The Pricing Solution - Fractional C-Suite Retreat - Episode # 002

Growing a business is hard, but it does not have to be. Once a week, we take a break from the hustle and bustle in business to talk about innovations and what's new in the C-suite. This is the Fractional C-Suite Retreat, and I'm Joseph Frost. Pull up a seat at the fire, grab a drink, smoke a cigar, and just join me as we relax, learn, and get inspired. This retreat is sponsored by Your CMO, helping organizations grow with better marketing strategy. Today's guest is Luke Templin. Luke's a CPA. He's a fractional CFO and co-founder of A2 Advisors. And in full disclosure, Luke is my fractional CFO for the Your CMO Company. So thanks for joining me today, Luke.

Thanks for having me, Joe.

I like to start every call with just a quick question or a quick thought about what you see as the biggest opportunity in C-suites today that maybe they're not seeing?

Yeah, I think, I think the biggest thing is pricing. I see too many companies just hitting the easy button, whether it's trading time for money in a service-based business, or it's just doing cost plus a percentage. I think almost every business has some opportunity to put in some some form of a subscription model.

Yeah.

Yeah.

So that's something that's probably not a normal model that many businesses that have been around for a while think about. It's certainly new with the software and SaaS and all that. So gimme an example maybe of how a more traditional business model could add an element of subscription to it.

Yeah, so I have a— it's a service-based company in construction, and historically parts and labor, you know, the different competitors of theirs just offer a basic warranty, and some are offering a lifetime warranty without much of a price difference. And one thing we're putting in place is if you want that lifetime warrant— warranty You need to have quarterly maintenance. It creates that subscription model for the construction company to come out once a quarter, check over all of their installed product, make sure it's running correctly, and then it creates that ongoing revenue stream. Um, another one recently is an e-commerce client. It's not necessarily subscription, but it's getting more creative with the pricing. So they had a large customer come to them. Wanting a decent amount of supply of their product. And so one thing we put together is, is what I call the triple cheeseburger model, right? So you have, you have 3 prices, essentially. You have one that's no contract, it's the highest possible price, then you have, here's what a year contract looks like and how much volume you have to purchase from us, you got a mid-range. And then a 2-year contract with lower margins.

And how does that work, the triple cheeseburger? It gives the prospect some options that puts them in a state of mind.

Yeah, and I call it the triple cheeseburger because the triple cheeseburger was created in order to sell the double.

So, okay.

And if you pay attention, it's all around us. If you look at Starbucks, It's a lot of pricing. I call it gaming, but a large— I don't know what the large option at Starbucks is called, but it's not called a large, something fancy. If you look at the price— yeah, venti, there we go. You look at the price difference between that and medium, there's not a huge difference, and it's really not a huge difference in size either. And so there's There's a lot of, uh, theory that most people don't put into pricing. Most people think pricing should be some formula, it should be very scientific, but to me it's an art form.

Yeah. So how do you, um, how do you evaluate whether someone's priced right or not if it's an art form?

Yeah, it, it takes a lot into consideration. I mean, the biggest consideration is looking at your customer. What's the value to them? Now, there's some industries where you're a commodity-based business and good luck. I mean, your price is set. You're not changing it much unless you get extremely creative and offer some sort of concierge service where you're delivering that commodity or installing that commodity and provide a bunch of customer service. But I think that's the biggest thing, how is, is learning what the value to your customer is. And a big part, especially in professional services, is in that discovery. You have to have a conversation with them. Like, what, what is this service going to bring to you? And sometimes it's, there's not a, it's not a price. It's more of an emotional sense, like reducing stress. Are allowing the owner to spend more time on something they enjoy more, they're better at. And then you've obviously got to look at competitors and your cost, but it's, it's really trying to determine what that value is to your customer, what the perceived value is.

Yeah. So my MBA program, we, we learned about cost-plus pricing and value-based pricing, and value is the preferred way to do it. But most accountants and CPAs will usually think cost-plus. How did you go from the typical cost-plus pricing mentality to more of the value-based pricing mentality?

So I spent a decent amount of my career within CPA firms, and I just saw partners of all shapes and sizes just killing themselves, putting tons of hours into work. And essentially it's because you're trading your time for money. And I just, thought there had to be a better way. I'm also a huge component or proponent of technology and automating things. And so the more you automate things, you kind of kill yourself if you're billing by the hour. And so I got turned on to Ron Baker, has a podcast that's slipping my mind at the time, The Soul of Enterprise. And Ron Baker is He's a pricing expert, spends a lot of time kind of in the accounting world, but great podcast, a little heady, but he gets into, you know, blue-collar type businesses as well. But that kind of, kind of got my mind into the value-based pricing.

Okay, so, uh, you're starting to dovetail into what I would consider sales and marketing when you get into pricing.

Yeah.

Which makes me wonder, how collaborative are you in the C-suite? You come in as a fractional CFO, and you're evaluating pricing or having those conversations about pricing, then are you reaching out to your counterparts that are on the sales side and the marketing side and really collaborating on how do we get the pricing right for our service? How do we tell a story maybe differently that'll get us at a premium price? Versus how do we script the salespeople so they can close deals at a different price point? Are you getting into those conversations also?

I am. I think it's key for C-suites to be able to work together and be somewhat of a master of none, have at least a basic knowledge of all of the— whether it be IT, marketing, I mean, everything that makes a business hum. I think a CFO, a COO, a CEO, that you need to understand it at some level, be able to have those conversations. And I think that is a a big key in someone that's good at a C-suite is they can kind of talk and translate different areas of the business. Yeah. Understandable.

Interesting. So in marketing, you know, we look at pricing quite, quite a bit. And we take a lens of what the competitors are doing to help us guide it, to make sure that we're price relative to the competitors. Do you look at that as well when you, when you, when you're digging into pricing?

I do. Yeah. Because competitors sometimes can limit you, especially in an e-commerce business, something that's more product-centric. Uh, that's where you got to get more creative, uh, because your, your competitors definitely are going to set the floor and the ceiling for you.

Okay. Um, unless you're the, the highest cost alternative and you are the ceiling.

Exactly. Yeah, you better have very good value proposition if you are the ceiling.

So let's talk. So with pricing, I think it's interesting as a fractional executive, that is one of the value propositions that we offer to our clients is they can get a lot of value for the price of a fractional CFO. Have you seen that be a large part of the conversations you initially have with prospects about that, that, you know, value between price and what they get? Or is it kind of unspoken and it just, it's what, what happens?

Yeah, I have that conversation a lot. Most businesses I work with, it doesn't truly make sense for them to bring on a full-time CFO until you're $20 million in revenue or above. And being able to afford a full-time CFO, it just doesn't make sense. And so being able to communicate what the investment is for a full-time CFO and what I bring to the table, um, I, I feel definitely helps in the sales process.

What is your target client size? Million to $20 million or in that range?

Yeah, that's, that's pretty much the sweet spot. It's that entrepreneur that's growing large enough that they're ready to grow, scale the business. You know, most businesses, once they get to about that million-dollar threshold, you got to make the decision. You just want to maintain a lifestyle and have a stress-free business, or do you want to scale this thing? And so the entrepreneur that takes the fork in the road of scaling definitely needs someone like any kind of fractional C-suite on their team to help guide them through that. 'Cause that, especially that million to $5 million, that's tough to get above. Yeah.

What do you think the hesitation is to let go of some of those duties? Or, and maybe it's not even you're doing stuff that they were doing, you're probably doing things that they weren't doing. So what is the hesitation? Is it purely cost? Like they just don't want to spend the money or just uncertain of what, they're getting.

Yeah, I think cost, um, and uncertainty is a little bit— my biggest thing, especially when it comes to financials, is I equate it to going to the doctor's office and dropping your pants. Um, it can be embarrassing, and, and I try and guide owners through that. I mean, I've worked in SEC $1 billion SEC companies, and I can guarantee you it's not perfect. I mean, at one SEC company I was at, I I spoke up multiple times that I don't think these financials we're issuing is right, and a piece of it I didn't think was right. An investor ended up coming back and saying, "Yeah, this doesn't look right." We had to amend the financials, which does not look good in the SEC. But again, accounting, you're never going to get it perfect, and so you shouldn't be embarrassed of your numbers. But I feel that is one of the biggest limiting factors owners have. And There's a trust factor too, right? When you're dealing with money, giving that up can be difficult as well.

Yeah. Yeah. I know just from personal experience and bringing you on, we were at the stage in our business where there were more and more questions coming up that we didn't have answers to, and we knew we needed to find some, some answers. And obviously we're in the fractional space, so we knew what a fractional CFO would do for us. That was an natural outreach. But I think other business owners might reach out to a traditional accounting firm for some of those answers, or they'll maybe look to hire and thinking that that's the right answer and might— maybe that hire is a— I don't know what— they're probably not looking to hire a CFO, but maybe they're hiring some sort of internal accountant or something to try to answer those questions. How do you feel that a fractional CFO differentiates himself from an agency or an accounting firm or from a full-time hire that might be not a CFO, but potentially in the mind of an owner could do as much as a CFO for them?

Yeah. Yeah. I think accountability is a big piece in the fractional world when you're comparing it to a full-time. One example I have is recently I was working with one of my clients that has a leadership team involved. The owner asked my opinion and I was pretty forward on my answer. And I've always felt the leadership team has been a little hesitant to say some things they want to say just because there's that fear of being fired. Obviously, I don't want to be fired either, but as a fractional person, I have more eggs in my basket. So if I get fired by one client, I still have other clients where an employee, if they get fired, they've got to look for a whole new job and it, and it makes having tough conversations difficult. I think the other thing with being fractional, you get to see multiple businesses. You're not, you're not embedded in one and just focused on one. And so you get to see what worked well or what didn't work well within other industries. Potentially larger or smaller companies in the same industry, things like that.

So that makes sense. When you're comparing yourself with a full-time hire, you've got more accountability, which is an unusual concept that I think business owners would have a hard time understanding— how a part-time person or a fractional person could be held to more account than a full-time. But I see that as being very true. Like, you're— you have to add value every month if you're a month-to-month fractional executive. Otherwise, it's— they'll just let you go. Whereas if you're a full-time employee, the lease is really long in my experience for full-time employees, and it's not as critically looked at as fractional is. But what do you— how do you compare yourself to then the alternative of trying to get that information from an accounting firm as opposed to an independent fractional? CFO.

Yeah, I think, I think one component, uh, of a fractional over a firm model is you're typically dealing with an owner, so you understand the same pain points as the entrepreneur you're guiding, uh, which I think is huge. Um, and, and there's usually more agility, um, especially in the, the CPA world. I mean, they're pretty limited on what they can and can't do just because the profession Legal can be the same way. Marketing, I think, is a little more open, but CPA firms especially, they're hesitant to give guidance on forward thinking and projections just because there's so much unknown that their governing bodies, they like it to be very factual. Not, again, it goes back to being an art when you're looking forward. Than a science when you're looking at history.

So you've got accountability is one thing that a CFO, a fractional CFO adds, got kind of that working real-time diversity of clients provides some value-added thinking, some different thinking, that's a value to a company. And then The, the idea that you're, you're not constrained by the confines of a firm is another differentiator for you and other fractional CFOs. And then lastly, owners are working with other owners as a— because as you're a practice owner, you're building your own practice. You, you work through the same or think through the same ways of building your practice that a business is thinking about building their people. So there's some common language and common issues going on. So that makes a lot of sense. But as a summary, those are the reasons why it's a good value for companies to consider a fractional CFO. What do you think are some of the criteria then that goes into finding the right fractional CFO for, for, for companies?

Yeah. So I think most people look at expertise and like in my world, they look, hey, are they a CPA? Which I, I think expertise is important, but it's lower on the list to me. First and foremost, are you a core value fit? If you're not aligned on how you think and not, not necessarily like how you think in my situation, like taking on debt, whether you like it or not. It's more, do you align with the company's core values? I think that's important. Second, I think, is communication. You know, in my realm, there's a lot of jargon. People make things way more difficult than they should be. And so if you're meeting with a fractional anything and what they're telling you just doesn't make sense, or it seems complicated, it's probably not the right fit because you're going to run into communication issues throughout the entire entirety of it. And then looking at that expertise, I mean, there's something to be said of been there, done that. It definitely helps the speed.

How important is capacity in the conversation? How do you measure, does this fractional executive have enough time for me?

Yeah, that's a good point. Yeah, that— I mean, and that gets brought up a lot in conversations I have, um, on how many clients do you have and how many can you take on, because that is important. I mean, and it goes back to that communication part. You can kind of gauge a little bit of that in the discovery phase. I mean, if someone's slow to get back to you on a proposal are just setting up meetings, that's usually a sign that they probably have too much going on.

Yeah, yeah. And do you feel— is it normed in the fractional CFO space to charge monthly kind of flat fee by the engagement, or is the norm to charge hourly? And so you're kind of back to that whole, the whole model you started with, the trading time for, um, dollars.

I think, um, I try hard to surround myself with more forward-thinking people. So most people I talk with are doing that value-based fixed fee. I think there are a lot of fractional professionals still charging by the hour just because it's, it's just easy. I mean, I could literally have a conversation with you today and say, hey, my bill rate's X, ready, ready to go, sign here. We're off to the races.

Yeah, the typical consultant model that's been around for so long. There's an expectation of what range you should be in, but there's no expectation of how productive you're in that hour. That's always been my challenge with the, the hourly model in any, uh, you know, gosh, any engagement from attorneys to accountants to creatives. It just seems like, yeah, maybe I pay more per hour because seemingly you're a more productive or you know, a higher value person, but there's no incentive for you to work faster or to get the job done better in that hour versus the flat fee model. I feel like it's— there's probably somebody winning and someone losing every month or every week, just from a time standpoint. But as long as the fee is clear and the value and the expectations are there and the stuff's getting done, it's like hiring a full-time employee. I'm paying you this, this is your job. And as long as you're getting the work done and you're helping me grow my company, I'm gonna continue to pay you this. You never scrutinize your full-time employees if they're— I mean, I shouldn't say never. Rarely are you scrutinizing the same way you do a fractional or a consultant.

Yeah, agreed. And that's how I try and pitch a fixed fee is you need to think as me or any fractional person as a part of your team. Yes, they're a vendor and there's an easier, really easier separation and relationship there, but it needs to, you need to look at it like payroll, essentially. It's the fixed fee that you pay every month. And I think by charging a fixed fee, it's a known, like you said, it's known they can budget for it. And the client is more focused on the value of what you provided than a bill of, oh shit. This cost me X, Y, or Z. Um, and it probably in most cases would have been the same price that if you would have taken the time to do it up front, they would have agreed to. And so you eliminate that surprise, and then there is more focus on what you're providing.

Yeah, I think it's a great point. Um, you mentioned something there about earlier about trying to connect, or thinking of that CFO or fractional person as, as a part of your team. That's hard to do fractionally, because you usually are remote. You're not there full time. You're not around the water cooler in between meetings, talking to people, you're not bumping into other team members. What are some of the intentional ways that you go about creating that connection that a full-time CFO would have, even though you're a fractional.

Yeah, that, that very much can be challenging. So I'm a big proponent of check-ins at least semi-monthly. And during that, you need to spend time understanding the client on a personal level and having, hey, how are your kids doing? Hey, what are you up to lately? And, and getting to know them personally and kind of that water cooler talk. I think is very important.

Yeah. Do you do anything else intentionally outside the semi-monthly meetings?

There's times where I'll check in with clients if I, you know, read something or listen to something that I think would be of interest. I'm constantly sending things like that to clients.

Yeah. Okay. Yeah, I know we've been having this discussion internally. Recently is how can we intentionally strengthen relationships within the C-suite for our CMOs? Because just like any team, that bond of trust that gets created and camaraderie, it's important. And as a fractional member of that team, you want to feel like you're part of the team. But it doesn't happen naturally. And so we've been trying to strategize internally about how do we do that. We've thought about one-on-one calls just to other members of the C-suite team, putting that as an expectation of our CMOs that, hey, you should reach out to at least 1 or 2 people a month that aren't on your direct communications regularly. Or we haven't quite figured out what the secret sauce is, but we're experimenting to see if there's things that are easy to implement that create that additional bonding between the fractional CMOs, in our case, and leadership teams.

Yeah, yeah, celebrating wins is another big one. You know, they land a new client, just saying congrats or sending some sort of gift, I think, could go a long way as well.

Yeah. So I know we wanted to talk a little bit about, switching gears here, about Profit First. That's something that you've spent some time and energy becoming sort certified in, in their approach methodology. Can you explain a little bit what Profit First is and why it's important for business owners to consider or think about or be aware of?

Yeah, so I think the stats, something like 82% of businesses fail because of cash flow. Most owners understand their profit and loss statement very well, a lot that I've been around struggle to understand their cash flow, which is the relationship between the balance sheet and the P&L. You know, you could send out an invoice for $10,000, looks great, I've got $10,000 in revenue on my P&L, but that $10,000 may take 30, 60, 90 days to collect, and you've got payroll and rent and all this going on before you collect that. And so the one thing I have found most entrepreneurs do on a daily or weekly basis is they check their bank account. And so the premise behind Profit First is leveraging that habit rather than running a bunch of complicated reports that you may or may not understand. I mean, it takes a good CPA probably 3 to 5 years to fully understand a cash flow, and that's someone that's spending every day doing accounting at some level for a client within a CPA firm. So it's, it's understandable that understanding cash flow for an entrepreneur can be challenging. So what Profit First does is it leverages that bank account habit, and the idea is rather than having one large plate, uh, that you're gonna eat everything on you're gonna spend all your cash. It's splitting up those, that one large plate into smaller plates. And so within the Profit First model, you have 5 bank accounts, an income account, an owner comp account, a tax account, a profit account, and an OpEx account. And so semi-monthly, what I do in my business is I take based on percentages that of healthy companies of what those 4 items should be. So owner comp, taxes, profit, OpEx. I allocate the money out of my income account into those accounts. And the idea behind that is now you have a small plate. You look at that OpEx account, if there's not a lot of money in there, you're going to start getting creative, um, and probably not hire that person that you thought you you needed. Where if there is a lot of money in there, then it's okay, I've got 2 to 3 months worth of operating capital, I very much can hire someone comfortably and be able to sustain it. And so that at its simplest form is what Profit First is about. I encourage every entrepreneur at least to read it. It makes you think differently and it simplifies accounting and, and changes the mindset, right? Accounting says your sales less expenses should be profit. Well, that's essentially saying you should take the scraps, where Profit First is flip that on its head. Sales less profit is how much you have to spend on expenses. And I can say for my, my business, it's made me think, um, about purchases regularly because I'm like, do I really need this? Does this make sense? And so it kind of changes your mind mindset on expenses as well.

Yeah, I really found a lot of value when I first discovered Profit First several years ago, just a mind shift that profit should be first. That's the name of the book. Because at the end of the day, as I had been growing my other businesses and this business, it is an afterthought. Oh, we made money last month. Great. It's not— it hasn't been an intentional, we've got to make this amount of money. And to do that, we've got to pull that out and then only spend the leftover. People are usually running their business pretty cost-consciously. So I think it's aligned with traditional thinking, but it is a weird mind shift to think about profit first. Where I struggle with profit first, and I'd be curious what your take is, how does that— how do you think about profit first in a growing business where sales are somewhat uncertain? So whether that's a new startup, or or businesses that are going into new service offering or product offering. And you really do have to— well, traditionally, you have to consider investing money ahead of time. So you are intentionally going in the red. How does that reconcile with the profit-first thinking?

Yeah, so one thing profit-first talks about, especially in a startup scenario, is having loan or investment money that, that is used specifically for growing that business. And that's kind of, you got to look at that as, okay, here's, here's our runway. Can we make this successful in this amount of time? You know, if you're going to go hire someone that's $100,000 and maybe you take $200,000 from investors, well, that that needs to return money. You got a 2-year window, and if it doesn't, then, um, if you didn't— if you didn't figure that out quicker in 2 years and didn't make a decision to cut that person or pivot, you've got an issue.

So it's more— it's not operating profit first that way, it's just going in with a very predetermined expectation of profit or, or incremental profit for every investment you make and just having a a real hard cap to what that might be.

And yeah, and that's more my thinking on it. Um, Profit First is a little debt adverse. So Profit First would argue, okay, well, you want to hire the salesperson to grow your business, right? Simple example. Profit First would argue, well, okay, if you were bleeding money every month, who are you going to fire first? Yourself as the entrepreneur who, who should be able to do sales, or all your employees? Well, if you're about to go bankrupt, you're probably going to fire all your employees before you fire yourself. And so profit first is— it goes back to that mind shift change of you got to get creative. Yeah.

So what about like a new product or service? Same thing. You just got to say, we, we were willing to invest this much money, but we need to have this many sales within this period of time to, to make it a good investment. So are you looking more at just a higher degree of profit when you have those conversations? I feel like those are the conversations you have all the time when you start a business. You gotta find out about cash, give yourself a runway and go. And maybe Profit First really isn't meant for startups in that sense. It's more operating.

No, you, you very much can use it. Um, so under true Profit First mentality, it would be creating another account which is called the vault account. And so it's like, if you have, let's just say, even like if you're you're planning to do an ERP system, which is a 6-figure investment, it's all right, we're gonna put X amount of dollars away a month into our vault account, and we plan to do this at the beginning of 2022. Um, but yeah, I mean, it's, it's, um, I see Profit First as a tool in the toolbox. It's not the all end-all be-all. I think it's very, very good even in the startup scenario. And it's potentially, again, starting a new line of business is looking on taking on debt. In my mind, if you take on any kind of debt or investment, you, you should be able to return your money within 2 years. If you can't, it's probably not a good investment.

That makes sense. So as a CFO, you've got a lot of tools in your tool belt. Profit First is one. You bring it out when it makes sense. But I would agree, you mentioned it earlier, it is something every entrepreneur should read, learn more about, because it does have a big mind shift. Whether you follow it to a T, it's kind of an aha moment. At least for me, there were some insights there that made a lot of sense. Just like many things, maybe 80% of it you can implement, 20% you can't be perfect in. But from a mindset standpoint, it makes a lot of sense. How could people learn more about Profit First from you?

Yeah, so if you go to my website, A2Advisors— advisors is spelled with an E—.com/profitfirst, I have the core chapters of Profit First there for people to download. Okay.

And we'll share those links in the show notes so they'll be able to see that. Let's switch gears to some of your personal things you do. What, what, what do you like to do outside of work?

Majority of the time I like to spend with my family in the outdoors, whether that, whether that be on a trail or on the water. And you may have picked up my daughter screaming in the background.

No, I didn't. I didn't. But, uh, maybe, maybe it came through on some different ringtones for other people's ears. But, uh, so what, uh, what's a good, uh, what's a good outdoor activity on the water you like to do? Canoeing, fishing, boating?

A lot of fishing and boating. Both my daughters, um, enjoy fishing to an extent. My parents have a place down, um, in Oklahoma that we go to pretty much every major holiday, and so we'll do a little fishing and then, um, toodling around on the boat.

Where in Oklahoma? Grove, Oklahoma.

Grove.

Where's that? Where's that from?

An hour east of Tulsa. Okay. South.

I think we might have mentioned, talked about this in the past, but I went to the University of Tulsa. That's where I got my undergraduate degree in chemical engineering. So I remember Grove. I remember hearing about Grove. I don't think I've ever been to Grove.

Grand Lake is beautiful.

Yeah, we had a— we— well, we did have a, a Lambda Chi Alpha formal on Grand Lake. Okay. But I don't remember much of that. Yeah, that was, that was way back in my drinking days. I don't drink anymore. But, um, so fishing's good. What about, uh, hiking or other outdoor activities you do?

Yeah, I do a lot of hiking. Um, I take my daughter to school every day. We have a pretty large trail system down by our house, so we spend a lot of time on that. Yeah.

What's the most unique place you've hiked?

Uh, the cloud forest in Ecuador.

The cloud forest in Ecuador.

What was that like? Yeah, I mean, it was amazing. Um, it's hard to describe. Um, I mean, you're literally in the clouds in a jungle, um, surrounded by all kinds of wildlife and insects that— I mean, the insects they had there were incredible. They had— I can't even remember the name of the ant, but the guide was like, don't touch that, it feels like you get shot if you get bit by it.

Oh my God. This was it— was it above the clouds so you can kind of— it was above the clouds, so you can see the clouds below you and you're in the jungle walking around? Oh wow.

Yep. Yeah, on a mountain. It was amazing.

Um, when did you do that trip?

Oh, that's probably been 5 or 6 years ago.

How many miles? How was it? An aggressive hike, or was it kind of—

it wasn't, it wasn't as bad as I thought it would be. It was, um, pretty tame. It wasn't very rugged. Yeah.

Was it a day hike or, uh, overnight?

It was a day hike. Yeah.

Yeah, we recently went on a hike in Switzerland on this mountain, or this, this mountainous area called Hardergrat, and it was 16 miles. So you could do it in a day, but it was about an 8,000-foot climb. But 9 of those miles were along this ridgeline where you, you literally had a foot of walking space with 150-foot drops on either side for, for very— for large portions of that 9 miles. There was enough of those, not the whole 9 miles, but there were good swaths of that along the way. That was pretty, um, pretty intimidating. There was one area, one area in particular where they had— you could, you could rope in or harness in and cross this one particular section. And a lot of people did it on their butts. They just kind of scooted across. It was just too, too much to handle.

Well, it's a good thing everyone made it. We, we did a hike similar to that in Italy, and we had a gal with us that she did not want to cross. We finally got her, but yeah, it was— that could be a little scary.

Yeah, it, it can be. Uh, we, we all made it down, uh, We didn't all make it across. So I think it was 4 of 9 made it all the way across. Okay. Um, one of the, uh, one of the rest made it halfway and straight down. And then there were 5 of us or 4 of us that decided we were going to start at the end and kind of meet the group in the middle. It was an easier route. Um, because we started high, we didn't have to have the initial climb, and we made it about a third the way through and down. So we had 3 different routes going that day, but we all made it down eventually, which is fun.

Nice.

Uh, where do you want to hike next, or what's a big hike you want to go on? Bucket list?

Oh, I have a client that's done— I've never done any serious mountain, like elevation. Um, and I have a client that speaks very highly of Kilimanjaro in Africa, and I've always wanted to do a safari at some point. Um, so that's kind of on the bucket list.

One of the ones that's on my list is Machu Picchu. I've heard that's amazing.

That is also on my list. Yes, that, um, I just want to see the ancient city that's there. Yeah, exactly.

And it— and I think there's a few different routes you can take, um, depending on the group you go with. If, if there's hardcore hikers, there's a hardcore route, I think, to get over a couple days to get up there. And then there's another route where you take a bus and it's like a day hike or half a day hike to get to the top. So I don't know which group I'll end up going with, but that's certainly on my list. The 4 of the guys that I went to Switzerland with on that Hardergrat route are trying to plan for Denali and doing an ice climb. Now that's insane.

I don't know if that's, that's in my cup of tea.

No, I, I, I don't think I don't have that in me. I don't have that desire. I don't, they're going to train for a couple of years because it's a, it's a— I can imagine. Yeah. Yeah, it's quite, um, quite a feat to try to do that. Uh, what's the biggest fish you ever caught?

Um, are you familiar with paddlefish? No. So it's, uh, it was as tall as I was. So paddlefish is a prehistoric fish. It's got a huge paddle. They're filter feeders like whales. They like kind of filter in and out plankton. So there's a pretty healthy population down at Grand Lake. And so the one I caught was as tall as me, weighed 70 pounds. Holy buckets. Yeah, they're big fish.

So I'm not much of a fisherman, but I did spend a month in Alaska. I've got relatives up there. So when I turned 16, I drove up to Alaska with my uncle. From Omaha, Nebraska. He had bought— they would fly down to Nebraska, buy their vehicles, and drive back up to Alaska because it was so much less expensive to buy vehicles new here than it was in Alaska. So one summer I drove up with him on the way back and spent a month, and we went salmon fishing. We did the there's the red salmons or the silver salmons that you kind of— and you see in the streams, we got the buckets on and they're swimming upstream. That was super cool. And then we did king salmon fishing where you're kind of trolling up and down a river. They're still coming upstream, but it's not like you're wading in the water. You're— it's in a river. And I caught a 35-pound king salmon that I was the only person to catch it. A king that day. And it was— it took me about an hour to bring in. Uh, it was so cool. It was one of the best experiences I've ever had.

And that's awesome.

That's my claim to fame. That's all I got.

The good one. I, I— kings are on my list. I have not chased kings before.

Yeah, it was fun. It was beautiful too. The weather was amazing, and it just— the scenery and the whole experience was was terrific. I've never gone fly fishing though. Have you ever done the fly fishing? I do.

I was just about to bring that up. I love fly fishing mainly because of what you just described— the scenery, um, the place where you go fly fishing are just amazing. I could spend hours in the water without fly fishing, but I'm addicted to fishing, so yeah, so win on both, both fronts. Very good.

Well, it's been a fun conversation, finishing up on some fishing and hiking stories. That's good. Um, so as we think about the, the fractional space in general, just kind of a closing thought. What— it seems to be an interesting, um, opportunity or option for business owners to get access to strategic-minded experience and talent on their C-suite. What do you think about the, the whole fractional landscape? Do you think that it'll continue to grow? Do you think it'll dovetail into something different? What do you think the future of fractional looks like?

Yeah, I, I definitely think between COVID and the great resignation, I think it's absolutely going to do well. Um, and, and I always see it as the more fractional people, the better. I don't care if there's 100 fractional CFOs, it's just more people marketing, helping owners understand it. I think more and more owners are starting to realize that hiring someone fractional is easier. You don't have the emotional attachment you have with an employee. You know, it's— there's less risk. I mean, most fractionals that I know The engagement guarantee is usually a month to 3 months, right? Granted, you could fire an employee at any time, but it's usually a little harder. There's a bigger emotional investment into it. So, and I think the more and more fractional professionals there are, the better for businesses too. Businesses win because that fractional professional is going into multiple businesses and it's somewhat repetitive. I mean, most fractional people that are good, they're pretty set. Here's, here's what we're going to do. Um, obviously there's some depending on what's going on, you've got to pivot sometimes, but it's, it's back to the, they've been there and they've done it multiple times where an employee that's been with a company for 5 to 10 years, I mean, they have the same experience. They don't, they don't get to see different companies and, and do multiple implementations of, you know, a lot of what I do when I get in there. And I'm, I'm sure you do too, is overhaul systems. Because if your processes and your data is shit, well, guess what? I'm not going to be of much help for you.

So yeah, I mean, we bring a pretty proven process and systems with us. That forces some of that systemization accountability within our clients. And then that's what we feel a value proposition is for our clients, is being able to start building their core infrastructure and core competency around marketing that they didn't have before. And a fractional is great at that, especially in our, in our model, you know, we plan to just come and go and be there for 18 to 24 months, build that core competency and leave. And/or stay on to continue growth and development. But when a business owner can get access to somebody that can come in, look at their business fresh, fix it, improve it— maybe it doesn't need fixing, it just needs improving— and their model is to get it to a point where they're no longer necessary, it's, it's a total win-win. Yeah, I think the fractional space is only gonna grow as well. We see a lot of people getting into it from the marketing lens that we have. I see the CFO fractional world's been around a bit longer than marketing. It's a little more mature. Where I find some concern is that there's gonna be so many that it's gonna be hard for business owners to discern between a good one and a bad one. So what do you think are some tips or ideas for that discernment?

Yeah, that's a good one. I think it really comes down to education. You've got, you've got to be able to clearly educate owners on what makes you different. I usually ask the question, And, and I still find it rare today that owners are considering other fractionals similar to me, um, but I try to get a sense, especially when I was in the confines of CPA firm, who they were talking to. That way I could help, like, hey, here's that. And in some cases, like, I've ran into a real estate deal where they get me who they were talking to, and, and I flat out said, hey, That person is part of Profit First. I know them. They have— I understand real estate, but they have held and owned real estate. Like, they know your space way better than I do. That's their niche, that's their specialty, and I steered them that way. Um, but then the reverse could happen. You could run into a competitor and you, you don't obviously want to bash that competitor, but if, if you know that something's not a good fit for that competitor, explain why. Like my biggest competitor, and I don't even look at them as a competitor, but the biggest fractional CFO in town, they're still billing by the hour. And that is, I mean, that's a difference and that can matter. Yeah.

So as a fractional leader, knowing your differences are important, um, as a business owner, probably just— there's not a good place for business owners to go to, to, to really objectively evaluate fractional leaders at this time. It's just not— there's not— not mature enough. Now, we've started the Fractional Professionals Association. There's another organization called Fractional Leadership. There are some other sites out there, and some of those are just listing sites, like, hey, I pay to be in involved and there's no vetting process. Some of them are meant to be a little more vetting, but at the end of the day, it's still buyer beware a little bit.

Yeah, it is. Yeah. And yeah, I think, I think at this point it's, it's personal referrals. Um, it's back to the old school, uh, method there. Um, but yeah, I mean, I had a conversation with Ben Wolfe, founder of Fractional Leadership, the other day, and they're doing a pretty decent onboarding vetting process before they bring anyone on, rightfully so.

Yeah, he's got a nice setup there. And I think he's probably— he's the first I've seen that has a vetted list. And their vetting is based on reference checks and making sure that, that fractional leaders is truly a full-time fractional executive and not just a part-time or interim. So that, that is one, and I think that will grow. But business owners need to realize that just because someone has a fractional in front of their name doesn't mean they're really what you think they are. So you just gotta do your due diligence. I, I like— I think it's important that a fractional leader has some sort of proven process that they're aligned with, like for you Profit First is one of those proven processes. It's not your only one, but you're certainly in alignment there. And you've built your own processes and proprietary for how to deliver fractional work. We've built our own systems and processes, and they're very much inspired by EOS Traction. So that for EOS Traction users, they recognize what we do and they understand, oh, there's some proven processes there that make a lot of sense. But I also think pedigree— you mentioned expertise. I think pedigree is a problem in the fractional space because if someone's got a lot of really big logos of companies they worked for, business owners can easily be misled. That's probably a harsh word. Could misinterpret that as meaning they're going to be very good in that role for my company. And what I've seen is pedigree sometimes means way far removed from actually doing the work anymore. So it's important for business owners to look past the pedigree into what, what their true expertise is and capabilities are and how many successes that they had recently. That's going to be a better source of, I think, due diligence than just looking at a resume and the names on it. But I'll agree with you, at the very end of the day, the most important thing is the trust factor, which comes from having a core value fit. If you can find somebody with a core value fit, it'll work out. Even if they're not the right person, it'll be recognized early, and it'll, and the, it'll be an amicable separation. I mean, if it's a good core value fit, it'll work out. If it's not, no matter how good they are and how, how much value they can bring, the core value fit's not there. It's going to be risky. Yep.

And it goes back to, uh, EOS Traction, right? Hire and fire by your core values. Yeah. If you can't do that with your core values, well, your core values probably aren't core values then. Yeah.

And that goes all the way back to Good to Great.

Uh, yeah, Good to Great is where that comes from.

Uh, it's that core value thing that's been around for a long time for a reason. Uh, it's It's, it's an easy litmus test. It's not always easy to implement it, but it's a black and white litmus test. Is this a good fit or not? And we like to evaluate our clients that way. When we look at a client opportunity, because we've had client engagements go bad, almost always it's a, it's a one or two of our core values were missed. One of our core values is trust the process, value the expertise. Well, when we have a client that doesn't trust our process or thinks that doesn't value the expertise of our team, it, it's surely going to fail. Um, so we look at our clients the same way they probably should be looking at us to make sure we meet their core values. We want to make sure they meet ours. All right, Luke, well, thanks for your time. The best way for people to get a hold of you, we have, uh, all the details in the, the show notes, but to go to your website, download that Profit First. They'll get a little bit better understanding of Profit First, but they can find you on LinkedIn and other places as well, correct? Correct.

Yep. LinkedIn and Twitter are my two main social medias. And then on my website as well, I'm more than happy to jump on a 15-minute call and go over any questions. I love to learn about people and, and learn what their issues are.

So sounds good. All right. Well, thanks for your time today. I'm glad we got this one recorded. The mic is working on my— I can hear you, you can hear me. So we know that the mic's working. So good.

All right.

Thanks, Luke.

Have a great day. You too. Bye.

And that's a wrap. There's another successful episode of the Fractional C-Suite Retreat. See our show notes and more episodes at fractionalcsuitretreat.com. This podcast is Sponsored by YORCMO, helping organizations grow, save time and money with better marketing strategy and fractional execution. Visit them at YORCMO.com, YORCMO.com, spelled wrong on purpose.