141. My Dead Simple Approach to Metrics As a Fractional CFO

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How are we investing in additional business acquisitions today? How are we hiring more people tomorrow so that we can do bigger stuff? It really frees you up to start doing the next level work that you've been trained to do for the last 10, 15, 20 years. There's nothing that'll kill me more than having to put out fires all the time. And that's all I do, is the fractional cfo. It's like, why am I even here? This isn't. This is an impact for me. We've got clients that pay 5, 6, 7, $8,000 a month. And this is at the heart of what we do every month. So I think about these four numbers and I have this like creative genius moment. I come up with four. I called them the critical four because I'm really good at marketing and coming up with creative things. These are the four numbers that I said, if Brandon understood these four metrics, man, life would have been so much better when I worked at the IT company. And let me say this before I reveal them, I fully understand that there is nothing sexy about what I'm trying to show you next. I fully understand that you know things that are 10,000 times deeper than this. But what's our fundamental job as fractional CFOs like at the end of the day? What are we really doing here? I would propose that our fundamental job as fractional CFOs is to help business owners understand their numbers so that they can make better decisions. At the end of the day, that's what it's all about, right? The end of the day, our job isn't to tell them all the answers because we can't be with them all day, every day. They're going to do stuff without us. Even if we were full time CFOs for them, we can't handhold them through every decision they make in the business. We've got to teach them how to think differently. We've got to empower them with a different set of skills so that they can take different actions, so that they can have the impact that they want to have. So there's nothing sexy about this. The sexiness is in the simplicity. So here's the four numbers that I came up with. The first one is revenue. That's the easy one. That's the one that everybody knows. Nobody really struggles to tell you how much revenue they made during a given period. I'm at the bar, I'm with my girls, I'm drinking White Claws. How's business going? Revenue's up 38% or golf or whatever it is you're supposed to do to have beers with guys and tell them about revenue. The next one. Gross profit. Yeah, nothing sexy. How much is left over after you buy all your cost of goods and pay for your cost of services? Net profit. How much is left after you paid all your SG&A and then my jam? Cash. Pretty straightforward, right? Nothing, nothing complicated. Nothing crazy about that. But show of hands, how many people in here would love their job 10 times more if every one of your clients understood how every decision they make in their business flows through these four numbers and what impact it'll have on them? Anybody? I don't know. I wish. I mean, we're working with our clients to get them there, right? But the cool thing is when they start understanding this stuff at the fundamental level, your job as the fractional CFO maybe counterintuitively becomes more powerful because you're not having to tell them to quit buying 3D printers anymore and worrying about how they're going to get cash for payroll. You can start working on the strategic stuff. You can start helping them with the three year, the five year, the ten year stuff. How are we investing in additional business acquisitions today? How are we hiring more people tomorrow so that we can do bigger stuff? It really frees you up to start doing the next level work that you've been trained to do for the last 10, 15, 20 years. So empowering them with something as basic as this actually creates more opportunity for you to add more value. You kind of see how that works. But the CEOs have to understand how to think through the basics and make the decision. So you're not putting out fires all the time. There's nothing that'll kill me more than having to put out fires all the time. And that's all I do as the fractional cfo. It's like, why am I even here? This isn't, this is an impact for me for the eighth payday in a row, trying to help you figure out how to move money from this account to that account so that we make payroll.

Every fractional CFO needs three things to be successful. You're gonna need a sound financial strategy for your clients. You're gonna need clients that are willing to listen and do the work. But you're also gonna need accurate and timely books. But if you're anything like me, you don't want your firm handling bookkeeping. You wanna stay focused on high ticket advisory services. And that's why my firm uses Desmul Desmool has built their entire company around providing world class bookkeeping and financial operations while providing the best customer service and client communications that I've ever seen. Decimal handles everything from bookkeeping to AR and AP to payroll and invoicing. They even take care of taxes. If you value accurate and timely books for your clients but you don't want to do it in house, then I highly encourage you to check out Decimal. My firm trust decimal for our books and we refer all of our clients to Decimal as well. Click the link in the description below to learn more.

Remember again, back to that fundamental truth. Without understanding, there is no action. And without action, there is no impact. So let's start with the basics. Why not? And I'll tell you that for my firm. We've been doing this for five years now. This is the core of our firm and we've got clients that pay 5, 6, 7, $8,000 a month. And this is at the heart of what we do every month. And you're telling yourselves, do they pay you how much for critical4? But I'm telling you, it's not the critical4. It's the work that we get to do once the Critical four has been mastered and we get to move on to the other stuff. That's why they stick around. In fact, after lunch you're going to get a chance to meet. We're going to bring three of our clients in. I think I mentioned earlier. They're going to talk to you about Critical four and how they've used it and how their business has been elevated, impact has been elevated as a result of them and their leadership. Understanding these basic fundamental things that aren't super sexy. There's no cool graphs and KPIs that go along with it. It's the basics. But the basics is what moves the needle. That's what so many of the business owners in the SMB space need. They need the basics. They think the advanced stuff is sexy, but without the basics, the advanced stuff doesn't matter. All right, my friends, I hope you found this episode helpful.

If you did, it would mean the world to me if you would leave a five star review on Apple Podcasts, Google Podcasts, Spotify, wherever you're listening to this episode. In the meantime, I can't wait to see you back right here next week.

I'll see you then.