Why Your Business Needs a Fractional CFO with Kim Murray | S5E5

Welcome to Rev Up Your Business with Hilda Gann. We are now in Season 5, and we've changed the name and the focus of the podcast. Rev Up Your Business is the podcast for small to medium-sized business owners, entrepreneurs, and HR professionals. Each week we share tips, strategies, and trends on how you can build success in your business. I share my expertise as a people-centric leader in work culture and human resources. My guests share their expertise in human resources, marketing, sales, finance, IT, leadership, and the multiple facets that you need to take care of your business. If you love to learn and want to find out how you can rev up your business, join us. Welcome to another episode of Rev Up Your Business. Today, my guest is Kim Murray. She is the CFO of Flexify. She's not your typical CFO. She's a strategic leader and a passionate advocate for maximizing impact in the business world. She's got 20 years of experience and started out in South Africa. But she's been here in Canada for over 12 years. And she's worked in a multitude of industries such as edtech to travel and from creative agencies to interior design. And she showcases her adaptability her flexibility, hence I think the name Flexify comes from that, for delivering value across the board. She's a real strategic thinker and she does it with heartfelt purpose. This is what sets her apart from the financial world. Welcome, Kim Murray.

Thanks, Hilda. That's a wonderful intro and thank you so much for those kind words. And I am very, very excited to be here.

Great, thank you. Tell us a little bit more about your business, and then what is a CFO?

Yeah, so my business Flexify is a fractional CFO offering. So a fractional CFO is somebody who takes that lens of being a CFO. They come with all the experience, um, as you mentioned, I've got over 20 years of experience but we are able to take our time across various companies. So for instance, I have between 7 and 8 clients at one time, and I am able to spread that across those different clients and help each one in a very different and unique way, but bringing the same experience but at a fraction of the cost.

And that is the word, fraction.

And yeah, fraction is definitely the keyword here. It really helps leverage those companies that you know, need that strategic advice and that experience but can't necessarily afford the large, you know, payroll bill that would come with a full-time CFO.

Yeah, and at certain stages of a company, they don't need a full-time CFO, but they get the value of that strategic thinking, that years of experience, that holistic approach only when they need it. And hence the other part of fractional is only when you need it. You don't have to pay for it while there's idle time. And it gives you the challenge to work with multiple people using your brainpower, but it also gives us as business owners that opportunity to get that expertise, get that ability to strategically think and build your business at a price that's affordable. For people.

Yeah, 100%. And, um, I'm even seeing it in the mid-range kind of companies as well. It, you know, it's so efficient. It's an efficient use of time. So I'm not paying for somebody just to sit there and pop up when I need. I'm paying them to pop up when I need. So a little bit of a different mentality there.

So you just mentioned it's not like people don't need to think about it— well, I can't afford that, or I don't need that. When would be that ideal time to consider bringing in a fractional CFO?

Yeah, this one is an interesting question. There's a couple of times that I would recommend it. So, you know, perhaps you've reached a revenue ceiling of about $1 million and you're looking to grow. How do you do that? What are the right choices? Looking at budgeting, forecast modeling, so that you can really make that decision, um, of, of those next steps. I have also had where it is complete startups, right? So they have potentially received investment from a VC firm or investment investors, and they have had to manage those funds quite carefully. Sometimes, you know, it is a lot of money, and so really just keeping an eye and making sure that those funds are spent well. And then I guess it is also just maybe perhaps you need to go and raise funding, or perhaps you need to work with a bank to get funding or those type of things. So really, it's when something is a little bit outside of your lane of genius, um, and it's a little bit outside of perhaps a bookkeeper's lane of genius as well, um, and it's that, that next step of, um, you know, where we can really make an impact.

Yeah, you know, I'm thinking we jumped right into talking about CFOs. And maybe we skipped a few steps for some people as, you know, maybe newer entrepreneurs and business owners. People, when they go and they get, "Oh well, I want to start a business," and they go to the local community service supports and they get that opportunity to, you know, learn about what do I need to start a business. And they talk about finance. And usually, they talk about bookkeeping. And accounting. And now we've gone and leaped, leapfrogged, and talked about CFOs. So let's dial it back a bit and help people understand what's the difference between a bookkeeper, an accountant, and a CFO, and at what stages and, and for what reasons do you need each of these roles?

Yeah, that's a great question, and I get asked that a fair bit. Um, so a bookkeeper is really that person who is very detailed, very transactional, every day, you know, on your bank, reconciling, doing invoicing, AR, AP, those type of things. So really just diving into the transactions, but not able to maybe perform reporting functions, to dive into what those mean, the numbers, that type of thing. So a little bit more transactional view, getting things done. Then if you were to move to sort of that controller level, that's where they would potentially be able to do a bit more reporting, a bit more analysis, perhaps as grow, you've got a team that they would be helping with, perhaps you've got audit functions that need to be dealt with, bank relationships, those type of things. So that little bit more senior, still what I like to call rearview looking, so still on the reporting of what has happened. And then that CFO kind of kicks in at that point where, as I explained, it's a very forward-looking approach, very strategic, budgets, forecasts, cash flow, you know, fundraising and any other challenges or that come up that maybe are outside of the, the realm of just pure numbers.

Okay, that, I mean, that helps. And I know you mentioned like bookkeeping every day, but for some business owners, they can kind of keep a track of it and then at the end of the month give it to a bookkeeper, and the bookkeeper then gets your books processed for that particular month. So you can see your sales, you can see the expenses, and you can see the profit that you had. Share some tips and strategies for, you know, relatively new startups, and, and what about the company, um, that they need to do to think about as they're beginning to look at the finance aspects?

Yeah, this one's a very important one, and I think there's a couple of sort of best practice, if you like. So stay on top of your cash flow. So whatever model it is that you have or, um, that you are looking at, understanding what cash you're coming, what cash is coming in, what cash is going out. I would typically recommend about a 16-week rolling forecast, and this will just give you a peace of mind. Uh, yes, I've got payroll covered, or I'm going to be able to pay, you know, Bob next week. And it really just actually is one of the biggest sleep-at-night tools that I can say really helps. Um, the other part of this is, um, another tip that I've definitely would suggest is decide if you're going to go with a bookkeeper or not. Perhaps you're going to dabble in it whilst you're growing, and then you pick a bookkeeper. Just make that decision. Whatever you do, stay on top of your books. So making sure that you have financial information, uh, to be able to report on. With that financial information, picking a few KPIs that are important to your business. So for instance, if you're a professional services business, perhaps that's a staff ratio or a utilization ratio, or a gross profit margin ratio. And what I would suggest, only about 4 to 5, otherwise it's completely overwhelming. But really, really, really monitor those, track them. They are red flags. And make sure that then if you see the red flag, that you action it. And I think lastly, just a tip that I received in my own business and in my own life was fail fast. And often we are so afraid of failure that we'll keep pushing at something that isn't right for us. Trust your gut. Fail fast. Make those decisions quicker than you would like to. They're uncomfortable, but they will save you a lot of time and a lot of heartache. So for instance, if you've maybe hired somebody and you've got a weird feeling, or maybe they're not producing the revenue that they thought— you thought they were going to be able to bring in, make a decision and stick with your gut on that. I've seen it too many times, and it's something that I just really highly recommend startups.

I like how you say that fail fast because it's so true. And you gave an example from HR. So, I probably should add to that. I think sometimes you feel it's not like you don't want to be not nice. So, you keep some people on and yet they are the poison in your company. And all of a sudden, other people start leaving but you— and they leave but they don't necessarily tell you exactly why. And finally, you know, after failing slow, you suddenly realize this person isn't, you know, helping our company. In fact, they're impacting on other good employees leaving the company. And when they let that person go, there's this huge relief. There's the relief of the boss or the owner who terminated that person, and then there's a relief from all the staff. Who have kind of skirted around working with this person or have had such stress as a result of it. And so people learn. And after 2 or 3 of these kinds of examples of not terminating people that should have been terminated a long time ago, they get more courageous about it. And when they say, why didn't I do that before? I should have— that's a validation of your fail fast. The more you do it, the more it results. The other thing I want to share Because when my husband and I had our engineering company, we learned about cash flow cyclically. So, for example, when you pick the fiscal year end, then you've got 6 months to file. And in those 6 months, then your accountant or your fractional CFO says, "Okay, you need to bonus these people out." And you learn that about at month 4 and go, ah, and our fiscal year ended in August. So, we actually had to pay people their bonuses in February and December is a time where you don't get money. If you don't see a check in the first week of December, you ain't gonna see another check until the second week of January. And so, So we learned very, very quickly that, hmm, gotta push on those invoices and catch those ARs in November in order to get the money for December, and then push again in January to get the money to make sure that you have the money to flow out for our February bonus period. So learn about what is cyclical in your business. You know, for those of you who have an ice cream shop, you know those months from May to late September are your months to get the money going. So do what you can, but then try to sustain the rest of the year on, on that kind of, you know, cash, cash abundance.

Yeah, that's, that's really great insights. And definitely that's why I say just staying on top of that cash, but looking at it in a much bigger picture in terms of, you know, if you— especially if you're a cyclical business, seasonal, your December periods, your July periods, everyone goes on vacation. Those are very hard months to sometimes get through, and just making sure that you've got months of cash to cover you through that, that's another KPI you could potentially have on your dashboard, um, really keeping eyes on that.

A lot of, of, of business owners really don't know enough about finance, and they don't know necessarily how to read the reports that they get. I was fortunate enough to have an accountant who really taught me along the way, and I learned a lot. I remember the first time she came to my house and she had given me my Chartered Accounts, and I put the stuff in, and I was on pins and needles, worried about whether— what she would say about how I put these books together. And she basically asked me if I had an accounting background, and I said, "No, I don't." But I did, I had a nanny so I learned how to do payroll and a few other things so I got a little bit of knowledge savvy here and there and then she just, she shared with me that I did a good job and over the years I just continued to learn. So what tips and strategies do you have for us not so savvy finance people? So we can grow and feel more confident, as I learned, uh, from that, that, that, that very, very embryonic stage of learning how to manage my finances.

Yeah, I think, um, an easy tip is utilize the tools that are out there. So you've got something like a QuickBooks Online, for instance. It makes it really easy to have your data all in one place. It has got APIs that will work and collect bank information, those type of things. It makes your invoicing easier, all of those. So leverage technology. It is there, right? Why would you struggle through something that was— it also then will help put in, put that information into a way that is a little bit more palatable, a little bit more easy to understand. And then I really do believe if it is not your lane of genius, stay away from it. So hire that CFO. Honestly, the time that you will spend being frustrated and self-loathing if you don't understand what's going on— if you can think about what that would equate to if you were to hire a CFO and you could really feel comfortable pushing the business forward, leaving that to somebody else. And then as I mentioned, that fractional CFO is somebody who's a business partner. We're going to take you on that journey For me, for instance, for me, I will have a CFO call with my clients once a month, walking them through everything. Lots of questions, lots of understandings, lots of looking forward. And so really finding that business partner that you feel comfortable with. So I think, you know, using those systems sets you up for success, and then understanding where your level of comfort is and perhaps reaching out for that business partner to come on that journey with you.

And I know you talk about strategically, but if you can give a little bit more detail to help people see the value of a CFO. I know when I get my annual report, there's always the back pages with the notes that say, you know, you're vulnerable in your IT and, and making recommendations and suggestions. So can you highlight some of those things that you strategically help a person do? Because I don't think that a lot of business owners really understand the value strategically in helping the business. It's not just the numbers, it's taking that data into information and information into strategy that will help you grow.

Yeah, I think how, how I typically break it out is I'll start with a goal. So let's say you're just a one-man show at this point, uh, one human show I should say, um, and then you want to— your goal is to make $200,000 a year in salary, um, and off you go, and you want to work 100 hours. So then we would go to a budget, right? So we would say, what does a budget look like? What revenue would I need to earn to create a $200,000 profit, what is the rate that I would need to charge at. So then perhaps you come to me and you say, hey Kim Murray, this is no longer the goal, I want to be bigger. And we look at a budget, right, and we go, okay, well, if you want to make $1 million of, like, revenue, how do we get there? And perhaps we need to hire people, those type of things. And so we would model that out. And I think that is the first part of helping, right? A lot of people have no idea where to start with looking at a model. You do not have to know all the things. You make assumptions and you feel— you make comfortable assumptions and you go with that. I think the next part of where there's a lot of help and insight to be had is that next step where you've got this budget that says you're going to make $1 million and you're going to maybe have had 4 employees, and then suddenly that $1 million isn't looking on track anymore. Now, A, we've made a conscious effort to revert back to look at our budget versus actuals, which is very important. But then we are like, oh, we need to course correct. And so this is again, we, and that strategy, how do we course correct? Well, we do not want to necessarily maybe let go of one of the employees because we have spent a lot of time training them. And that, that can be costly for a business, right? So potentially, oh, well, maybe we can just become a remote company for a bit and we can lose that rent expense or something like that. And so as As a CFO, you know, we work with our owners to say, okay, let's look at other levers or all the levers. And so I think that's sort of the key, is being able to take a step back out of the business and seeing what levers we have and when and why we would pull them, and then, you know, advising on what we suggest and obviously helping implement whatever is the way forward. Yeah.

Thank you for sharing that. I think our conversations really helped others see the value of a CFO more than just bookkeeping, and really an ally, a confidant, an advisor to help people move their company in the right direction. And in a way that's even more effective if I was just sitting here and trying to figure it out myself. You know, if I had hired you 3 years ago, I'd probably be, you know, have twice as much revenue and not gotten into, into that hiccup that I had or something. So there is that value. I know when I was introducing you, you said you had a passion, and I see that word do, and I believe there's a message behind it that's really valuable. Do you want to share? I think that's your passion piece there, so share that with Kim Murray.

Um, so my— in my office, um, I have 'Do what you love and love what you do,' and I really do have a passion just for helping business owners. Um, I am a business owner myself, and it's been scary and emotional. And so if I can help in any way or form, um, no matter how big or small, that was my goal for my company, was just to add value from day one. And I absolutely love it. I love the clients that I work with. I love the impact that I get to make every day. And so I'm living, living my wall, living my wall.

What are the ideal clients for you? Because sometimes people just go for the, you know, anybody who shows up and is going to pay me. And then sometimes you find that maybe that wasn't my ideal client. And through, through trial and error, you learn to identify what are those clients that make the, the work that you love to do even more enjoyable because you love to do it with them.

Yeah, that's a great question. Um, and it's something that I learned recently was you have to find clients that align to your values.

Exactly.

So yes, they may pay the big dollars, but they may be awful humans. And, you know, that sometimes— maybe when you start your company, sure, you may, you maybe just take on whatever you can get, and hopefully you'll get to a point where you can be value-driven. So aligning to the values. So for me, I have to have a relationship with my clients, otherwise I can't have those conversations that are necessary. I have to understand what makes them tick, and, you know, I really have to build that trust with my clients. And if we don't have the same values, it's never going to work out. And so I've learned that, and I've learned it sometimes the hard way, um, but now I'm able to be kind of strong in that value-driven approach to how I select clients and hopefully how they would select me.

So you mentioned the hard way. Would you mind sharing the anecdote?

Yeah, I think for me, you know, I've had clients who I've moved on from simply because I think we saw different values in terms of they were very focused on one area of the business and potentially I could see risks in the other area of the business and they potentially stopped seeing the value in what I was bringing. And if at any point a client says to me, you know, oh, I will happily say, great, I loved our time together, but let me, let me move on. Another time is, you know, where I haven't necessarily made that connection. I might not be everyone's cup of tea. I'm good with that. Um, but you know, I think I, I've realized this about myself, and potentially, you know, other people might see this, but if you're not that person's cup of tea, they can't be that, that trust relationship.

Yeah.

And then I can't say to you, Hilda, you know, I think maybe you've gone off course, because we couldn't have those deep courageous—

do they tell you where to go? What do you mean off course? You don't know what you're talking about. And that That's— you have to have that honest, open relationship, and I have to feel comfortable to bear my business soul with you so that, that, that you can help me get out of that, that jam, right?

Yeah.

You and I've had the opportunity to work together, and it came about through a referral of an accountant who who said, hey, you know, Hilda, let me introduce you to Kim Murray Murray Murray. So we've worked on this client who is in a professional services space, and we did the policy and procedure manual and performance evaluations with that focus for me, like you, people-focused, creating something that reflected the values of that organization and built upon that. And then we got to a point where, you know, you knew that I was doing management training and you thought, hmm, you know, and you brought it to the attention of your client. So again, this is something that you did for your client from a value-added for CFO. Tell the viewers and the listeners what made you decide that they needed this in your, obviously, your role as their fractional CFO. And then, what made you choose Peoplebrite to do that training?

Yeah, I think, um, obviously working with you, Hilda, on the employee manual, I think it really spoke to yourself, to me, to the broader company. And as you said, working through that, I think we understood each other well, and I knew that we were going to have a great relationship. And, you know, I your approach was very pragmatic, very employee-focused, but also protecting the client at the end of the day. And to me, that was the perfect balance of how to approach this client. Also, this client is, you know, it's somebody who I do align to the values. We have a great relationship and everything. And so I really always just, I want to do better than I can with them. And so once, you know, once I saw that you had this you know, this offering of something more, which was really that, um, that team building, especially at the management level. And this particular client had some newer managers in place, and I just felt as a team they could, you know, really come together. There was a lot of potential for growth. Each and every single one of these newer managers is a superstar in their own right. But maybe had been promoted without sort of that management knowledge, which often, as you would see, and it is too, happens often. Um, so I really— they have 110% of potential, and I just saw the gap with what you were offering and where we were at to really close that gap, bring it together, and ultimately In my mind, happy employees equal revenue. So selfishly, the finances are taken care of, right?

One person leaving could pay— well, more than pays for, for the training program.

Yeah.

And, and how did you find the training program for your clients? And I just— to, to kind of highlight what I do is I provide a training program that helps I provide a training program that helps leaders be more people-centric, that they hone in on their people leadership skills. They've got the skill sets for the technical work and they probably got the project manager and that's how they got promoted. And one of the things I do is I introduce a tool called Fascination, which helps leaders understand more about their strengths in communicating and creating trusting relationships. So that's just the preamble to it. And what did you and the client think about the program?

Yeah, so I think, I mean, you would have seen it as we walked out at the end of that day, and it was a big day. We all were smiling, having good conversations. I think we just felt felt more connected. And so I think that was, for me, the biggest takeaway. But, you know, outside of that, just from how the day worked and planned, it was great to get some insights on people that were sometimes a little shocking. And, you know, sometimes you didn't know, oh wow, that, that's actually kind of a thing that makes this person tick. And so you, you're able to kind of adjust, right, in, in each of those circumstances. And, and, you know, how you approach those conversations from— I think one of the biggest takeaways for me was understanding what that person values, what is respect to that person, how often we take away what we want from a conversation, what we think is respectful, what we value, but how do we meet in the middle. And honestly, I like even— I, I use that daily myself, and I, you know, I certainly know the managers um, use that, and they, and they saw some really great insights into themselves. I think for the first time they were like, yes, I really am that. You know how sometimes you kind of doubt? And, and then they saw that in their colleagues and were like, oh, okay, great. So yeah, really eye-opening.

I, I think the beauty of that Fascination tool, because I used it to help people understand their uniqueness in a quantifiable way because you can tell people, well, you're unique and you're unique, but it has a lot more weight when you have an objective tool that is research-based to say, oh, I thought that's what I was and now I know that's what I was, you know. And so, it gives people even more confidence. And I loved how when we finished that day with the managers, they said, can you come back? I think we should bring this on for all of our staff. So we had a half a day session just focused on the actual Fascination and how everybody in the whole company had the Fascination tool. And I remember at the end, the most senior person saying, you know, is everybody okay? Can we share this amongst each other, like all of our assessment tools? And I'm thinking, wow, you know, and everybody said, yeah, because they got to know each other better and it It really did help. First of all, the manager training and then the team building training from that, from the fallout of that. So I really appreciate you sharing that with people because to me, my passion is people-centric and creating people-centric workplaces. And it starts to me with managers being more caring and uplifting and motivating their teams. And so I, I appreciated what you— we shared about that training, and it validates the kind of role that a CFO plays. You know, you do that— you did this with human resources, but you've also done it with other aspects for those clients in terms of helping their efficiencies and their effectiveness.

Yeah, well, we loved working with you.

Oh, thank you, thank you, thank you. Um, what other things do you want to share before we wrap it up today in terms of, you finances, strategy. What would you like to share that you haven't said already?

Yeah, I think, you know, you've taken a step as being a business owner, or perhaps you have been one for a while, and really just considering coming always back to what your personal goals are. That will really light you up to allow you to focus on the business And if you've got that down and you've got the support of a business partner, whomever that is, you will be set up for success. And really just aligning to your personal goals, aligning to those values— sometimes they get lost in an employee handbook— but being truly value-based, you will have success. And, and ensuring that you surround yourself with the right people and hopefully a fractional CFO.

I have one more ask of you, and I think we find this in ourselves as business owners. Sometimes you don't have enough money. If you spent the money to do something, it can be tenfold, and you could find yourself 2 years from now trying to build what you did, but if you had spent the money way back when, you would be making so much more money. What advice do you have for us? Because that's always the thing, do I have enough money to spend that? And will it result in, you know, a great return on investment, or will it be just another lesson learned?

Like, yeah, I think that's a great question. And I think what, you know, a fractional CFO brings is that accountability to action, but also the ability to be able to know when something needs to be pivoted or, you know, you need to pivot now. Maybe you did go too far down a path or maybe you're about to, and it's just showing that it's not going to work. So I really, you know, I think that is sort of key is investing now in good decisions such as a fractional CFO, perhaps you know, whatever that looks like. And then making sure that you follow that path together, that you hold hands on that path together. And again, coming back to making decisions decisively, fact-based, um, but you've got the intelligence and the forecasts and the budgets, and you've got all the pieces of the puzzle that actually support you versus trying to struggle along on your own and and ultimately you make decisions maybe too late or not on the right information or anything along those lines.

So Kim, if you have an accountant, do you need a CFO, or can an accountant be a CFO as well? Just trying to understand that distinction.

Yeah, I think if I'm honest, no. Um, I think a CFO just has those level— those years of experience to see the bigger picture. An accountant, as I mentioned, is sort of that very transactional, rearview-focused person. And so they, they will start to pick up on a few variances, or what happened here versus here. They could probably compare to last year, those type of things, but they don't have the insight into the bigger picture, like what's the growth plan, how many employees do we want, you know, how much salary do you want to take home, Hilda? And so I don't think that transfers necessarily from an accountant into a conversation with the business owner or those type of things where a CFO is really, really focused on that big holistic picture.

So, so an accountant really understands the numbers and how to use them but not every accountant may be capable of or desire to think about those numbers in a very strategic way that builds a business. Am I correct in that, that, that analysis?

Yes, I think it definitely is something that is they get numbers to a point and then we sort of, you know, take over from there. And to your point, yes, I don't think they have perhaps the experience. Um, sometimes it's a desire to take it to that next level.

Yeah, not, not to say that every accountant only thinks that way, but some accountants, um, some accountants can be, be CFOs because they're that way, right? So I don't want to paint the number No, no, not every accountant is, but some accountants are not strategic, but CFOs are strategic, and that's the difference. Well, thank you for, you know, helping us understand the world of finance and the different roles that people play— bookkeepers, accountants, and CFOs— and the value of considering what a CFO can mean to you you and your company. So thank you very much. How do people get a hold of you, Kim?

Thanks, Hilda. This is great. Um, so to get a hold of me, I am on LinkedIn, so just as Kim Murray on LinkedIn. And, um, I have a website, uh, flexify.ca. Um, and just reach out on any of those channels, and I'm happy to chat to anyone who will listen to me.

You're an easy listen to, Kim Murray. But thank you again for coming on our show today.

Thank you so much, really enjoyed it.

And to the listeners and the viewers, thank you for taking the time to hear another episode of how you can rev up your business. Thank you for tuning in to Rev Up Your Business with Hilda Gann. Be sure to like, comment, and subscribe to our podcast on YouTube and Spotify to stay up to date with all of our latest episodes. For more HR tips, strategies, and to learn how you can create a people-centric workplace, visit our website at peoplebrightconsulting.com.