Become a Fractional CFO: Your Guide to Earning $300-$1000/Hour

Hi, my name is Charles Lykoff and I've helped over 200 financial professionals start, grow and scale a profitable fractional CFO firm. So the next few minutes, I'm going to give you everything you need in order to start offering fractional CFO services. I'm going to walk you through exactly what is a fractional cfo, how to think about your offer, and my favorite way to get clients as a beginner. So with that said, let's dive right in. So if you look here, the first thing I have is what is a fractional CFO? Now, what is a fractional CFO? Oftentimes, companies say you're in the 1 to $50 million a year range, don't have the ability to afford a full time cfo.

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Typically, if you want a full time cfo, you're thinking several hundred thousand dollars a year, hopefully an equity package, hopefully severance.

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That's usually the level of salary that we're looking at. And that's what I've been paid as, as a full time cfo. Now, as a fractional cfo, a lot of these companies still need that level of help, still need that level of financial assistance. Right. That maybe that level of brain power right. Behind making better decisions, however, they can't really afford a full time one.

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If you're doing $2 million a year, if you think about it, even if you have a 10% margin, right, that's $200,000 a year in owner. He's not going to go out and hire a $200,000 employee just to kind of grow that business. But he could probably be helped by someone. Just give him a couple better ideas on how to run the finances of his business. And so that's where a fractional CFO comes in, right? Rent the cfo, fractional cfo, virtual cfo, vcfo, finance consultants, right. They're all sort of terms that people have used to describe most of the time, not all the time, the same role. And here's why that's important. Right. Oftentimes I've said, hey, I'm a fractional cfo. And someone looks at me and they're like, I got an accountant. That's not really what the fractional CFO does. Sure there's some CFOs that have a better knowledge on accounting or background than others, but really you're looking for someone. How can you help a business owner make better financial decisions? Right? How can you put more money back into their pocket? Oftentimes fractional CFOs are dealing with things like budget and forecasts and working capital management, maybe capital raises, maybe selling the business, maybe some negotiation, maybe some commercial terms. Much more of like operating in financial levers and less accounting levers. Now to say they can't be helpful with accounting levers, but the more you get into accounting and bookkeeping, the more you are accountant kind of controller nomenclature kind of applies there. It's really like fractional cfo. So if you can't afford a full time finance guy, but you need the knowledge or the brain of one, you hire one fractionally or part time. So that's where fractional CFO comes in. So let's talk about the next thing here.

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It's like, why do you want to be a fractional CFO?

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I've been a fractional CFO since 2017. I didn't know it was called that in the beginning. But like, here's why we want to be a fractional cfo. First off, when you work a corporate job, you're usually locked in to how much you can earn. So if you've gotten to the stage where you get equity packages in your CFO or your corporate role.

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Your compensation can go up significantly. The end of the day, you're trading hours for dollars. And so when we look at that, it's a good life. Right. However, it's not optimal when you're thinking of how can I work as little as possible while making the best result possible for my employer, for my clients, for me and for my family and for my community.

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There's a different kind of hybrid model. And so if you're a fractional CFO, I've seen earnings at the very minimum $300 an hour, preferably.

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Preferably over a thousand. But I would say minimum 300 an hour. If you're not earning $300 an hour, to be honest, you're making a mistake in either package or pricing. But we'll get into that. So you're making a minimum of $300 an hour, hopefully around $1,000 an hour.

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Should be at 1k per hour. Now that's the first reason why you want to be on. The second reason is most small business owners don't have a trusted advisor that they could go to for finance things. Right. Oftentimes I've sat with my clients and they've told me things or experiences that they can't share with their wife or their husband, sometimes their business partner. Oftentimes you're working in between them to their friends or even other Business owners or employees or customers. Because money can be a touchy subject with people. There's a lot of, like, emotional stuff behind the money part. And so you get to be a trusted advisor to them, helping them make some of the biggest decisions of their entire life. Whether capital raising or whether they're selling their business or want to exit or firing employees. You are essentially helping them make very large decisions and you help them justify them with numbers that hopefully you do the analysis on to create. So you're offering like a very core piece of the entrepreneur experience that a lot of small business owners, frankly, are missing out on. So it's fun. Fun. Wow. I can't spell. Fun and empowering. Empowering, right? So it's fun and empowering. So you can earn significantly more. It's fun and empowering. And unlike corporate, you get to choose destiny, right? You get to choose your own destiny. It's funny, someone commented on one of my videos the other day that I don't know how to spell. Yeah, you're right. Microsoft Excel, I'd never had spell check on. You know, I know all the formulas. I got them all. All memorized though, right? All TSV pay, special values. So anyhow, so you want to be one. It's really the way to. If you're financially minded like I was, I had a corporate job, worked for Siemens, worked for Tech Data, became a CFO of another company. It's the way to put you in the control, the driver's seat of your earnings, your career and your hours. Highly recommended. So that's why you would want to be a fractional cfo. So let's get into the offer details. Like, first of all, offer details. A lot of times people get confused, like, what is the word? Offer. Offer is just simply how you package price, communicate and deliver what you do, package price, communicate and deliver what you do. So offer details how you package price, communicate and deliver what you do. Oftentimes people say, what's the package? Or what am I proposing? What am I supposed to do? And there's a whole bunch of things you could do as a fractional cfo. Whether it's budgets, forecasts, working capital management, right? Doing some M and A, doing some capital raising, helping them borrow some money, right? Whether it's an esop, doing margin analysis, pricing analysis, commercial negotiation, I've done a lot of that. There's a million things you could do as a fractional cfo. There's four things that are important for you to take in mind when you're building your offer, which is what you know how to do, what you like to do, what your client needs and what your client thinks they need. And those are four different things. And I bring those up specifically for this reason. My firm, we handle E commerce entrepreneurs, right? That's what we do. Some of them have nexus in like 35 states for sales tax, which means they have a requirement to file sales tax in those states because they hit the transaction threshold or the dollars in revenue threshold for those states. Now does that mean I'm going to file sales tax for all 35 states for them? No. I hate filing sales tax. I don't want to do that least fun thing that I could possibly do. I don't want my firm spending time on it. It's not ROI positive. It is annoying. I would rather send it out to another firm, refer it out, send them somewhere elsewhere.

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Can I do it? Do I know how to do it? Also? Yes. Do I like doing it? Absolutely not. It's not part of my offer.

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So that's that part. Now the next part also, from a value add perspective, it's not a big value add. It's more of like an admin thing, right. Than a true, like strategic value part. And that's where I like to keep what I'm doing. So that's that. So the next part that we look at is the following. What your client needs, what your client thinks they need. And here's the real challenge with this. If your client knew what they needed, they would have already bought it. Usually you're the financial expert and not them. And so we think about it. Oftentimes a client will come to me for this or for that when really they need something else, like usually a fractional CFO or someone who wants to grow their accounting firm, kind of move it into a fractional CFO firm comes to me and they're like, charles, you know what I need to be able to have more staff? Well, when you really look at their numbers and you break down their financials and you look at their income statement and you look at their staffing and their utilization and everything they have going on, usually they don't have a staffing like needing more staff problem. They have a utilization problem or an hours tracking problem, the next thing they also have is usually a pricing problem. Usually it's not a I need more staff problem.

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Because how do you need more staff when you don't have enough money to pay you at the appropriate margins that you should pay your staff at? And so how I help the E Commerce Entrepreneurs and how I help individuals. You guys start your own firm. Same sort of thing, Right. What you need and what you want are usually two different things. And so you need to be able to package your offer in a way that makes sense for the person who's purchasing it. However, it still gives them what they need because you are, at the end of the day, you're the financial expert. And if you're working with someone as a fractional cfo, my number one belief is you should make them more money than you cost them. That's my number one belief. You should make them more money than you cost them and you should be a creator value, not destroyer value. And you should know what levers to pull for them.

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If you know how to do those things. Yes. Do what's important to them. Right. They want the fancy dashboard. Sure. But you know, put that number two on the list. Put making them more money number one on the list. I believe that's my obligation as a fractional cfo. So that's offer details. Now let's talk about pricing. Pricing is all over the place. I've seen everything from people offering online for, you know, nine, 79amonth, and I've seen people sell it for $30,000 a month. So that's a big gap, Right? Huge gap here, 1k to. And I'm sure there's packages that are even higher than that per month. Now let's break into like, how they even do that. So if someone's charging just $1,000 a month, they're probably acting in a different nomenclature. They're probably not different nomenclature. I think they're usually acting as bookkeeper plus, dare I say, like, hey, I'm a bookkeeper, I'll get your books done, I'll talk you through it, but I won't really provide any high level advice.

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Not high level as in generic, but high level is strategic, impactful. That's kind of the bookkeeper plus kind of pricing.

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And if you're providing real valuable advice and you're only charging a thousand dollars a month and you're reviewing their financials, you probably should charge more. They'll pay it because you should be making them more money than that.

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They should never be like, I don't really want to pay the bill. They should be always very happy to pay you because you make them a hell of a lot more than you cost them. So $30,000 a month, usually that's when you are getting way up on the pricing scheme. Usually you're doing some outsourced accounting at that point, because that time you usually. That's 360 here, right? That's usually W2 territory. So that can be kind of hard. That's usually outsourced accounting. They're buying hours, they're buying labor. I like to put it as me as a fractional CFO is you're buying my brain, not my time, not my hands. So if I can structure something that way it goes, goes back to the offer part. We're kind of giving you some cements here. If I can structure why I'm selling my brain and not my hands, I'm in a really good situation. My hands, even if it's cranking away in Excel for 15 hours a month, like I don't want to do that for a client if I don't have to. If I can make them more money a different way. We all have. It all comes down to being able to provide the value. So pricing I like anywhere between 2,500 to 5,500 to 7,500amonth. There's a really cool pricing model that I call as the upfront pricing model that I can get into here later. But essentially that's allows us to get paid up front for the work we do up front and then collect like a long tail kind of subscription. So if I would think about your pricing, put it to somewhere where they couldn't get a W2 that can deliver the amount of value you can, but also doesn't put a big strain on your team. If you really want to expand revenue per client, think about adding like outsourced services like bookkeeping, tax prep, tax planning.

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Control level work, A R AP that kind of stuff. Consider adding that stuff if you want to expand the scope. But then you become more of like an outsourced service or an outsourced resource, not so much a fractional cfo.

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Are we coating with the mind of building like a big outsourced accounting firm or are we trying to be like high level consultants? And if you look, it's a lot easier to scale 2, 3, 4 fractional CFOs and grow than it is to scale, you know, 37 different accounting staff underneath you. So that's his pricing here. But I like anything realistically. 5k a month is a beautiful number that I love. That does not include bookkeeping, by the way. It does not include taxes, does not include sales tax. Now let's talk about marketing. So 5k equals good. If you want more help on pricing, you can always hit us up profitsurg.com hello. You can talk to our team. We can see what would look like to build something custom for you as far as all this stuff, because we build this out. Now let's talk about marketing. I'm talking about my favorite way to get clients in marketing. So the first time I got my first client, I found her in a Facebook group, right? Her name is Chris. We've been friends ever since. I started working with her in 2017 and I found her at a Facebook group. My wife was like, oh, you know, messages lady. And I was like, no, I don't want to. It's waste of my time. I got a corporate job, I'm all fancy, look at me. And turns out my first client was paying me $7,500 a month after I approached her. So I really like. There's two places for marketing. There's organic. Organic and paid, right? So organic is basically anything from SEO, search engine optimization, right? So like writing blog posts and whatnot, which takes a long time to get going. Then there's Instagram, Facebook, you know, TikTok. That's like making videos, making content, hoping people see it and reach out to you can be done. Takes a little bit of time. However, it's really useful because then you get to learn the pain points and problems of your customers. But it's a little. Usually it's the slower route, the cheaper routes, but it's the slower route and we think of time, value, money, cheaper, slower usually go together. But if it makes sense to pay and go quicker, sometimes it can make a lot more sense. And so there's the paid route. So there's paid ads on Google, paid ads on meta platforms, Facebook, Instagram. I really like the paid platforms myself. You know, I've heard from some people that say paid ads don't work. That's 100% not true. We spend $50,000 every single month on paid ads in this business and in my other business. So helping people become a fractional cfo, growing their fractional CFO skills and acquiring fractional CFO clients where I do the financial for them. Paid ads works for both of those, which is selling an expensive service over the phone for a long term duration where I help someone deliver them value that changes their lives. Paid ads absolutely works. Is it scary? Yes. That's why some people say they don't work because either they couldn't figure it out, they're not good at marketing, or it's just scary. And it's easy to say. However, if you want to grow something large, it's the way to go, right? I don't know too many people who own a fractional CFO firm who are taking 20 sales calls a day from organic. That's a lot of posting. That's a lot of, a lot of typing with your thumbs there. The organic's a good way to start. Dip your toe into the water, get going. As soon, soon as you have enough revenue to be able to dump, you know, 1, 2, $3,000 a month in ads, I would do that. It is so amazing when you can put a dollar in and $5 gets spit back out. If I gave you a box, right? Say, say, say my cup. Here's a box. I got a little profit surge mode. And if I said every dollar I put in spits $5 out the back of this box, how many dollars would you put in? Me, I mean, I would take a shovel and be shoveling cash in as fast as I could. Can I get a second mortgage? Can I get another credit card? Hey, babe, we're going to have to sell the car. Every single dollar I'll be putting into that box. That's what paid advertising does, is the fastest, most scalable way to do it. It can be scary if you've never done it before, but if you realize you put it $1,000 in, $5,000 comes out in the first month, you can get addicted to it. It's fun. So I'll stop harping on paid ads here. The next thing you need is to get your first client is sales, right? And sales to people in the finance world. It's kind of scary sometimes. Here's what I mean. There's two types of sales calls, and oftentimes people get this misconstrued. So there's marketing calls, marketing calls, and referral calls. So a call from you should have an 80% close rate referral call, close rate of 80%. Now, basically, if someone gets on the phone with you and their referral, you would have to offend them for them to not sign up with you, right? So I talk to people. They're like, charles, I am amazing at sales. I go, okay, well, how many calls have you taken from marketing? That is a stranger on the Internet who didn't have their best friend of 20 years who's worked with you for five years, refer them. How many of those calls do you take a month? Usually the answer is zero. And then I asked them, okay, if you never take real marketing calls, you've only taken referral calls. We don't actually know if you're good at sales, right? Because you can roll your face across the keyboard and sign on a referral call, right? As long as you didn't offend them or they're not a good fit for your services, right? If it's a brand new business and you're like, hey, it'll be nine grand a month and you're doing $100,000 a year, yeah, that's not a good fit. You're never going to close that. I don't care how good you are at sales. Like that's insane, right? Unless you're trying to help them raise, you know, $10 million or something wild like that. So referral calls, easy to close. There's like implied social capital exchange. That's why, right? If I As a fractional CFO sends one of my clients to a third party vendor, they sign up 90% of the time because they trust Charles. I'm their fractional cfo. So if I say, hey, go hire this vendor, they're great. Usually they go hire their vendor, that great, right? And some of the vendors I send them to aren't great at sales. So that's that. Now let's talk about sales to marketing calls. Marketing call. Someone knows a little bit about you, right? But they have a need and they want you to f it. So it's usually a stranger, it's usually on the Internet. And you have to take them from understanding that they have a problem, understanding it's a specific problem, understanding your solution, understanding your version of the solution and your timeline and then bringing them over the line and agreeing to your solution at your price for the problem. That is multiple series of beliefs that you need to drag them through and including. They need to like and trust you, your company, your process, slash product, right? With a referral call, they already trust two of those things already being referred to you. With a sales call, they, they don't even understand that, much less know them or trust them and, or agree with them. And so sales, you need to be good at sales. It's a lot easier to sell fractional CFO than a lot of other things that I've sold. However, you need to be good at sales if you want to sign on clients regularly. And so again, we teach that in our programs. We have digital products, we have a coaching program. You can check it out profitsearchgroup.com but one of the things I want to talk about here is you need to have a good sales process. A good sales process. Now. Well, most times when people have a sales process, they have the initial quick Discovery call. Then they get financials and they go over it with them on the next call. And then they have an engagement letter or a proposal or vice versa, whatever. And one sales call can turn into three, four or five. That's a bit much. That is a long process. If you have a good sales process, you should be able to turn someone from stranger into customer and collect a credit card number at the end of that first call. I oftentimes sit with my clients who I help grow their fractional CFO firm and they have a four call sales process. And I try to explain it to them as like, all right, you're limited on time, you're growing, you got a family, you want to get new clients. And you're like, all right, Charles, show me how to get a get one sales call day on my calendar. Just one a day. Meanwhile, like we take, you know, 10 to 15 a day, right? Last year I took 1360 sales calls. That's five every single day for an entire year. So I've, I've gotten pretty good the whole sales thing. And that's a one call close, by the way. And they say, Charles, I got this four call sales process. I want to call a day. So it's like, all right, well there's five days in a week. So there's five calls a week. Each of those calls takes four calls to sign on a new client. So you want to go from selling five hours a week to selling 20 hours a week to get the exact same number of clients you sign on. That's why we can't have a four call sales process. Right? You just don't have enough calendar space there. You don't want to be taking sales calls at 9pm for the third follow up for someone who probably won't work with you instead of eating dinner with your family. 4 Call sales process does not work.

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If you are the true authority in your field and are a trusted advisor, you can take someone from stranger to understanding their problem, understanding the solution, understanding your solution, your way of doing it, trusting you, signing on and giving you a credit card so you can get going with them to get them out of their problem all within an hour. That's what being good at sales is. And so appreciate you guys being here. That wraps up our video today. So if you have any questions, you could do me a favor, reach out to me on via Instagram, LinkedIn, wherever else. If this has been helpful for you, do me a favor, check out some of their other videos, share this with a friend. And again, if you want to learn how to start, grow and scale a profitable fractional CFO firm, check us out@profitsurg.com. i'll see you guys later.