This Wall Street finance secret lets my clients afford boats in Florida

If you are a small business owner and I make you an extra, let's call it $200,000 a year, would you be okay paying me just $5,000 for that? It's kind of a good deal. You made $200,000, I made $5,000, right? So you're up $195,000. That's an easy deal to make. As a fractional CFO, it is your responsibility to help small business owners do a couple things, right? I'm not going to go spend $200,000 in inventory and 6 months later have the bank say, hey, you know what, I'm gonna come take your house because you can't afford the inventory. So people have real fear, real problems, real challenges, and if you're able to budget and forecast out how much is coming in every single month and how much is going out, you're going to be able to significantly help them over a period of time. This is the most important thing when acting as a fractional CFO. It's really peace of mind. So when you're looking about peace of mind for your clients, there's really 3 things that you do as a fractional CFO. There's help them make more money, there's help them keep more money, and there's help them understand their money. If you're a small business owner, you've got all these different things that are going on. You're hiring people, you're firing people, you're paying inventory, you're collecting money that people owe you, you're paying money that you owe people. There's a whole bunch of things going on, and you have what's called open loops, right? You have a problem that's open that you haven't solved, that you haven't open and you need to close them. And so what ends up happening is you have a significantly higher amount of stress and you don't really know what to do, and you can end up kind of spinning in one direction and not really going where you need to go. So as a fractional CFO, it is your responsibility to help small business owners do a couple things, right? And when we talk about understanding their money, there's a couple things you need to help them understand. One of them is helping them understand where their money is coming from. So how we do that is with a budget and a forecast. We predict how much money is going to come every month for the next 12 months, and we break it down based upon the categories. Revenue is the amount of sales that we get minus the cost of of it sold, service cost of revenue, whatever we want to call it. That's how much it costs us to do the thing. That leaves us with gross profit. After gross profit, we have selling, general, administrative, which is all the kind of other stuff that we can't directly attribute to the cost of the product. And then after that, we've got typical interest or amortization, depreciation, right? The other kind of things that are like non-core business that end up happening anyhow. And then that's left with how much money that we actually get to keep at the end of the day. And so when we look at that, right, if you're a fractional CFO walking someone through an income statement, helping them understand those things, not just what happened in the past, but watching what's going to happen in the future, not the next 30 days, but the 30 days after that and the 30 days after that until you can show someone every month for the next year how much money they're going to be making. If you can give them that peace of mind, hey, you know, I can afford to hire that new employee, I can afford to pay for that new inventory. I'm not going to go spend $200,000 in inventory and 6 months later have the bank say, hey, you know what, I'm going to come take your house because you can't afford the inventory. So people have real fear, real problems, real challenges. And if you're able to budget and forecast out how much is coming in every single month and how much is going out, you're going to be able to significantly help them over a period of time. Now, Now, if you're a fractional CFO, that's called a budget and a forecast. Now, if you're providing a budget and forecast services, that's one of the things that you should be doing that small business owners absolutely need. And if you can do that, you're going to help a small business owner earn significantly more. If you can help them earn significantly more, all you have to do is get a little piece of that for yourself. So if you make the whole pie bigger, just having 5-10% of that for you. If you are a small business owner and I make you an extra $200,000 a year, would you be okay paying me just $5,000 for that? It's kind of a good deal. You made $195,000, I made $5,000, right? You made $200,000, I made $5,000, to make. So that's one of the easiest ways that you can be a fractional CFO is you can help people earn significantly more in that way. It's helping them understand their money with a budget and a forecast. A budget is the first version that you set for it. A forecast is you recreating the budget every single month for the next 12 months. Don't get caught up on the details. That's one of the most important things you can do as a fractional CFO. Now, one of the other things that you can do as a fractional CFO is we talked about the budget, but let's talk about how to turn— like, actually, we forecasted out what's going to happen, but how do we actually pull a lever and get someone to make more money in their business? What do we have to do? So there's something called working capital. Working Working capital is accounts receivable, meaning money that people owe you, accounts payable, money you owe other people, and inventory. Inventory is the widgets you have to sell, right? If I were to take off my shoe and say, this is, this is the shoe that I'm selling, how many do I have? And so when you optimize working capital, it's how much money does it take to like run the business? Like how much money do you actually need to keep in it to like keep it alive, right? Do you keep $50,000 or $100,000 or $500,000 in their checking account? Who knows? You can help them figure out as a fractional CFO. Now one of the easiest ways to do that is if the business needs $100,000 in their checking account just to run bills coming in, whatever else, if you were able to cut that number in half, what you are able to do is you can help that business owner write himself a check for $50,000 or $100,000 by cutting that number in half. How do we do that? Well, accounts receivable, we need to collect sooner, right? And you can help a client do that. Accounts payable, you want them to be able to pay later. And inventory, how do we have the right amount of inventory? People often ask me, Charles Leikauf, like, how do you manage inventory? Well, it's kind of simple. It's how much sales have you forecasted? Remember, the forecast is the important part first to be coming. Okay, well, we're going to buy the amount of inventory that is forecasted to sell, not what's sold prior, but the amount that forecasted to sell. And so when you look at that, that's an easier way to, to optimize working capital. So if you spend some time on AR, AP, inventory, budget and forecast, you're able to help clients make more money, keep more of their money, and understand their money. If you can do these things, you can be a fractional CFO. That's one of the most important things that I highly recommend that you get good at. We have tons of trainings called CFO Mastery that we can show you if you ever want to go through any of our details. That's what I highly recommend you get into if you need more help doing any of those things. Hi, I'm Charles Leikauf. I own Profit Search Group. I'll see you on the next one.