quite the same degree and breadth of strategic insight.
Over the past decade, much has been said about the changing role of CFOs. Long gone are the days in which CFOs were tasked solely with financial management and reporting; instead, the responsibilities of today’s financial officers can stretch from investor relations to strategic growth.
The evolution of the CFO
The drivers for the increase in scope of the CFO role are as plentiful as they are diverse. From increasingly stringent regulations and the impact of globalisation to the transformation of business and industry, the evolution of the CFO role has been a necessary response to the growing demands of a rapidly changing world.
A natural consequence of this evolution has been the need for CFOs to expand their scope. They have had to step up and bear the burden of increased responsibility. Although their role may have become more integral to the success of the business, expectations and pressures to deliver have also multiplied.
More recently– over the past three years, to be precise – CFOs say they have experienced a “significant” (53%) or “some degree” (44%) of change to their roles according to our latest research. Many (59%) respondents reported an increased array of duties, noting that their role now necessitates greater prediction and management of risk and compliance issues, or that they are increasingly being asked to drive the bottom line as well as the top.
As a result of this increased pressure to take on a larger breadth of responsibility, the plethora of the CFOs’ responsibilities now includes everything from taking a more strategic role in their business and working in a multidisciplinary function to analysing customer data and leading strategic mergers and investments.
The current state of play
As CFOs’ roles continue to expand, they cannot to neglect the day-to-day responsibilities that have previously defined their function. When asked to make a like-for-like comparison between their primary obligations now and three years ago, CFOs provided little evidence that they are under any less pressure to perform their ‘core’ tasks, despite growing expectations about what else they can deliver. Our research found that when listing what CFOs see as their main responsibilities both three years ago and today, they identified only slight changes between the two. The usual daily accounting and treasury tasks are just as relevant today as they were a few years ago, but compliance rising in rank to occupy third place and controllership falling to eighth.
While organisations seem to be increasingly reliant on the expanding skillset of the CFO to help them deal with external pressures, many respondents suggest that they aren’t being provided with the requisite level of support to conquer those challenges. Our research highlighted that resource issues are one of the biggest struggles facing CFOs. They do not have a large enough team to carry out all of the work, and time pressures inhibit them from completing the tasks effectively. Moreover, more than a third feel that they are struggling under the pressure to find new growth and revenue opportunities, with 31% noting that they are asked to be experts in too many fields. CFOs suggest that an increasingly broad remit is making it difficult to focus and ensure the direction of the finance function. In fact for many (56%) feel that their employees don’t have access to the tools and technologies that could help them, in spite the fact that a significant majority (84%) say technology solutions are vital to their data analysis and smart decision-making.
What is also evident from the research is that CFOs are concerned with having to meet the seemingly unrealistic expectations which the board has on the finance team. This is further compounded by a trend in team size reduction, with almost two-thirds of respondents sharing that their team size has decreased in recent years. Essentially CFOs are being asked to do more than ever before, all while seeing their resource levels shrink.
Looking into the crystal ball
Looking ahead, data is going to play an integral part of the CFOs’ role in years to come. It is true that the importance of data has already been established; more than a quarter of respondents say that data analysis has become an increasingly vital part of their responsibilities. Many suggest that analysing data it is now one of their day-to-day tasks – and this is only going to increase.
As it stands, over 90% of CFOs state that data is either “extremely” or “somewhat” important in helping them make smart decisions and forecasts.
But data isn’t just about forecasting. It can help finance leaders to better understand customers, gain a better understanding of the market in a globalised world, and improve the organisation’s operational efficiency. Data is also essential in helping identify new revenue opportunities.
Setting the scene for success
The role of the CFO is undoubtedly in a state of change. As it continues to evolve, conflicting priorities, growing expectations and shortfalls in essential resources are creating a high-pressure, high-risk environment: one in which the consequences of poor decision making are becoming ever more significant, such as was the case with General Motors and Enron for instance. In fact, over half of CFOs surveyed feel that it is just a matter of time before a serious mistake is made due to a lack of staff and resources. Providing finance leaders with the data, tools, time and technology to do the job to the best of their ability should be a boardroom-wide concern, given the critical role they play in an organisation’s success.
