145. THIS is Why Fractional CFOs Lose Clients (TOP REASON)

Foreign.

All of us in this room, fractional CFOs, we know it's not about revenue. We got to figure out what those drivers are for our clients. We can help them make the smarter decisions along the way so that they understand what the impact is down the road. That, to me, is what being a fractional CFO is all about, ladies and gentlemen. That's when clients, they show up for those CFO calls. When you're having those kind of conversations, they know that you understand what they're trying to do and you're going to help them figure out how to make it a reality. I get fired up on this stuff. This is what we get out of bed for, ladies and gentlemen. This is the fun stuff. Most business owners, certainly most earlier stage business owners, and certainly more experienced business owners, they can never get past the point for goals of some arbitrary revenue number. What do you want to do in your business next year? Eight figures. Eight figures? Why, that's awesome. Why.

Eight figures or seven figures or multiple six figures?

Right.

Whatever the number is, most business owners don't get past that point. How many of you have clients that like, they just have an arbitrary revenue goal that they throw out at you? Anybody? A lot of hands up. Right. Once you've got those forecasts and projections in place with them, you get to start moving to help them identify what their real goals are. Because even though our clients tell us they have these seemingly arbitrary revenue goals, most of them are people. They have selfish desires. They have things that are important to them. Really. I don't care If I made $10 million in revenue. I want to buy my wife a new house. I got three kids that are going to graduate high school in the next five years. I don't want them to have to take on the same debt that I had to so that they can go to college. We have a hundred employees that are amazingly hard workers every day. I'm so inspired by them just going to town and doing such great work for us. I want to pay them 10 to 15% above industry average for their compensation. We had a client a few years ago, super cool guy. Come hell or high water, he was given $10,000 a month out of his business to his church. There was nothing more important. He's like, I got to keep the lights on for my family. I got to keep a roof over our head and I got to keep us fed. I'm going to pay for the new wing in my church. $10,000 a month. It was like a three year goal. He's Like, I'm going to make sure that new wing happens. That was his thing. But when we first started working with him, he was like $4 million a year, top line. So your goal is to start to get to know your clients, peel the layers of the onion back and find out what really drives them, figure out what those real goals are. What impact do they want to have? Just like you, I mean, all of us in this room, fractional CFOs, we know it's not about revenue. It's about that cast, the distributions, the take home. Like, we know that there's things that need to happen in the financials for us to be able to realize the goals and impacts we want to have. We got to figure out what those drivers are for our clients. And I think it's one of the hardest jobs that we have as fractional CFOs to figure out how to get inside and flesh those things out. And I think the truth is it can only come over time as you develop trust and rapport with your clients. So it takes time, but hopefully not too much time once we figure out what those drivers are for them, the thing that gets them out of bed every day. And. And for those of you that have worked with me, I talk about the five drivers. Anybody remember what they are? Make my heart pitter patter. Who remembers the five drivers? Goals, dreams, fears, aspirations and uncertainties. I like to do them. The positive ones and the negative. Goals, dreams, aspirations, fears and uncertainties. Those are the drivers. That's what keeps your clients staying in the game. Those are the things that keep them up at night. Those are the emotional things, the feels, the insides that drive them as entrepreneurs. Those are normally the things that connect to their true goals. We got to figure out what those things are. And here's the cool part. Once you figure out what those are, it becomes a very simple math exercise.

From there, I know how hard it can be to build a fractional CFO firm. We spend our entire careers learning the technical side of things, but not enough people talk about how to build a business around it. The work is hard and I know that it can get lonely. And if we're not careful, we can end up losing our passion for the work. And ultimately we just burn out. For me, I realized that I needed three things in order to get my fractional CFO firm to get to the next level. I needed next level training from somebody who had been there and done that before to show me how to get my firm off the ground and how to scale it up. I needed to be around a community of other fractional CFOs that shared my energy and passion for the work. And third, every so often, I just needed a jolt of energy, a fresh spark to reignite my own passion for building a fractional CFO firm. If you're looking for that next level training, the amazing community, and that jolt of energy to get your fractional CFO firm unstuck and on a new trajectory, then I'd like to invite you to join our industry's only conference in the world, the 2025 CFO Accelerator Live, happening in Orlando, Florida, May 21st through 23rd, 2025. Over three days, you'll hear from me and some of the other most successful fractional CFO firm owners as we share the lessons that we've learned in building and scaling firms. You'll get to network and collaborate with hundreds of other fractional CFOs from all over the world. Firm owners that serve every niche you can think of and with every type of firm business model you can imagine. You'll walk away from our three days together with a renewed passion and excitement to get you back to your office and start scaling your and your impact. Click the link below to grab your tickets. And here's my promise. The price shown in that link is the absolute lowest price we're gonna offer. If you wait, you will pay more. So grab your tickets today and join me in Orlando, Florida, May 21st through 23rd for the CFO Accelerator Live. If you have any questions, just text live to 1-469-515-8087. I cannot wait to see you in May, my friend.

All right, you want to send your kids to college? How much does college cost today? I have no idea. All the money, 100 grand. Does that sound directionally correct? Let's call it 100 grand. We're adopting, by the way, so we're about to have like a 10 year old in the house. So I have to like start learning these things about like what kids cost. I have no idea. I know I've got to learn about Pokemon too. Like this ten year real quick, guys, just a personal aside, my wife and I have two years now have been trying to adopt and we were supposed to have a kiddo in our house last Friday and then it turned to Saturday. And then Friday afternoon they said, hey, we're going to have Jesse in your house on Tuesday, if that's all right. And I was like, I'm doing something on Tuesday. Is there any other possible day that.

We could do this?

So my wife's at home right now.

She couldn't be here.

She's at home waiting for this 10 year old boy that we're adopting to show up. And so on top of sweating up here, I'm terrified because I have to go home later and know about Pokemon. So that's what we got going on over here. No big deal. But we figure out what these drivers are, right? So they've got three kids, 100 grand each in college. College tuition, that probably sounds a lot like $300,000. He said they've got five years. We can start doing some math here. We got to figure out a way to increase free cash flow by $300,000 total over the next five years. So that means we probably need to do something that looks a lot like getting net profit up $300,000 over the next couple years. We know what the net profit margins are of the business, so we can extrapolate that up. And now we have a meaningful revenue number. Are you following my math? So now all of a sudden, we've got a business owner. Their thing is they want to pay $300,000 so their kids can go to college tuition free. We understand how that translates into the financials. We use that to, I call it working backwards through the critical four, right? We figure out the cash goal. We understand what net profit looks like. We know what the margins are. Now. We can understand what the revenue is. Now that we have all of those pieces in place, we can help them understand from an operational perspective how to run their business. You have to maintain 18% net profit margin at 4 and a half million dollars a year in order for you to hit this goal. If net profit margins are going to go down, then what else must happen? Revenues must go up. And so as these different things come in business, as these different seasons come through, as these different challenges that inevitably happen come around, we're there to show them how they have to dance in order to still stay on track to hit the $300,000 over five years. We can help them make the smarter decisions along the way so that they understand what the impact is down the road. Does that make sense?

Every fractional CFO needs three things to be successful. You're going to need a sound financial.

Strategy for your clients.

You're going to need clients that are willing to listen and do the work. But you're also going to need accurate and timely books. But if you're anything like me, you don't want your firm handling bookkeeping. You want to stay focused on high Ticket advisory services. And that's why my firm uses Decimal. Decimal 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 to all of our clients to Decimal as well. Click the link in the description below to learn more.

That, to me, is what being a fractional CFO is all about, ladies and gentlemen. When we get to a point where we understand what our clients are all about and we can help connect the finances to the plan, when we're able to tell operations what they need to do, we can tell the marketing person that they need to have a 3x ROAS or the whole thing falls apart. And here's why. That's when clients, they show up for those CFO calls. When you're having those kind of conversations, that's when they will never, ever leave you, even if the economy goes to crap. Because they know that you're their girl, they know that you're their guy. They unders. They know that you understand what they're trying to do and you're going to help them figure out how to make it a reality. I get fired up on this stuff. This is what we get out of bed for, ladies and gentlemen. This is the fun stuff. And it all starts with the simplicity. It all starts with simplicity. So you don't have to have this crazy, you know, multidimensional models and all this other stuff that I see so many people talking about for your clients, right, for client facing now is what I'm talking about. Don't throw all that stuff in front of them. That's what they need. They need to understand how to make smarter decisions in their business. They need to understand their numbers so they can make better decisions. I said earlier, one of the two reasons that clients don't take action is we're not tying it back to their goals. You see what I mean by that? Now when we're telling them, hey, you need to cut your marketing expenses or you need to, you can't give the pay raise next year. When we just tell them that, we start to look like a constraint for them instead of somebody that's empowering them. But when we can tell the whole story, hey, this has to happen. This decision has to look like this or else your youngest child, who's not your favorite anyway, they're going to have to take out a loan for college because the oldest child's always the favorite. Is that right? I've been telling myself that for 44 years. I'm sticking to it. So you've got to connect those, those tactics and strategies back to their goals. We hear a lot about like the financial storytelling. That's the story you've got to tell. Z Score tells them nothing about how they're going to be able to send their kids to college. Quick Ratio tells them nothing about how they can pay their employees 15% over market average debt to equity does not tell that guy how he's going to be able to single handedly pay for his church upgrade. 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.