From Stretching to Scaling: Fractional CFO Secrets for Founder Led Businesses  with Cruz Gamboa

Welcome to the B2B Growth Blueprint podcast, where we talk with entrepreneurs, founders, and leaders at B2B services, tech, and SaaS companies to learn the systems and processes they've used to create success for their business. We'll also learn from marketing and sales experts to provide insights to help you grow your business. I'm your host, Mark Osborne, and the podcast is brought to you by Modern Revenue Strategies and their 10x ROI B2B Growth Guarantee. Schedule a free diagnostic call to learn the fastest path to double your B2B revenues in just 90 days.

Hello and welcome to another episode of the B2B Growth Blueprint Podcast. I'm your host, Mark Osborne. And today I'm very excited to welcome my guest, Cruz Gamboa. Now, Cruz is the CEO of ScalingCFO.io, and he's a strategic fractional CFO who helps founder-led companies scale with financial rigor and get ready for investment and/or exit. He began his career on General Electric's Elite Finance Management Program and rose to General CFO for GE's gas power business in Latin America. Where he led the team to a record year selling more than 1.5 gigawatts of power projects. He's an economist by training with a degree from the University of Texas at Austin and an MBA in finance from NYU. He spent more than 15 years at the intersection of finance, strategy, and growth, and he partners with SMBs and startups as a fractional CFO, translating operational decisions into metrics that actually move enterprise value. What really sets him apart is his conviction that revenue is just a tool. Profit, cash, and enterprise value are the real scorecard. And so I'm very excited to welcome him to the show and to talk about some of these opportunities. So, Cruz, welcome to the show.

Thank you, Mark. It's great to be here on the show with you. Looking forward to this conversation.

So you've obviously had an illustrious career. Tell our audience a little bit of your story of sort of the twists and turns that brought you to where you are today.

Cool. So yeah, I mean, I started, my first job was actually at Unilever. So I spent like 2 years of, of like doing grind work as a, what they call a marketing financial analyst. So I, I was doing numbers for the marketing department on launches, et cetera. Then left to GE for the FMP like you described it. So that's how I started my career there. And then I stayed for over 22 years. Made it all the way to CFO of a division in Latin America of GE. And yeah, I mean, eventually it just felt like I wanted to see other things and there was an opportunity to leave for a startup. I went for that. It wasn't necessarily aligned with me. And I mean, for those who have been in the corporate world, when you leave for a startup, It's a big culture shocker. And then eventually I made the decision to not go back to corporate or another startup and just start my own. You know, if it was gonna be messy, it was gonna be messy on my terms.

Cool.

So that's basically how I got to where I got. I mean, in all of that, I mean, we can talk about like the intricacies, the emotional and spiritual roller coasters of going through that whole thing, my awakening that happened in the middle of all of that. I mean, those are interesting topics of conversation. Not sure that there's, you know, we want to talk about them today, but they are. There was a lot. I mean, to get to where I am right now, there's, I've had to do a lot of work, inner work mostly. And because I actually came to the conclusion that 95% of business problems are mindset problems. And more that we work on ourselves, the more that we work on just developing the identity of and the clarity of who we want to become, then the easier it is to, um, to get to where we're going in a way that feels aligned with who we are.

That—

I mean, that definitely resonates, and it's certainly a very interesting topic. And what I have seen so often is it's not only, you know, sort of the mindset, but as you start to build a team and are working with a team, It's how the mindsets of each other kind of interact. And whereas one person might sort of have that mindset of really being in the role, whereas other people might be dealing with some mindset issues, imposter syndrome, or just, you know, other frustrations, it sort of changes the dynamic of the whole team. So it's so interesting to hear you say that.

Yeah, I mean, I This is not something that I read on textbooks. I've seen it, I lived it. I've been on both ends of that spectrum, the guy with a bad mindset and the guy with a better mindset. So it's just the human experience. The more years that you have under your belt, the more things you get to experience and you get to compare, right? Like what's a better way of being?

Well, and now, you know, small businesses, startups get to have all the experience that you got and sort of this very structured, grinding corporate world as you described it. And one of those perspectives that I think is really interesting and that you and I have chatted a little bit about is that this idea that revenue is just a tool and that the real goal for businesses to sort of measure success should be around sort of profit, cash flow, Enterprise value as sort of that scorecard. Talk to us a little bit about what you mean by that. Like, help us clarify that distinction between revenue versus profit versus cash versus enterprise value.

Right. So let me start by saying 2 things because I, you know, sometimes when I talk about revenue, it, for certain founders, it's a little bit of a trigger. They're like, what is he talking about? But, you know, the reality is that revenue is not the same as profit. And it's not the same as cash, and it's not the same as enterprise value. Yeah, right. And that there's nothing wrong with revenue. We do. Obviously, we do need revenues.

That's right.

But when you make it your life's obsession, and the only thing that you want to optimize in your business, it can create more problems than it can solve. Because what I've seen, and over and over again, it's like, it's like, it's like an algorithm, to be honest. It's like a human, like a A founder, a I want to say a an aspiring founder who's trying to scale their business. Their obsession is to just do more revenue because that's how they believe. There's two things, right? There's the piece of the identity, like if I have more revenues, then I must be successful, right? That's an identity piece. And then there's the other one, which is that comes from a place of I would say from a Scarcity, where like holy cow, I don't have enough cash, therefore I need more revenues.

Yeah.

So these are kind of like two different types of mindset issues that I see over and over again. And if you're going through this right now, don't feel bad. I mean, it's you're you're here to we're all here to learn, right? So yeah. So the way that I like to reframe this way of thinking is that you need to think of your company as 2 things. First of all, one of your biggest assets. Okay, so think of it like as if it was like you're buying— you have a stock which you created, right?

Mm-hmm.

And it— that stock has value. And that value, if you're doing— if somebody is doing something right, that value is going high, like, is increasing over time. That's what we all want. That's why we invest in the stock market, because we want the stock to perform better and better and better, right? We don't want the stock to, the stock to get stuck at a certain level and maybe give us dividends from time to time. That's not what we are investing in a stock. So if you think about that and you remove yourself from the concept that it's just a business, but it's actually one of the biggest investments that you have in your investment portfolio, then it switches the mindset from like, well, what drives value? Does revenue drive value? It could, right? But the reality is that anybody who sold their company or understands the world of valuations, you know that what you are really, when you're valuing a company, you're valuing the profits of the company and the growth prospect of the company or your ability to create growth in that company. So the present value of the growth opportunities in that business. That's right. Okay. But notice what I said. I never said revenue. So I said profits. Okay. I said cash flows really at the end of the day. So that's how a company at the end of the day is valued by an investor. So if we focus only on revenue, we may be maximizing revenue to the detriment of profits. And this happens, or cash flows. This happens all the time, right? A lot of founders that I've met, they say that they're scaling their company. And when I actually look at their financials, yeah, their revenues are actually growing, but their profits are not growing at the same rate. So in a way, you could say that they're actually buying growth. They're not necessarily scaling the company. Okay.

Yeah, I call that stretching.

Stretch, right?

Yeah, that's not scaling. It's stretching, and stretching eventually snaps.

Stretching eventually snaps. I you know what? I may just steal that.

Stretching.

Sure thing.

Yeah. So because in at the end of the day, revenue suck. I mean, in a way, revenue creates other problems. Like for example. Working capital problems. And when the machine, right, the company is not designed properly, what ends up happening is you put more revenue through a system that has leaks or doesn't have the capacity to basically allow for that revenue to grow without friction.

Yeah.

So this is a physics problem at the end of the day. I mean, Doesn't it sound like to you it's physics?

Yeah.

Yeah. And I mean, we can get into the rabbit hole of theory of constraints. I know Blackhorn Mosi has milked this concept a lot, Alex Hormozi. And but yeah, it is. That's what it is. It's just a— it's physics. So that's why, you know, what I suggest to my clients is that we Obviously, we want to grow the company. We want to scale it. And revenue is a component of it. But what we want to do first is just take a more holistic view on how is our machine designed. What is the design of that? Can it sustain the growth that we want to put through it? Is it going to input a sustained profit increase? Or does it require additional elements in order to be able to Somehow create some kind of a profits without a lot of friction.

Okay, that's right.

So so that that's the work that we do. We spend the first six months just getting really clear on financials, getting really clear on what is the vision for my my clients because there's the reality is that not every founder wants to be a CEO.

Yeah.

Or, or is fit to be a CEO or wants to invest the time and in working on yourself and becoming that leader that can be the CEO of your company. We don't, we don't have to be, you know, if you are sitting on a good idea on a business that the, you know, that your clients and the world needs, then I mean, you could just as easily just put a CEO in place and then just, just be the visionary and And the owner of the business, and I know several people that that's how they run their companies, and they're super happy. There's nothing wrong with that. They have a quality of life that many other entrepreneurs who are sort of wearing the badge of honor of like I'm doing the grind and every decision goes through me are not having because they are you know they go back home at the end of the day super tired, super busy, super like stretched. from an emotional and a spiritual perspective. And, and most of the problems, they end up getting carried over to their home, right, to their personal life. And that's what we don't want.

So, so many great things in there to unpack, one of which is you talked about, you know, sort of investing in a stock and thinking about your business as a stock. And that reminded me of a stat That if you look at the S&P 500, so the stocks within the S&P 500 and the market value, the, you know, sort of the capitalization or the enterprise value that the market has determined for those businesses, you add up, you know, cash and, you know, how much revenue they're generating, and then even, you know, sort of the inventory that they own and, you know, machine and equipment and all that. 70% or more of the value of those companies actually rests within intangibles. So things like the, you know, the human capital, the people that work there actually drive that. The, you know, sort of the operations and how their systems work, you know, those intangibles, the social good or sort of, you know, brand benefit and welfare that they've built for the company. Those intangibles make up 70% or more of the value of the S&P 500. And so that also then starts to explain why 2 businesses with the same revenue in the same industry could have very different EBITDA. So getting to that sort of profitability kind of measure, and then based on that, a very different enterprise value. To the tune of 2 or 3 turns. So, you know, a $10 million a year business, one person might sell it for 2 turns and earn $20 million, another might sell it for 4 turns and earn $40 million off the sale of that. And there's so much more opportunity in building that enterprise value than just focusing on top-line revenue. Going from, you know, being a $10 million a year business at 2 turns to being a $20 million a year business at 2 turns to get that same $40 million payoff is so much harder than going from a $10 million a year business that's worth 4 turns and getting that $40 million a year payoff.

Absolutely. I mean, I mean, it's— I was actually kind of like laughing when you were talking about this because I— there's an example that I did for one of my slides in a presentation that I did. It had the exact same numbers. It had 2 companies, each of them $10 million in revenue. One of them was worth maybe $2 million and the other one was worth between $12 and $15 million. And you're like, how is this possible? They have about the same, the same amount of revenue, exactly the same. Well, one had, you know, maybe $500,000 in EBITDA and just like a really, you know, not very tight business. And the other one just had a really profitable business, super well-oiled machine. The founder was not in the delivery, right? And then it had all these different things in the pipeline for product development, et cetera, that made the company that much valuable. So that is just another way of summarizing what you just said. Yeah.

So, and you raised another point there that is so worth talking about, which is sort of the entrepreneurial myth. And, you know, the Gerber book that, you know, a lot of folks have read and it's an awesome book, The E-Myth or The E-Myth Revisited. But for those of you that aren't as familiar with it, it talks about— and I think this is somewhat of an American cultural thing, but you've, you've certainly spent more time abroad than I have— that In society and culture, we have this sort of entrepreneurial myth that the entrepreneur is the visionary who comes up with all the ideas and the operational person who can grind it all out and the genius marketer that can sell everything to anybody and the finance whiz that can make sure it's all profitable and the leader that can inspire a team. To sort of follow them, partly because we don't really know Steve Jobs. There was a persona that he put into the world and that media picked up on. But a lot of those sort of aspirational kind of leaders, CEOs, entrepreneurs that we think of, there's a picture that's painted about them that oftentimes really isn't true. They might fill one of those roles and then be really good at picking the right people around them to fill the rest of those roles. But most really successful companies have an individual in each of those roles that excels at each of those requirements rather than it really being dependent on one person. And that sort of overcoming that mindset, as we talked about earlier, is really one of the keys to driving enterprise value, is to not being dependent on one person for all those things. As you come at, you know, businesses from a finance side, how do you help them, you know, sort of see that in the work that you do with companies?

Well, we, I mean, we, by asking questions, right? And by having these conversations daily and by following sort of the blueprint that I use for companies to scale. So the thing that I do differently, I guess, from many other CFOs is that, yes, I'm the fractional CFO, but I'm also kind of like the scaling advisor. So I follow scaling methodologies to make sure that we get really clear on, you know, what is the soul of the company, right? Like what are the core values, the object, so the BHAG, the Big Hairy Audacious Goal, right? That's the vision. For like how this company wants to make an impact in the world and what's our three, five, ten-year target so that we can you know work from right to left on what are the things that we need to do today to get prepared for the growth of the company in the long run. And when you do that, it something really exciting starts to happen, which is that the founders start seeing it starts to like. falling in love again with their business.

Yeah.

Because, you know, I tell you how many times, I don't know if you've ever seen it, but how many times I meet founders who are kind of like disillusioned. They're kind of like angry at their team, the company, because it causes them pain. Because, you know, and I just had this, it's funny because it also triggered another memory from yesterday. I was having a call with somebody And like, how many times do you feel like when you are the owner of a company, you're feeding everybody, and then you eat last?

Yeah.

And sometimes you don't eat enough.

Right?

Okay. Just sit with that for a minute. Just because I know that for a lot of people that may be listening to this podcast, that may be a thing where you feel like you're working for everybody else. And what about you? Like, who's taking care of you?

Yeah.

Right. And, and I think that's when you start falling in love with your business again and you start understanding that, you know, that there are different ways to organize a business so that you don't have to like put yourself last. I mean, you can— I mean, obviously you want to take care of the team and your clients and, and your suppliers and all of that. But you also want to take care of you. The business has to be— it needs to exist To also give you satisfaction, to give to make you wealthier. Okay, to help you leave a legacy behind for others, for your family. So it is once again the famous word is mind. It's a mindset issue. Like the minute you you make that mindset shift, then you are then you understand that you don't have to be the guy who has all the answers because that in effect when you when you do that when you become that person. you're becoming the bottleneck of the growth of your company as well, right? Yeah.

So we have a slogan around here, no heroes, because we see so many businesses that are built on sort of like personal heroics. And maybe it's the founder that, you know, sort of does everything and is sort of a constant ball of energy and ideas. And, or the other sort of corollary to that is no hustle mode. Because the other thing that we see is a lot of companies, they grow, and we talked about this earlier, they're not really scaling, they're stretching, they're buying growth, maybe through, you know, sort of loss of profitability. But oftentimes that loss of profitability is because people are working 60, 80-hour weeks, they're not being compensated for that. So, that's a loss of profitability too.

Hmm.

And it also burns people out. And so oftentimes we see companies think, especially from a marketing and sales perspective, well, let's do another tactic. And then they stack tactics on top of each other.

Right.

Let's do email and then let's do LinkedIn and let's do product-led growth motions and let's do an account executive sales team. And like when they start to stack all these things on top of each other, what they don't realize is It's not incremental. In fact, it's negative because each new thing is a distraction from the other thing. So you don't get better at any of them, you get worse at all of them. And then the only way to, you know, add another tactic is to add more people, which reduces your profitability, which then makes it even harder. And so it's such an interesting kind of cycle that folks get into. I'm curious if you see that sort of tactic stacking as a symptom of what causes some of that, you know, lack of profitability as companies grow?

Not only have I seen it, but I've been there myself.

Yeah.

Okay.

So, I mean, not even I am, I'm not infallible. Okay. And the reason being is that we all have blind spots. Like I, it's not like I woke up and say, well, I'm going to start stacking strategies. That's what I do, right? It didn't happen like that, but it happens. It just creeps up, right?

Right.

It's like you're like you're trying something and it's kind of working, maybe not as fast as you want. And then you get nervous and then some genius comes, somebody that you meet or something that you hear on Instagram.

Magic silver bullet.

Yeah.

Buy here. Then you get like FOMO, right? You're like, holy shit, maybe I'm not doing this right. Maybe I should be doing this. And then you, you start testing different things. And, and eventually when you test, when you've tested several of them and you realize that the lesson has always been there in front of you, that, you know, you just need to stick to one or two things and just get really good at them. And only when you master them, just go to the next. Once you feel that in your bones because you've done it enough times, then it's easier for, for you to listen when somebody calls you out on it. Okay.

Yeah. So, well, and not only that, but what we see is, you know, from a competitive advantage perspective, you know, companies, you know, they find a, you know, product market fit and then they experiment with a few different ways to sort of bring that product to market. So that go-to-market fit. But the companies that get distracted and they try 10 things, don't scale nearly as quickly as the companies that they make a strategic decision that this is likely to be the bet that pays off, and then they just really bear down and figure out all the complexities of that go-to-market motion. They then will, you know, be able to hit on the— hit the gas and really have that go-to-market fit much faster than the companies that are trying Let's try 20 different experiments and see which one works because I heard someone else did it, not because they're strategically thinking through how their solution should come to market.

No, I mean, yeah, I couldn't have said it better. I, for me, it became really clear as one of my coaches, David Mayer, he basically like, he told me that straight. He's like, look, I, He's like, you know, he's kind of like very, you know, stoic like that. And he's like, look, I've been there. I've done— I've been in your place. I've done the thing that you're doing right now. And I, you know, fast forward, just commit to one thing and just, just master it. And then you can do the next thing. And, and it took me a while to listen, you know, and then I, then I realized that what he meant, like what he meant. I mean, he— I knew that that was the case, but I didn't see that. I didn't think that I was doing it.

Correct.

I didn't have that, that self-awareness. I was like, no, I'm not doing that. I mean, it's just like I kept like giving excuses as to like, well, this didn't work and then this didn't work and then this didn't work. And now that's why I need to try this. And I kept trying to convince myself that, that, yeah, that I, I needed to do something else. And quite frankly, I think that's when we stop trying to make excuses and we, and we understand that the lesson is just get really good at one thing. And just be like the best at that one thing and then move. Only when we've—I mean, sometimes I guess we just what I'm trying to say is sometimes we just need to learn by screwing it up. Yeah, sure.

Okay.

It's just like it doesn't matter how you know what sage you bring into your life to tell you what you need to do. You still probably need to go through the experience and just feel it and then be like, "Yep, he was he or she was right." And maybe that's just the way it is, and it's uh. So there's nothing wrong with you. You're just being a— you're just being human.

So there's an old phrase in sales that some things can't be sold, they have to be bought. Like some— like the audience has to actually sort of desire it in order to, you know, make it a real solution. And it's funny, as you're saying, as you're talking, it's occurring to me that some things can't be taught, they have to be learned. And so like until you've, you know, sort of had the cycle yourself, As much as you can read the same insight as everyone else until you get your own skint knees and burnt out and bruised elbows, maybe you don't really learn the lesson.

Yeah, I mean, maybe unfortunately it's just as easy as that, right? It's yeah, I mean, we can pin it. We can put a pin on that one because I don't think we're going to solve it.

That's just that's human nature. That's right. Yeah. Well, Cruz, you're obviously an expert in it. ton of super interesting topics and have such great perspective. We could talk all day, but I got to be mindful of your time. Before I let you go though, like, tell our, uh, you know, audience a little more about, you know, what you're working on today, who you help, and how you help them.

That's awesome. So maybe I should demonstrate what we have been talking about, right? Because I, I had 5 different ways in which I was reaching out to clients, some of it with social media, LinkedIn. I was really active in LinkedIn. I grew from like 2,000 followers to like 91,000 followers, and it was a little bit of like hit and miss. I will get leads, and then I tried masterminds, and I tried like five different things. Sure. And what I realized is that for the stuff that we do, people need to experience me. Okay? They need to kind of have an open, safe opportunity to come and sit with me. And just kind of listen to the way I, you know, I think about scaling and making growth more sustainable. And the best way to do that is to have a container for that. So that's what I— why I created the Cash Flow Breakthrough, right? The Cash Flow Breakthrough is my 90-minute workshop that I launched. And guess what? The website is cashflowbreakthrough.com. You know, if you want to learn more about it, it's very simple, right? So now all of my sort of my my lead generation, my sales, everything is just going through that window, and I am you know I'm going all in. All of my resources and my energy is on building that because I believe that that is the best way to to bridge the trust gap that exists specifically for the stuff that I do, which is. Your financials. Financials are, you know, it's— people are very vulnerable. I've had people cancel on me at the last minute before we had a strategy session. And I said, well, but why do you cancel? What happened? I just couldn't do it. I just felt too, you know, too embarrassed about my financials. And I'm like, well, this is exactly why we should have the strategy. It's the opposite. And it's like, that's right. So I've experienced that. And, and at the end of the day, I think that's, that's probably, that's probably what we need to do. We need to, you know, we need to bridge that gap by creating, by making the space, the Cashflow Breakthrough, a safe place to experience me and to experience themselves with some of the stuff that we, the activities that we do during the workshop. And, you know, I I think that's, you know, I just wanted to demonstrate how after many failed attempts, I now have a very clear vision on how to grow my company, how I've been growing my company, and the Cashflow Breakthrough is really the way to, you know, get into my world, to get to know me, et cetera.

And who's that built for? Who exactly should go check that out?

So this is built for founders who I would say are like high 6-figure, You know, at least above six seven hundred thousand, and founders who are maybe low seven figures. I mean, it could be all. I mean, quite honestly, I've I've had some eight-figure founders attend because the lessons are are kind of like timeless. But the reality is that I can't help everyone, you know? Yeah. And in my company, like the way the stuff that we do, especially when it comes to scaling, it makes sense for somebody who's already. Has product market fit, who's been in the market, who is now willing to just productize the scaling process, okay, just to like implement it and, and, you know, work on your numbers and cleaning them up so that you have, you can have clarity on what's making you money or not. And somebody who is at that level is somebody that probably would be a— this workshop would be a good fit for.

That's great. And is that the best way to get in touch with you? CashflowBreakthrough.com or some other way?

Yeah. So, I mean, if you're interested in just kind of just having a conversation as well, that's a— we can start by DMing, by DMing me on my LinkedIn. I'm super active there. I see— I don't, I don't let anyone, anyone kind of like touch my LinkedIn DMs. I'd read them all. And, and then the other way is just to schedule a quick discovery call with me. And you can do that by going to callwithcruz.com.

Okay.

callwithcruz.com. Super simple. And on the left, there's going to be an option that says discovery call. It's a 15-minute conversation. And, and that's just one way to just get a hold of me really easily.

Awesome. Well, Cruz, thank you so much for taking the time to join us. I really enjoyed our conversation and learned a lot. I'm sure our audience did too.

Well, thank you, Mark, for the opportunity to just tell you a little bit about my, my company, my experience, and I'm looking forward to continuing our conversations in the future.

Talk to you more.

All right. Thank you.

Thank you for joining this episode of the B2B Growth Blueprint podcast, and we hope you've gained insights to grow your business. If you enjoyed the discussion, please rate, comment, and like on your favorite platform and share to others who will find it useful. Do you know a CEO, founder, or leader at an early-stage B2B services, SaaS, or tech company who would like to be a guest and share their story? Send us a note. Let's schedule a conversation. Thank you for joining this episode of the B2B Growth Blueprint podcast. We hope you've gained insights to grow your business. If you enjoyed this discussion, please rate, comment, like on your favorite platform, and share to others who will find it useful. Do you know a CEO, founder, or leader at an early-stage B2B services, tech, or SaaS company who would like to be a guest and share their story? Send us a note. Let's schedule a conversation.