240 They Pivoted to vCFO - Here’s How It’s Going

You ever dreamed about just trading it all in for just doing the CFO thing all the time? Or even running a little firm that just does the CFO thing for like a few different companies? That's what this person did. So what's life actually like when you're running that firm? Was it a good decision or not? They shared a whole bunch of details with me. We're going to go through it, see how it's actually going and a few tips for how to make the most of it. This is a Roast yout Firm podcast edition. Come on in. Foreign. So if you watch my main YouTube channel, you're familiar with the format Roast Affirm. Folks anonymously submit a bunch of details about their accounting firm to me. From how much money they make to the team size to what's going well. What's not going well. We share all that along with a few ideas for what they could improve upon. Like ideas for how to overcome those, those pain points. And it is a very welcome break from thinking about your own firm all day long and be able to put like the advisor hat on for somebody else. It's actually really funny. When you exercise that muscle and look at somebody else's firm through like a clear untainted perspective, it's very easy to spot. Oh well, you ought to be doing this or that right? When it's our firm, that can be much harder to do. But this whole exercise of playing coach for somebody else, it's interesting. I actually think it makes you a better, a better runner of your own firm. So bunch of info about this firm. I'll put a link in the show notes. Anyone can anonymously submit information to me about their firm. You don't even have to put any identifying information about yourself on there. I don't need to get in touch with you anything like that and I might just roast yo firm. Okay, about this firm. All they do is VCFO work. So like advisory work for other businesses. They do about a quarter million a year in revenue. A pretty, pretty good sized market. They have one part time contract accountant that's remote. That's the only other employee. So it's the owner and then a part time contract accountant. No specialization right now, but moving towards service based companies. Is service based companies a specialization in terms of the annual cycle? There's not a ton to it. They said if it has a government deadline they don't touch it. So their client cadence is usually quarterly or monthly financial meetings with clients with check ins. Either weekly, semi, monthly or monthly. Pricing varies anywhere from 500 bucks to 10k per month, with that generally coming in between 2 and 3% of revenue. Their new minimum is thousand bucks, median is 1.8. Clients are billed upfront for projects and implementation and then ongoing work is billed either monthly or bi weekly. Sales and marketing looks like pretty much just personal referrals. They send a calendar link for the initial meeting that asks for some demographics, company revenue, their budget, few other things. Initial meeting is 30 minutes to an hour, mainly listening to their needs. Then they request access to their QuickBooks or Xero and they review a file with a proposal for three different options. They go over the proposal live on Zoom and send an Ignition engagement letter when they agree to a proposal or one of those tiers of the proposal tech stack, mainly QBO, Ignition, Fathom, Fathom's a reporting platform and Office 365. The workflow they've settled into. They will generally wait for the client's bookkeeper to let them know when everything is ready to start their process. So they're starting after the month end close is complete. They have access to QBO and usually have read only access to the bank occasionally access to other one off things as needed. The accountant this is their their part time on staff contract accountant will review financials and prepare agendas. Then they'll meet with the client live. I think that's like Zoom or something. Not in person necessarily pains capacity. They said adding a CFO is hard. They're expensive and at high risk of getting hired by a client or starting their own thing. But what they enjoy is the biz dev side and taking Fridays off. What a show off. They also enjoy managing people. It's easy whenever I'm doing these sort of roast things where they give you bunch info. It's easy to give like jump straight to general advice of general best practices for a firm and like usually probably 75% of the time the general advice is fine. But the one thing you don't want to cruise past is what does this person actually enjoy and what do they not enjoy? Like what are the things that are giving them energy versus the opposite because we are more I would argue energy limited than we are time limited because the stuff that we like gives us energy does not feel like work and we can kind of do until the end of time and do it productively at great lengths. The stuff that is soul sucking. We're wildly inefficient at it. It's just not fun. So I don't want to cruise past what they're enjoying. The biz dev Side taking time off, so having some flexibility and managing people. Interestingly now this person previously worked with like regional firms doing the normal kind of coming up through big firms sort of thing before going off and doing just their own CFO work. Three, three kind of tidbits, takeaways for me of how they can continue potentially developing the company. I try not to say grow cause it doesn't need to grow necessarily, but developing the company on a path that ought to be enjoyable for the sort of stuff that they're into. Number one, if they love the biz dev side of it. This is actually something I've been learning a lot more this year. There's a real business to be built just around doing things that we typically think of as being biz dev. So if you can become a sought after person in a space, there's actually decent money to be made doing, speaking, doing webinars for groups, training, that sort of thing. A lot of stuff that we normally think of as traditional biz dev. And so if that's what they really enjoy, let's find a way to marry biz dev with stuff that will raise their standing. Because a business where you're doing all the advising work and it's not clear if they want to be doing the advising work until the end of time or if they want to pull somebody else in. But a firm of this size, you're ultimately only going to make money to the degree that folks will put a premium on you specifically. So if you are just some person who's taking like peer network referrals, which is where they're at today, honestly, like that's the floor for this kind of thing. You can only go up from there if somebody's buddy is telling somebody else to come work with them. Like that's pretty good social proof. And you can still build a business around that. But that's far from being like the sought after person in a space right, where you can command really high rates. And being able to command these rates also solves other problems like it being hard to hire another cfo and risky because that CFO may go work for somebody else. That CFO is only going to work for you if you're the best deal for them. Like that's, that's the deal. Anytime you're paying somebody to work for you, you have to be the best thing for them. And if there's a fear of that CFO going and taking a job with a client, which I can understand, then it just means that's a fundamentally better opportunity for them. Right. So how do I make my firm the best opportunity for somebody like that? Well, I probably need to pay them more than my clients can afford to pay them. And we ought to be able to do that if this person is managing a number of a number of projects. But the more we can get paid for those projects, the more likely it is I can hang on to the CFOs that I bring into my firm because I can pay them better. My clients can. Right. But again, the whole question of how much they value what your firm does comes down to in this case, what is the perceived, you know, prestige or quality of the work that you do? What is your standing within a specific space? And the more specific the space, the easier it is for that standing to get higher. But tip number one for me is like just honestly doubling down on that biz dev stuff that they love. This episode is sponsored in part by Live flow. The spring G2 little award badges just came out. You know G2 like the software platform review platform. What the software review platform is going to read you the the spring Little award badges that Liflow won. Leader. That's all it says. Just Leader. Spring 2024 Next one Best Estimated ROI Best Usability Most Implementable Best Relationship and Momentum Leader. All those just from Spring 2024. Liveflow. It takes your QuickBooks data, syncs it out to Google Sheets or Excel, whichever flavor you prefer. And obviously the kids are loving it cause they're burning down G2 big news lately is they now support Excel. Sweet score. Huzzah. And shortly before that they released consolidations, the ability to roll up different company chart of accounts. Like whether they have matching chart of accounts or not. They give you a super straightforward way to consolidate those things. Man, when I was running a firm we had like 20 plus company consolidations that were so much bloody work to roll up. We actually stopped doing it monthly because it was just taking so much time. And we said we're only going to give you the consolidations quarterly because we can't be bothered to do it. This makes all that way easier. And because it will actually sync that data out like live in real time on an ongoing basis. You can even do some cool like near real time consolidated stuff. Pretty wild. Learn more about this one. The link in the show notes this episode is brought to you in part by TeamUp, helping you recruit top Filipino accountants without any ongoing monthly fees. The difference between team up and all the other offshoring options. The team up helps you hire staff directly. No middleman. You work directly with Your new hire in the Philippines. Hire the person, not the company. Guys, gals, gang. Here's just a few reasons to hire directly. You have access to higher level talent. Makes sense. You have complete control over team culture and training. They keep 100% of what you pay them and it's a lot more affordable for you. 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Check out the link in the description to learn more about Timo. One thing I've learned doing more speaking is the speaking thing can kind of compound because you go and do an event and if they like you, they want to have you back again. But also when you go to an event, there's a whole bunch of other people there that run events and even if they aren't, they're live. The folks that run events talk with other people that run events and that stuff can kind of snowball and you can make like okay money doing speaking. And so if you can pick up a little bit of steam here, there's going to be an abundance of folks who would happily come and talk about the same sort of stuff that you advise your clients on. And all it takes is one person in that audience being impressed by you for you to then land an engagement that can pay better than any of your other engagements. But that doesn't happen unless you're visible. And getting out in front of people, obviously social media, you know, YouTube, podcasts, stuff like that, there's a lot of ways to do that. But if this person loves the biz dev stuff, the glad handing, getting out there in front of folks, hit the circuit, get out there, do some speaking. Second tip, and this one's probably pretty obvious, do whatever we can to work towards a specialization. Right now they don't have one. They said they're trending towards working with service businesses. But while maybe that's a specialization, that's better than nothing, I think these days we really need to be thinking along the lines of what folks would have said in the past was micro niche. Micro niche, just being very, very specific. Like if dental is a niche, I want to go a step or two further than that. Who are the people serving the dental ecosystem? You know, dental practice management, software companies, dental lab companies. I want to go several layers deep because the Internet and the fact that now anyone can be in touch with anybody else, as we talked about yesterday, has made the world much, much smaller. So the size that a market had to be in the past to build a sustainable accounting firm on, it used to have to be much, much larger than it has to be now because it's gotten so much easier to find people with specific pains. And, and that version, that super niche version is better than the kind of niche version because the super niche version is made up of more rare pains. And the more rare the pains are, the more people will pay you to solve them, assuming they have the money to, to pay to solve them. How many dental accounting firms are out there? Right, Loads. Tons and tons and tons and tons. So while that is better than a totally general firm and a possibly a necessary intermediary step to get to an even more niched firm, like if you're doing something in the dental space, maybe you can't skip going through dental and learning all that. We should be pushing to get more niche. So like service service businesses. That's not, that's hardly even niche to me. Definitely not micro niche. This is actually probably my, like if I were going to be the one to do the client work, this person's setup is pretty close to my dream setup. If I were to build another firm, I probably wouldn't be in the client work from day one. I'd be building a team to do all that stuff from the beginning. But if there's a version of a firm that I ran where I did the client work, it would probably look a lot like this. And my path towards making this fun and super profitable would be becoming the very best of the best within an itty bitty space. And the smaller the space you're going after, the less incredible you have to be. So let's try to find a specialization to begin working towards. And again, specialization is a massive spectrum and you can't just skip straight to the end. It's something that is just a process that you're always doing, getting more and more specific in the pains that you solve. You don't niche down and then stop. It's a spectrum and something that is always a part of how you go through your professional career learning more and more specific pains and rare pains that you can solve for folks. And this pairs really nicely with the notion that they enjoy. Biz dev conferences are developed around crazy specific things. So if you can like become the go to person in that itty bitty space and go to all those conferences for that very specific thing and become that sort of little micro celebrity, that's a way to build a super profitable version of a VCFO firm. This is the case with, with, you know, any type of specialization, but especially so for VCFO work. Make sure it's a space where people have money to pay for what you do. Most SMBs don't have the money for a CFO and probably like should not be spending their money on a, on a cfo. And this is where VCFO firms can come in and provide that service to, to companies who aren't quite of the size where they can justify a cfo. So be sure you're targeting companies you know large enough and companies within a domain where they're going to actually have meaningful cash to spend on. What are rates that right now are like rates you aspire to be able to command? If right now your people can, can barely afford what you do, there isn't really any, any room to grow, right? And that's not just a problem for this firm, that's a problem for, for any firm. If you're thinking about where you're going to be three years from now and you're already pushing the limits of what your clients can afford to pay, you probably got to start getting creative and sometimes you can do that by even reframing what that spend is. For example, we came in and started doing like back office support for companies where they would normally hire staff to come in and do that in house. And so we would actually benchmark our fees against FTEs. So when somebody left, usually they would pull us in and then when the next person left they'd probably pull us in further. So sometimes there's a way to kind of kind of game that where it's something that a person would otherwise be doing. But let's marry the fact that you love biz dev with the fact that specific biz dev can take you down a path to specialization with like in a perfect world, personal interests you know, you like taking those Fridays off. What do you do on Fridays if it isn't family time? Like, what hobbies do you have? I'm a big advocate of following what you enjoy. I do not subscribe to the notion that you shouldn't make your hobby your job. I think that's born of an era of employers who want to kind of like suppress employees and keep them working and normalize the fact that work should be suffering. It's like, man, we only got so many years on this planet. Nobody's going to look back and be like, I'm glad I didn't follow that thing that I thought I loved. You're probably going to find more stuff that you love and you kind of just got to trust that as opposed to sitting there and like toiling away until the end of time just dreaming about going golfing or going to the lake or something like that. Find a way to marry that with, with like what you're doing and then your work doesn't feel like work. Then the people that you're hanging out with like it's stuff that you totally geek on. You go to a conference that's all about something that you're like, man, I stay up thinking about this stuff at night and you're gonna be like a kid in a candy store at this conference. Like, what a great way to approach work, right? Doesn't get any better than that. This episode is sponsored in part by Melio. If you have small business clients, and I know you do, you know just how hard it is for them to track all their payables and receivables, especially when they're doing doing it manually. Now there's an easy to use solution that turns all that tedium into an easy task that only takes a few minutes each week. 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To ensure a smooth onboarding process, I'll put a link in the Show Notes where you can sign up for that webinar and get to know this platform. That's a game changer. Spots are limited. Make sure you claim your seat asap. Thanks to me. Leo, check out that link to the webinar down in the Show Notes. This episode is sponsored in part by Cloud Accountant Staffing. Tell me how this resume sounds. Graduated with an undergrad in accounting in 2012. 14 years experience now the last five with US public accounting firms. Software experience QBO, Xero, NetSuite bless your heart bill.com stripe shopify, Gusto Justworks rippling full cycle Accounting Oversaw the monthly close and review. Onboarded new clients, coached and trained staff. Oversaw a small team of bookkeepers getting stuff done. Not bad, huh? That is a real resume from Cloud Accountant Staffing. A super talented accountant in the Philippines that could join your team. Not this person specifically because this ad read might be old, but to find the accountant of your dreams, all you gotta do get on the horn with cloud Account staffing. Talk about what your needs are. They've got recruiters on the ground in the Philippines. They'll find you somebody great. You get some resumes, you do some interviews. You want to know the wild thing? You don't pay a dime until you decide to hire somebody. Literally. What do you have to lose? The only reason you're going to end up cutting a checked Cloud Accountant staffing is if you got somebody that you absolutely love. So why not? I shared before I hired a bunch of people in the Philippines. Completely changed how we approached staffing our onshore firm. Give it a try. Link to Cloud Accountant Staffing in the Show Notes Third thought, last thought I had here is right now this. The way they're advising feels maybe a little expertise laden. Expertise heavy. So let's challenge the notion of, you know, here's my expertise. And right now you can sit down and do this stuff very comfortably, you know, across the table or on a zoom with the client kind of just by the seat of your pants because it's something that you have a bunch of experience with. But the more you can codify what that advising looks like and standardize even parts of it, the more you can de skill those parts of the engagement. And descaling those parts of the engagement means you can pull in more like staff level accountants like you know, start to hire a team offshore to do some of the grunt Work and a lot of the legwork to prep for meetings, that sort of thing. And just like reviewing a month end close or preparing a tax return, the notion of deskilling that entire thing and just getting some entry level person to do it all, like that's not realistic, right? But the fact that you can't get somebody to do the entire thing is not a rationale to not try to deskill as much of that process as you can. And this comes easier for some people than it does for others. The ability to communicate and make into a framework some of those things that you just know, like there's a progression of you're learning that thing to you now know that thing to you can now create a framework for that thing that other people can lean into. Right? And that's kind of the next step after you are the expert is how do I scale my expertise and make it as turnkey as possible for other people to at least do a part of it? It's probably unthinkable, this notion that you could have this very like literal physical location where they're making all these different menu items. And to think that you could pop up another one of those things in another part of the country or on the other side of the world with completely different people, completely different cultures, but still be able to somehow deliver like a consistent experience that felt true to McDonald's, like that's pretty wild, right? And it's certainly not to say that we're going to get there, but the, the notion that it can't be done at all puts all of the weight on your shoulders and on other CFOs shoulders. So I don't know what the ultimate right ratio here is of team members and what their inputs are to an engagement, but if right now all they have is like a part time contract accountant to review the bookkeeping that the company already did to make sure it's right. But then everything else has to be done by CFOs and the next hire has to be another CFO. That seems a little top heavy for me. Where man, like man, surely there's a way that we could pull somebody else into the fold here to do a bunch of the prep work. So the CFOs are still doing the client facing work and taking those calls. But we can pull, you know, new team members in to do more of the grunt work. We did an episode recently on, on deskilling work, how we can actually pull admins and entry level folks into complete parts of jobs that are normally done by, by Highly skilled people. If you're on the YouTube version of this, I'll link that deskilling episode at the end of here because I think it's super relevant. But that's kind of the secret to scaling just about anything is turning your secret sauce your 21 herbs. And what is it? Is that KFC? 21 herbs, seasoning and spices herbs. I feel like when I do things like this, it just enrages. There's like 10% of people who are just enraged. Or when I'm like, in New York today, city of brotherly love, and I'll just cruise right past that, and there's somebody sitting on their elliptical that's just enraged. I can't remember what the KFC thing is. All right, but that secret sauce of your firm, building that into a system where more of it can be done by anyone, that's like the dream. That's. That's like building an actual asset in your firm, rather than it just being you doing work. To have a process that's still going to require you. And it's not that somebody else is going to be able to do 100% of it by any means, but let's start with 5% and then 10, and then 20 and then 30. How do we pull more of those people into the process? There was a time where this was my dream actually to go out. I was like, I got super burnt out on tax work, knew that I didn't want to do bookkeep. Bookkeep bookkeeping stuff and was like CFOs. That seems really impressive. Also the fact that they can command way more in fees than I could for my accounting or my tax work, there's always an aspect of jealousy there as well, where I'm like, man, if I just want to go do my own solo thing that I could make good money doing without a whole ton of work, I'm just gonna go be a few companies CFOs. In fact, I knew this. I knew a guy that did this growing up, and he called himself an accountant, but he was really doing, like, VCFO controllership stuff for, like, three companies at a time. And he worked from home. And that just blew my mind as a child. I was over at their house one time, and I'm like, he just sits here at his computer. He gets to work from his house. He doesn't have to go to an office. That's incredible. And I just thought he had the dream gig because he had, like, three companies paying him half salaries. And I'm like, well, I can do the math there, man. That's like. That's more than one salary. I used to be so impressed by that. And I think there's no. No matter how big you get, there's always that person inside of you that's like, yeah, one day, what if I just stripped it all back? What if I just cut all the fluff here and I just. I bet I'd make the same money with. With a firm that's half the size. And the answer is, you probably would. But we all have that, like, voice inside of our heads. It's like, what if I all just. What if I just went back to it all being me? Just me and one person doing the grunt work? I would argue this person's actually done that. I don't know that they ran a firm before this, but they came from. They came from. From bigger firms and went out and. And did their own thing. And it sounds like they're taking Fridays off, so what the heck are we doing giving them advice? Did you take Friday off this week? I sure didn't. Okay, well, that's probably the big lesson to take away from here. Go launch your own VCFO firm because then you can have Fridays off. Right? Okay. You want to get your firm anonymously roasted? There will be a link in the show Notes where you can submit a few details, and I could potentially cover your firm in the future. Any advice or thoughts on this firm, pop them in the comments.