FINANCE EXPERT Reveals The WORST MONEY MISTAKES To Avoid Costing You MILLIONS

As human, our brain is. Yeah. I mean, our brain is literally wired to keep us safe and comfortable, and money falls right into that equation. So if we're used to making a certain amount of money and we start making more, our brain goes, ooh, I'm not sure what's going on over here. If I like this, I'm a little. I'm going to scale back to where I'm comfortable, and I know that I can manage it. And so having business owners be doing things that intentionally will help expand their money mindset can really make a big difference, too.

Welcome to the Scale or fail show. My name is Alison Maslin. I am a serial entrepreneur. I am your business mentor. I am the founder of Pinnacle Global Network, where over the last decade, we have been mentoring business owners all over the world to scale their business. And on the show, we feature amazing business owners that have created great success in their life, but they've had challenges along the way, and they have wisdom to share to make the road easier for you. And today we have an amazing show all about money, your cash, a conversation that people don't often talk about. So, Andrea Jensen, my guest today is the founder of the cash flow cfo, the entrepreneur solution to confidently running their business based on facts, not emotions. Providing virtual CFO services, bookkeeping, and tax support to small business owners to help them scale, which, you know, I love all things scale. So Andrea's goal is simple. To empower business owners to confidently own their finances and their future. I love that. So welcome, Andrea, to the Scalar Fail show.

Thank you. I'm very excited to be here.

Well, I'm really thrilled to have you. And Andrea has been a member of Pinnacle Global Network, our private mentoring and mastermind going on while she's in her fourth year now, going on five years. So I've had the honor really, watching her business skyrocket. And also, you have supported a lot of our Pinnacle members to, you know, be much more healthy with their cash in their business.

Yeah, absolutely. That's the best part.

Exactly. So let's. We're going to. You know, many of you, you hear about accountants, bookkeepers, but you don't often hear people talking about a cfo. And I will tell you that once we got a CFO in our, it changed my life, and I am not kidding you. So first off, Andrea, what is a cfo and what role do they generally.

Play in a business?

That's a great question, because there's a lot of misunderstanding around what a CFO truly does. So the way I Like to explain it is if you're driving down the road in your car, sitting in the backseat is your bookkeeper and your tax preparer, and they're looking out the rear view window, and they're telling you where you went, what you did, and where you spent your money. Your CFO is sitting in the front seat next to you, the business owner who's driving the car, looking out the front windshield, telling you, here's what's coming up, here's how to plan, and here's how to be prepared.

Yeah, you know what? That is a great way of looking at it. So you're really coming from a perspective of strategy with money.

Right.

Instead of the reporting.

Exactly. So what the CFO does is they take the reports that the bookkeeping team, the accounting team prepare, and they turn them into a tool for the business owner to make spending decisions, growth strategy, hiring, firing, different product lines, different services, and it gives them the tool to know, am I on track to hit my goals, or do I need to step back and fix some things in the business before I can continue to move forward?

Yeah, I mean, there's so many decisions, right. Should I hire this next position? Or how many people can I hire with the projections we have over the next year? Or how should we. How much money should we take out of the business? And, you know, it's just, well, we'll dive into more of it.

But.

Would every business owner be better off with a cfo, or is there a certain point that people should. Business owners should look into hiring one. So, you know, kind of, where's the line that you feel it's time?

Yeah, absolutely. Well, every business would benefit greatly by having a cfo. However, it's cost prohibitive. So if you were to hire a CFO in your business, you're looking at an annual salary of $350,000, according to salary.com so it's not something that every business can do, but what they can do is hire a fractional cfo, which is what our company does. And for one tenth of that price, you can get just the targeted advice that you need to help your business hit those next levels and grow strategically without running out of cash or losing your mind trying to figure everything out on your own as that business owner.

And so can you talk about the difference then of somebody that would be on staff as a CFO and a fractional CFO?

Yes. So typically, you want to allocate around 3% of your total sales towards your financial team. So that's a good gauge to Kind of say, where am I at right now? If I'm at a million dollars in revenue, then, yes, I should be bringing on a fractional CFO or pretty close to being ready to do that. That's when you kind of hit that point where your bookkeeper, your accountant, is maxing out on the advice that they can give you, the business owner, and so you're ready for that next level of bringing somebody into your financial team that can help guide and steer the ship for you.

Yeah, that makes so much sense, Andrea. You know, for us, there was a point where, you know, our business was really growing.

And, you know, there I had the.

Accountant, I had the bookkeeper, and I felt like I had a pretty good grip on where money was going out and the money that was coming in. And then all of a sudden.

It was like.

It felt like as soon as the money would come in, it would be gone, or things were slipping through the cracks, or I would find that we were spending money on stuff that was, like, ridiculous. You know, somebody was, you know, paying for mailbox, etc. When you could walk right across the street to the post office, and it was a third the cost. But, you know, as you're running the business, you don't have time to look at every tiny little spend that goes on in your business.

Absolutely. So the bigger your business gets, the more opportunity for money leaks in your business, because you truly, you can't keep your arms around everything as your business is growing, you're bringing in people to manage different functions and different divisions of your business. And if they don't have a cohesive strategy and knowing, okay, this is my budget, these are all the things on my wish list, you know, so say, for example, you have a marketing manager. They've got all the things that they want to do, and if they don't have a firm budget, they're just going to keep spending because to them, they're adding value, so it's justified. So. Yes. So the bigger you get, the more opportunity there is for the money to go out just as fast as it's coming in.

Yeah. And then you look at the credit.

Card statement and you're like, wait a minute, who authorized this? You know, something that went out that was several thousand dollars. Right. And. And by that point, it's too late. So it really does, I believe, create a level of organization in the business, systemization in the business. It just is, you know, as I said, it truly was a game changer for us. And I know when we made that step to bring on a cfo. And I know when you worked with so many of our clients in Pinnacle and they rave about you, how you've been transformative for their businesses, it just, it really took the stress off of me as a business owner knowing that those things were taken care of. I might still have weekly meetings and I'm very much, you know, have my eye on the numbers and, you know, I'm aware of what's going in and out and so forth, because you always should stay in touch with that. As a business owner, you're going to get into trouble. But, man, it just really helped make our company way more profitable. So now you talk about creating financial anchors in the business. What do you mean by that?

Yeah, so a lot of times when people think of the word anchors, it gives a negative connotation and they think of something that is going to keep them stuck in one spot or stagnant, and it's quite actually the opposite. So if you think of a boat that's anchored and if you can picture them, you know, bobbing in the water with the waves and finding the rhythm, they're actually moving quite a bit, but not too far off track. They're staying generally in the same spot. And that's what a financial anchor is designed to do. It's designed to say, here's my one year, three year, five year business goals, revenue goals, growth goals. And by creating financial anchors, it keeps you on track. But you're able to kind of ebb and flow with market opportunities or different things, you know, joint ventures or things that might pop up that weren't exactly on the plan but are like, hey, this is a great opportunity and it might get me to my goal a lot faster. But having those financial anchors like a cash flow forecast, a budget, doing job costing, having a staff utilization schedule, having key performance indicators for all of the activities in your business, those are the anchors that are going to keep you moving on the right direction and still give you a little wiggle room. You know, as the business owner, we like to wiggle a little bit and shiny objects jump in front of us. But that's what when we talk about financial anchors, having those key documents in place and using them as a tool to make financial decisions. So not looking at the bank balance to decide whether or not you can afford to buy something, it's truly looking at how do I want to allocate these funds? Am I, you know, going to spend it over in my marketing bucket or in my general and administrative bucket? Maybe I really need some more admin support, you know, so it's really looking at you have the same 100% to split up, but by having these anchors in place, it kind of helps you make those decisions better.

Yeah, I really love that analogy because it's true.

It's not like it's, you know, a ball and chain that's holding you back. I mean, you are able to move around when you're on that boat a little bit. Right. You've got some wiggle room, but you're not going so far off that you're going to be tumbling in the waves. But just some of the things you said, like a budget. Most business owners do not have a budget and I didn't for a long time either, you know, so it really makes a difference to be thinking of, okay, how much do we want to allocate towards marketing? How much do we want to allocate towards towards hiring a couple new positions and so forth for growth? And then the key performance indicators, talk about those a little bit because those are like the benchmarks that helps your team stay on track.

Yeah. So as a business owner, when you have key performance indicators for each of the different divisions in your business, it helps you take a quick, real high level view of what's working and what's not. And so some key performance indicators, you know, maybe we're looking at your marketing and key performance indicators is what's your customer acquisition cost, what's your customer lifetime value, what's your, you know, how much are you spending? A lot of people are doing paid advertising. So looking at all of those are KPIs. So that's just one section of the business. Then you have your team, you know, you do job costing, are they coming in, you know, at the right percentage, should still be profitable on the business, on the sale that you made. And so it's really looking at each individual person on your team should have KPIs, each division of your business should have KPIs. And then all of those roll up into one master dashboard that you, the business owner have that oversight on on a regular basis.

Yeah, it really does keep everybody on track, you know, and also I think it's important for the individuals on your team to have the direction to have those expectations. Because we know it's proven when you have goals and you are held accountable to those goals, the likelihood that you're going to achieve them goes way up.

Yeah. And it also helps too with team morale when they're crystal clear on what exactly what is expected of them and they perform Better, too, with that clarity.

100%. So when you start digging in, Andrea, with the CEOs that you work with in their business, what are the biggest mistakes you see them making with their finances that hold them back?

Yeah, this is a good one. So I would say some of the biggest mistakes that we see them is trying to do too many things on their own as their business is growing. They don't really have somebody tapping them on the shoulder saying, you shouldn't be doing this anymore. You need to bring somebody in with a different skill set, a higher level skill set that can help you do that. Because we see a lot of business owners that are really good at what they do and really good at making money, but they think, oh, it's. It's. I'll hire that, you know, financial person later. And they just end up probably, you know, spending that much money in overspending. They're overpaying in taxes because the proper deductions aren't being recorded and transferred over to the tax return. And they could have hired that person long ago, and they don't even realize it. So that's one of them. And the other is making those decisions of how they're going to be spending their money based off of, well, I think that this account's going to pay on this date, so I'm going to count that money and I'll spend it now. And just kind of playing what I call the shuffle game with their receivables and their payables and not really having a clear path and clear procedures of, you know, what happens when the money comes in, how does it go back out? How is that money coming out? To me, the business owner, is it in distributions? Am I on payroll? Oftentimes they kind of take whatever's left over. And that's. We're the opposite. We're like, no, no, no, no, no. You pay yourself first. We put that money aside, and then the business has to be able to run on the 75% that's left of the cash that you brought in. And if it can't, something's wrong with your business model, and we need to fix that.

Yeah, well, you know, I'm a big proponent of hiring forward and ultimately replacing yourself on a lot of the things that you do in your business. But I mean, honestly, with the amount of money that you save people and what you do, Andrea, as a CFO and also, you do accounting as well, I know it more than pays for itself. You know, I know in our position, we paid for our CFO 10 times over in the amount of money that we saved, that we were losing and didn't even know.

Yeah. A lot of times we see business owners aren't pricing their products and services properly and right there they're losing so much money. There's so many little things that we can come in and we have what we call the Fast Cash strategy session where it's one of our entry level kind of analysis. And we'll give you a write up of here's the first five things you should do and that will pay for our services. And they just love it. They're like, oh my gosh, where have you been my whole life?

I had only done this, you know, a year or two ago, where would I be? Right. Yeah, yeah, it really is, it is life changing and it's not something you learn in school. So if there was one thing you wish more CFOs did with their business, their money, what would it be?

I would say taking a step back and being more strategic with creating a plan. So you hear business owners always talking about, oh, I have a marketing plan, my marketing strategy, and I have a business plan and a business strategy. But very, very, very few business owners have a financial strategy and a financial plan. And it's, it's so, so, so simple to put into place. You know, that's probably going to be my life's mission, is to show how easy it could be with just a few things. Because it truly is, it's a math equation. You start at the top, we have our proprietary cash flow funnel and we show this diagram to the business owners and they go, oh my gosh, no one has ever talked about it this way before. But what it is, is at the top of the cash flow funnel, you're buying leads right into your business. Then the next level is you're converting those leads into sales. So that's your sales conversion. Then after that you're receiving the funds. So you're allocating how you're going to spend those once you've received them. And the last piece of the equation is to monitor, correct and adjust as necessary. But business owners don't think of it that way. I think we over complicate things sometimes and it truly is, it's a math equation when it comes down to it.

Yeah, it really is. And it's such a reliever of stress when you have an idea or you have some sense of control over your finances.

So you're not waking up at three.

In the morning stressed out, wondering how you're going to be Allocating things. And another thing that you said a bit ago was, and so many business owners do this, I was guilty of it. I'm sure you were. Maybe at some point is, I'll pay everybody everything else, and I will all just take what's left over. And that means basically, the business owner's making zero and their employees are making way more than that. And then the burnout happens.

Absolutely.

Because there's something energetic about saying, I'm putting this effort out, this energy out every day working in the business, but I'm not getting it back in. And, you know, you can only go so long with that where so many a lot of business owners just quit.

Yeah, that's very true. Very, very true. When you look at. For every dollar that you bring into your business through your sales efforts, if you just picture it in your head and say, okay, I've got four buckets. I've got my cost of goods sold bucket. I've got my marketing bucket, I've got my general administrative bucket, and then my profit bucket. So that $1 has to be split in a certain way over each of those four buckets. Because what's really important about making sure enough money goes into that profit bucket is because that's where you're paying taxes, that's where you're taking the distributions. That's where you're paying down debt. If you have it sitting on your balance sheet, that's where you know your. If you want to bring a new product or service to the market, that's the money that's going to fund that so that you're not affecting your cash flow for your existing operations. So it's just. It's just a different way of looking at it to make sure that you are paying yourself, the business owner, what you should be getting for all of your blood, sweat, and tears that go into running a business and having it grow.

Yeah, I think that it's a game changer when you do that. And for me, I remember the point where I just worked with my team and came up with a number based on where we were at financially and said, okay, that's it. This is the amount we're taking out every month, and we're not changing it. It is an automatic withdrawal, and it's happening. And the interesting thing is, and you know how I'm such a big believer of intention and manifestation. And when we did that and we committed to it, the money just continued to come. It was almost like I was telling the universe out there, hey, this is what I'm worth.

Yeah. And the other side of that is you're training your business to not expect that money. And so it's amazing how when the money's not there, you don't spend it, but if it's there, you find a way to spend it. So that's the other piece of that, too, is that, you know, it's. It's both of those happening at the same time.

Yeah.

Oh, I love that. That's such a great way of looking at it. And, you know, at the end of the day in your business, if you don't start doing that and putting money away, I mean, you could have a successful business and then nothing at the end.

Yeah.

After years and years, this happens a lot.

Yeah. Because truly our businesses are a vehicle to fund our personal net worth. You know, we need to be putting money aside for our retirement. We need to be putting money aside. You have aging parents that you're gonna have to care for, kids going to college soon. Like, these are all things that your business. That's why you started a business. Otherwise, you would go work for somebody else and get a paycheck. So you need to make sure that you're setting all of those things up so that your business is doing what it was intended to do. Do in the first place.

Yeah. Or have a business that's saleable at the end, you know, or passing on to your children. What do people not realize about finances when it comes to scaling their business?

I think just really how simple it could be if you have the right people on your team that can put the numbers in a way that the business owners can interpret them and make decisions from them. And I think also having somebody there that can fill in the gaps of where your financial education might be missing as a business owner. You mentioned something in the beginning where you said, they don't teach you this in school, and it's so true. Like, I have an accounting degree. I've worked for venture capital firms. Big, big, big, big publicly traded companies. And accounting is a language of business. But it's not the way that you necessarily run your business. Accounting, you could have a profit and loss statement that shows you've got buku net income. And you go look at your bank. Sit your bank account. You're like, well, where's the money, Cat?

Yeah. Oh, yeah. Been there many times.

Yeah. So accounting is not necessarily the way you run, like, operate financially, your business. It's there to give you the tools and speak the language. But there's. There's also that piece too, that you have to have somebody that can educate you in a way that, you know, you don't feel intimidated as a business owner or you don't feel, you know, bad about it. You need somebody that's going to empower you to be more financially savvy.

Yeah. Because, you know, you're the visionary as a business owner. You're focused on creativity, you're focused on building the team, you know, taking the business to new heights. If you are being sucked into the energy of having to make these kinds of decisions on your own, it's going to take away from that creative energy over here.

Absolutely.

Let's talk some strategies. What are two or three financial management strategies that you use in your own business that you could share with those listening today?

So I'd say the first one is that I don't make any spending decisions. My team doesn't make any spending decisions until we consult our cash flow forecast and our budget, because everything gets added to this. We have a Google Doc. It's pretty big, but we love it. It's very robust because it tells us, okay, for our cost of goods, we need to keep it at 40% or lower of our expenses. If we're getting to the point where our revenue is getting higher and we have some money left over to keep, like, say we're at 38 or 35%, then I get really excited because I go to my operations team and I go, we can almost hire somebody else. There's a little more money in the budget. They go, yes, we'll start pasting the ad because it takes a while to hire and things like that. But that right there takes the decision out of, when should I hire. Looking at our marketing budget, we've got 10% of every dollar that comes in goes to our marketing budget. And so the team knows they've got this amount of money and they get to choose how they think that we're going to get the most leads by spending this budgeted amount of money. And they get excited when they have extra money in their budget. They're like, oh, I've had this program on my wish list for so long, I'm going to go buy that thing and it's going to help do this a lot faster. And I'm like, cool, let's do it. So by having, having that set up in your business, it's going to just make everybody's life so much easier. You're not making those gut decisions of, I think we can afford this. And then maybe two or three months down the road, you're short on cash and you're kicking yourself because you made that purchase. You know, things like that. And the other thing I would say is that business owners could probably spend a little bit more time working on their money mindset. As humans, our brain is. Yeah. I mean, our brain is literally wired to keep us safe and comfortable, and money falls right into that equation. So if we're used to making a certain amount of money and we start making more, our brain goes, ooh, I'm not sure what's going on over here. If I like this, I'm a little. I'm going to scale back to where I'm comfortable, and I know that I can manage it. And so having business owners be doing things that intentionally will help expand their money mindset will really make a big difference, too.

Well, you know, being in Pinnacle, that I am a huge proponent of that mindset is everything, and it truly is. I mean, you could start really growing, and then your mindset goes, well, I don't deserve that, or, you know, I'm a fraud. A lot of people have that kind of feeling like, oh, somebody's gonna find out. I don't really know what I'm doing. You know, all of those tricks that the mind can play on you that shoot you in the foot.

Yeah.

And keep you small and choke the growth of your business.

Absolutely.

So that is huge advice. And you got to do it all the time. So. And if somebody can't afford. Guys are listening, you're like, oh, my God, I need a cfo. I mean, I need it yesterday. I want to hire Andrea. But what if they can't afford to hire a full time cfo? You know, what should they do?

Well, so that's the beauty of companies like mine. We offer fractional services, so you can get a fractional CFO to come in and help your business grow and scale. And then when you're ready to hire someone full time, then you cross that.

Bridge when you get there.

But this way, you can still get that all of those systems set up, all of those financial anchors that we talked about built and customized for your business so that you can take the stress off of you of trying to figure this out on your own and not be spending a ton of money.

Yeah, well, great. I mean, and again, it does pay for itself, like, quickly, you know, really sealing those holes in your bucket and finding other strategies and ways to capitalize on new opportunities, which I love. And so. And just you've been a member of Pinnacle now, as I said, going on five years Andrea. And I remember when you started and where you are now, and you've got this amazing team with you, and you've really grown because you're doing so much great work for people, really helping them. How has Pinnacol been for your business growth? What's the experience been like for you?

Well, you know, I always say that Pinnacle is like having my board of directors because I have so many. So many people I can go to for advice that something I might have spun my wheels on for a long time. I can go and get that. That targeted. Here's what I need help on. Here's where I'm stuck. And they'll be like, oh, have you tried this? And I'll go, oh, I never thought of that. Genius. And then off I go, and I just keep going and going. And so Pinnacle has been a tremendous, tremendous part of the growth of my business, the growth of me as a business owner personally. You know, I had just come out of corporate and was trying to figure this all out on my own and. And being surrounded by such an amazing community of business owners who are up to some really cool stuff, it lights the fire underneath me to go and do more, because I look at them and I go, oh, that's so cool. I could do something like that in my business. And what I really like about it is that it's a different industry entirely. And I'm able to say, well, how would that look in my industry? And I. You know, it's not the same by any means. It's different, but it helps, really helps with customer experience. If you think of an accounting firm, you think of cfo, you think of. You don't think of this. And we have a really fun. We have very beautiful aesthetic, you know, marketing, collateral, and things in our business, things that I probably wouldn't have. You know, I would have been like, I'm an accountant. This is the way we do it, right?

Yeah, you do it like everybody else.

Which you really need to stand out these days, right? Absolutely.

Absolutely.

Yeah. Well, it's been just so much fun to watch your business really explode and help so many people. And so for those of you that are watching today or listening, whether you're listening to the audio podcast or the video podcast, and you're sitting there and you're like, gosh, I know that I could be doing. Be much more strategic with my money, or you just need someone that you can brainstorm with. I remember just feeling frustrated with my accountant, and I love my accountant. I've had my accountant for a Long time. But I was needing more from them than what I was getting. And then I really realized, well, that's as far as that's going to take me. You know, that that's the lane for the reporting. I really want that strategy. I need to get a cfo.

Yeah, it's totally different skill set.

Yeah. And so we will put your contact information for people to reach out to you. But you know, what's the best way for people to reach you if they want to jump on and have a quick consultation?

Yes, absolutely. So you can visit us at the Cash Flow cfo, Allison, and we'll send you some goodies from what we covered today. And in this conversation, you can schedule an appointment to talk to us and hopefully get some good advice to get you to that next level, your business.

Awesome. So it's thecashflocfo.com.com Alison with two L's, and you're going to get some cool stuff from Andrea and her team at Cash Flow cfo. And I bet those of you that are listening right now, you're like, oh, my God, I need to get my arms around my money. So, like I said at the beginning of this show, it truly is a game changer because if you don't, there's a good chance that your business is not going to make it. And you've worked way too hard in your business for that to happen. We want you to flourish. We want you to scale, and that's what this is all about. So thank you so much, Andrea, for coming on the Scale or fail show.

You're welcome. Thank you.

Been very enlightening and very exciting. So for those of you that have been watching the show for some time and you're enjoying the show, please write a review and share your thoughts about the show for others. And if you haven't subscribed, subscribed to the Scale or fail show, absolutely do it. We are on all platforms where podcasts are, iTunes, Spotify, iHeartRadio, wherever you are to make it easy for you. And if you're wanting more information on Pinnacle Global Network and like Andrea was talking about for your business strategy, Andrea is working on your money strategy. Definitely reach out to us and we will put the information below, but it is supportinnaclegn.com until next time, get out there and elevate yourself because you are worth it.

Bye, everybody.