The importance of financial data-empowered decision making; with Jim Downes of Blueprint CFO

Welcome to The Unnoticed Entrepreneur. This show will tell you how to get the recognition you and your business deserve. Our guests share their practical insights and tools which you can use straight away. Your host is international entrepreneur, podcast host, and author Jim James. Hello and welcome to this episode of The Unnoticed Entrepreneur. Today we are going to South California, Southern California, I should say, to Newport Beach to meet Jim Downs. Jim, welcome to the show.

Good morning, Jim, and thank you for having me on the show. I'm excited to be here.

Well, I'm excited to be in Southern California, even if just virtually. And we're going to talk about the cost of chaos because you have a business called Blueprint CFO, which is, you know, Chief Financial Officer. And you've built this business, which is fantastic, from the ground up. into now having nearly 20 people who are helping entrepreneurs to use data to make better decisions, but you've also built a business as an entrepreneur. So Jim, tell us first of all what you do at The Blueprint CFO.

So Jim, we're an accounting company in effect, but we're a different kind of accounting company because we help our clients use their current financial data to improve the performance of their business in the future. And that's kind of making, you know, what I like to think of it as making accounting relevant because most of the time the financial statements that a client gets put in a drawer and nobody really looks at the data to say, you know, what does this data tell us that we could be doing better? And so that's the whole focus of Blueprint CFO.

And Jim, you mentioned before about, you know, being a rock star. CFO company. And when I look at your website, it doesn't look like an accounting company. You know, normally the Big 4, for example, is all about security and it's about taking no risks and about compliance. But with Blueprint CFO, you've taken a different approach. Do you want to tell us about that? Because it's a little bit more California. It's a little bit more rock and roll. Tell us about the branding and how you've decided on that. Who's doing it for you?

Yes. So we use a young woman named Haley Stern as our marketing consultant. Haley has been working with Blueprint CFO since I started it in 2019. And I think every company that uses a marketing consultant, one thing to think about is, do they really get it? Do they get what you're up to and what you're trying to do? And, you know, I mentioned a minute ago, we're a different kind of accounting company. When we hire new employees, we take a headshot photo of them and put on sunglasses, and we put that on LinkedIn and say, we've just hired another rockstar accountant. And you would not believe it. I mean, you know, marketing is two-way in a professional service firm. It's getting new clients, but it's also getting talented people to want to work for your firm. And so, you know, we have young people wanting to be part of our company because we're unique and, you know, we're cool. We're a cool company. So in all of that, you know, yeah, partially those are my ideas, but also Hayley has been a huge contributor in that, in making our vision, our brand vision visible in our website and all of our marketing material.

Now, Jim, forgive me, but I am going to ask you to mention how old you are and how old Hayley is, because I had Charles Reed on the other show and he's in his 70s, you know, running getpayroll.com and We also had this conversation about, you know, getting out of the way as a founder and letting the next generation build the brand. Do you mind sharing that dynamic?

No. So, I mean, I know we know we're not going to talk about this, but I'm 74 years old. And so I started Blueprint when I was 71 years old, but really I started it when I was about 50 years old, but it went through a lot of iterations and I never really got it right until I came to the conclusion that the timing was right for this kind of service. And I was able to surround myself with young people like you just mentioned that could help me make it happen. Because you can only take something so far on your own. You know, you may have the idea, but if you can't build a team of people that are talented, that get it and want to do the same things that you're putting forth as a unique mission of a company, then you're not going to get there.

Jim, what was the inspiration behind the name Blueprint? As well, because you've always been the visionary, but you've got young people like Hayley, which is, you know, really the way to keep the brand fresh. But what about the naming? Can you just share with us about that? Because that also seems really on point.

So initially, seriously, I was going to call the company Strategic CFO, and I still have that name. I have a company by that name. But at the time I was working with a marketing consultant and one of my former partners, and we were going through discussions about how we're going to help clients. And we kept saying the word blueprint, we're going to create a blueprint for the company. To be more successful in the future. And I came back to them like, wow, you know, we should call this company Blueprint. That it's much more interesting than Strategic CFO, and it tells the tale better in terms of what we actually are doing. So we changed the name to Blueprint, and not to be blowing my own horn, but through our marketing and our ability to reach out and create a brand, we have people, clients from all over the country calling and wanting to work with Blueprint CFO. And also CFOs that are in Florida, in Massachusetts, in different states of the country, way far away from here, they're calling me and want to become a Blueprint CFO. So that's all through marketing. You know, if there wasn't adequate marketing, nobody would even know who we are or what we do.

Jim, I think that's brilliant because that's really what the show is about. Now, could you just tell us about the role that your personal brand plays and the Blueprint CFO, because a big challenge for entrepreneurs when they found the business is that the leads come through their networks. And I really want my fellow unnoticed entrepreneurs to know how to cross that chasm to where the brand brings in the business rather than the individual. Would you mind sharing with us how you've done that, Jim?

You know, I think maybe professional service firms are unique in that they usually do start with one person who's the brand, right? I was working with a business coach at the time when I started Blueprint and I grew it from myself and a part-time accountant when I started it to about 4 people and we had about 10 clients. And the business coach said, well, Jim, what you've created is a pod. And you know, what you need to do now is get another CFO and build another pod and then build another pod. And you, you know, because your goal is to create a professional service firm, right? So it kind of gets to what you were just saying. It wasn't just all about me, but initially when you went on our website, it was all about me. It was Jim Downs, you know, is here and he can help you with your business. And so it was pointed out to me many times, you know, you got to change your website because it looks like it's just you, but now you're really more of a professional firm. So I think it's important to honor your roots though. I mean, I think, you know, what I did, we wouldn't have Blueprint if I hadn't started with my vision of what this kind of company can do for companies. But now in order for it to be successful and to scale, it can't just be me being the, you know, the face of the company. All the other people are the face of the company.

Yeah, Jim, I think that's brilliant. And the way that you've done that and transitioned, can we just talk about the other things that you've done? So for example, you've got a podcast. which you built as well. Could you just share with us the strategy behind that and what you're doing with it and the rewards that you're getting from the podcast?

So the podcast idea originally came from our search engine optimization firm that is working with us to gain visibility on the internet. And they suggested that we start a podcast featuring our clients and talking about their business. Their entrepreneurial journey, and also at the end of the podcast, how working with Blueprint has helped them with their company. And so we launched the podcast probably 6 months ago now. We've probably got 6 or 7 episodes and each one is unique and interesting, you know, in terms of how this person got into business and now they have 100 employees, you know, and they started it, many of them in their garage or on their kitchen table. And they quit their job and started a company when they had no idea what they were getting into. But the really cool part too, at the back end of every podcast is how Blueprint has helped them. And it humbles you when they say what the benefits of working with our company have been for them in running their business.

So Jim is the founder and CEO of Blueprint CFO in Newport, South California. What do you do? How do you help an entrepreneur build a better business through the role that you play with sort of as a chief financial officer, as a fractional one?

So every company has financial statements. A lot of times those financial statements aren't being prepared properly. I won't get into all the details of that, but they're not prepared in a way that's properly matching up the revenues and expenses. So the client really doesn't know if they're making money or not because the accounting is being done in a poorly, poor manner. Let's just say that. So, you know, the first step for us is always to make sure the accounting mix is correct so that we know in a particular time period if the company made money or not. And I can tell you so many, I had a new client came to me a year ago and he was a small company. He had about $2 million in revenue. And he said, Jim, I don't know if I made $100,000 this year or lost $100,000. Well, that's pretty bad. You should know whether you made $100,000 or lost $100,000. And the only reason he didn't know is because his accounting was all messed up. So our initial job is to get the accounting right. And then once we know the accounting is correct, we can look at the different components of the accounting. So one big one, which we talked about pre-show, was marketing expenses. And, you know, how much money are they spending on marketing? Maybe they're not spending enough. Maybe they're not spending anything, or maybe they're spending more than they should and they're not really tracking the benefits of the money they're spending properly. So they don't really know, you know, whether that money is being spent wisely or not. And so it's our job as the financial advisor to delve into that and get into the details and make sure any money that's being spent by the company is being spent in a proper manner that drives profitability.

Jim, I don't get many chances to ask someone in your position this question. How much should companies be spending on marketing? Because it's the great unknown, isn't it? What's your experience? You've got 40, 50 years now running companies as CFO in-house and as fractional. Your guidance would be wonderful.

I think, you know, so every company's different, so it's hard to Say exactly. You know, I always think in my mind that 10% of your sales should be spent on marketing, but we see many companies that are growing that don't spend that much money on marketing. So you kind of wonder if they were spending 10%, what could happen for that company? I signed up a client a year ago and they're a software as a service company. And so they've been very successful and they were spending $1 million a year on marketing. And when you looked at how much they're growing every year, it was about $1 million. So they were spending $1 million to get $1 million of new business. And I said to the owner, I said, wow, you know, that seems crazy to spend. You're really, you know, he said, well, you know, the good thing is when we sign up a client, they'll be with us for 4 or 5 years. So it's really like $5 million I'm getting for $1 million. And he said, well, do you think it's the right number to spend $1 million? I said, well, I don't know if it's the right number. I do know we want it to be more efficient in the future, so we need to start monitoring this and looking at every month, how can we make that better? I know there were things that he was doing just because he was kind of talked into doing things that he wasn't really tracking whether it was working or not. And we found that out over time. So we kind of tweaked that number and got it down a little bit. But, you know, many times companies are just spending money blindly without really knowing what the benefits of that marketing money is. And I think I always tell our clients that they need to track When they get a new client, where did it come from? What was the marketing effort? Was it email marketing campaign? Did it come through your website? Was it a click-through? You know, where did that client come from? Most companies don't track that information, which is kind of, you know, I don't want to say stupid, but it's definitely not something they should be doing. They should be tracking where those clients are coming from and making sure the money they're spending is being spent wisely.

So Jim, That's really interesting because as a fractional CFO, it sounds as though you're almost playing the fractional CMO, Chief Marketing Officer role at the same time. Are there any tools or tips that you can say to us that you introduce to clients to help them with that sort of trackability, traceability of revenue from the marketing?

Well, I guess the number one thing is a CMO. I mean, a CRM, a customer relationship management system. So most companies have a CRM. I don't know if you've heard of that before, but there's salesforce.com or Zoho. There's a lot of different ones, but they don't use it properly. They don't typically keep it up. They don't use the data for anything. They check the box. Oh, we have a CRM, but they really don't use it for, you know, managing and measuring their sales and marketing expenses and, you know, thinking about how they can get more customers and pay less money.

And Jim, is there a CRM?

I mean, so when you said we're a CMO, it's kind of interesting because, you know, we know nothing about marketing. We're not marketing experts in any way, shape, or form, but we do know a lot about data. And so we know there's data there that, you know, should be used to do things better, to do things in a more informed way. And that's our job is to make sure that the company's using data to run their business better.

And Jim, any tools or platforms? You mentioned Salesforce and Zoho, I know. Are there any platforms that you recommend to your clients to use, or those are the main ones?

So this is kind of getting into more of a custom approach, but there's a software that we use called Power BI. And Power BI allows you to bring in data from different systems to create a scorecard. So I get a, for example, for Blueprint, I get a weekly scorecard on our marketing. That tells me how much money we spent last week, how many leads we generated, what the sales pipeline looks like. That data comes from 2 or 3 different systems, our CRM plus our financial system. And Power BI is just one kind of data analytics software that you can use, but you would need to probably, unless you had somebody in-house that can help you put those kinds of scorecards together. So the cool part though is once you set up the scorecard, it's all automated. So every Monday morning I get a scorecard on our operations. How busy were people in our company and Is there slack in the system that I need to fill up? And also I get a scorecard on our sales and marketing. And, you know, just like I tell my clients, that's the data you need to run your business. And most companies don't have that.

Jim, I love that. We used to in the old days call that middleware, you know, software that connected other pieces of software. I'm not sure I use that term very much anymore. Jim, is there anything that You know, without embarrassing, you know, you or yourself, that hasn't really worked? You know, I like to also ask the question for shared experience of something you tried that didn't really move the needle when it comes to getting noticed.

So there's lots of different ways to try to attract customers, or you could cold call, you could do a mailer, you can do email marketing. Last year we launched an email marketing campaign and We were pretty much guaranteed results. And, you know, basically what we're selling is accounting. And I don't think an entrepreneur gets up in the morning and says, wow, you know, I really got to spend more money on accounting because I need to get better data from my accounting department. They don't, that doesn't even hit their radar. So getting an email and communicating our value, you know, to a client through an email campaign is tough. And we just found that, you know, we were spending money and not getting any results. We, again, for similar to how we would tell our clients, we started looking at where our leads were coming from and where we were getting our new clients from. And we realized it was more around the late relationships we had created with other professionals like bankers, CPAs, insurance agents, and business coaches. And so we've transitioned more to thinking about how do we get in front of people and meet them face to face, either at a networking event Or take them out to lunch or a sporting event or something like that. So it's kind of old school, but I think getting in front of people and having a conversation is more powerful than getting an email because we all know how many emails we get every day.

Yeah, Jim, I think that's a really valuable reminder of what some people are calling sort of unscalable marketing, you know, or lumpy marketing as Brad Sugars of Action Coach called it on the show.

When we sign up a new CFO to come on into our firm, we make it very apparent or part of the deal that they have to commit to spending a certain amount of time on business development. Because most accountants don't want to do business development. They just want to do accounting. But it's really important for us. We're more of a consulting firm, so they have to get a little bit out of their comfort zone and get out and meet people and tell the story. We did our quarterly review, how we did in the first quarter of 2023, a week ago. And I told all the young people in the room, you know, our young accountants that if you're in a social setting, you know, ask who's helping them with their accounting. And lo and behold, one of the controllers actually brought in a new client this week. So, you know, it's just starting a conversation.

Yeah, that's fantastic. Well, I was going to ask you for a number one tip, but it sounds as though, Jim, if I was to ask you for the one tip for my fellow unnoticed entrepreneurs, could you say anything else? Or do you think that's it? I think that's it.

I mean, I believe people want to do business with people they know and trust in our business, because we're a professional service firm. If you're selling a consumer product, there's a different story there. But even then you have to have, the customer has to trust that you're going to stand behind your product and, you know, it's been designed properly and it's going to last a while. So there's a trust factor there too, but particularly in our industry, you're an entrepreneur and you have a limited budget of what you can spend on things. And so you don't want to spend money on frivolous things that aren't gonna make a difference for your business. And there's many people out there saying, hey, gimme some money and I will make your company better. And, you know, a lot of 'em don't deliver. So it's tough to develop that trust factor, I believe. And I think listening, like our podcast, listening to the testimonials in our podcast about, you know, real people and how we really help, we really benefit from our service is very powerful compared to some Random email marketing campaign coming in.

Jim, that's a lovely way to close out the show. If people want to find out more about you and Blueprint CFO, where can they find you?

Yes. So go to our newly redesigned website. It was just launched this morning. So it's very, I think it's really a huge improvement over our prior website, but it's www.blueprintcfo.com. Or give me a call on my cell phone, 949-405-5440. I'm always interested in learning about new businesses and talking about how, you know, great accounting can help you run your business better and make more money.

Jim Downs. Now that is old school, giving out your mobile phone number. That is, ladies and gentlemen, that is, you need a one phone number.

Oh, the phone's ringing right now, Jim. I gotta, I gotta go.

Ringing off the hook. So Jim, talking to Jim, thank you so much for coming on the show today, Jim.

Yes, thank you for having me. It was a really fun chat.

It's been wonderful to go all the way to Southern California to Newport Beach, and I envy you near Disneyland, and my daughters will be jealous when I tell them we've been there today. So thank you to Jim Downs for joining me today and the Unnoticed Entrepreneur session. And we will, of course, as always, put his details in the show notes. And if you've enjoyed this show, do please share it with a fellow unnoticed entrepreneur. And if you've got a chance to rate it on your player, because that really helps to let other people know that this is a show worth listening to. And until we meet again, I do encourage you to keep on communicating. And thank you for listening to this episode of The Unnoticed Entrepreneur with me, Jim James.