150. Tough Conversations = Loyal Clients. Here's Why.

Foreign.

They have that trust that you're going to show up for them. You're going to tell them they're doing a great job, when they're doing a great job, that you're going to teach them, you're going to pour into them, you're going to show them how to make smarter decisions, but you're also going to push back, you're going to push further, you're going to push harder. And when they can trust you to tell them that they're screwing up at a high rate of speed and you're not going to let them step on the landmine, that's where you get a client for life. That's what they need. That's what they want. Not better KPIs, not more metrics. That's the stuff that they need and that's the stuff that they'll pay you for. And that's the stuff that they will pay you for years for.

This one I think for me.

Is the hardest. Just me personally, when I have to just tell a client flat out, you're wrong, you're screwing up at a high rate of speed, as we used to say in the Navy, but we used a four letter word that starts with an F. You're screwing up at a high rate of speed, you're wrong. That's hard for me to do. I struggle with it. But when a client's making a decision that you know is a fatal bad decision, you've got to be able to step up and tell them that they're making a mistake. You've got to tell them like, look, this decision's poor and it's going to turn out tragically. You've taught them what you can, you challenged them. But the situation is calling for another level of pressure. We got to show up with it because remember, leadership isn't about us. It's not about what we're comfortable with. It's not about doing the thing we like. It's about showing up for people how they need us to show up. It's about motivating and inspiring, inspiring them to take action. And sometimes you got to let them know that you flat out disagree. I'm a professional. I've been doing this for 20 years and I can tell you that if you do this, your business will not survive. That's hard to tell a business owner that. It's hard to hear it as the business owner and it's hard to say it, especially as someone that's a vendor. At the end of the day, we're vendors but you got to do it. And I'll be the first to tell you, it's walking a tightrope. When you get into these conversations, you're balancing the fact that, yeah, you do work for them. You can't force them to do anything. But. But I'd say all of our clients anyway, would tell you that they're paying us to deliver the bad news when the bad news needs to get delivered. They're paying us because they trust us to let them know when they're making a bad decision. A lot of times as business owners, we get myopic. We do, but our clients do too. We get hell bent on doing a thing. We're going to. We're walking down this path. It's going to happen. We're doing it. And a lot of business owners have a lot of yes men yapping in their ear. Great idea, boss. I love it. Let's go. I'm all in. Let's do it. And so we get that litany of people telling us how amazing we are, and we just get the blinders on more and more. And so it can be hard to take from somebody like us that news that the thing we're doing is fatal. It's really hard to balance that. But again, your clients need you to do that. They're trusting you to do that. That's why they're paying you the big bucks every month, because they know that even though you're uncomfortable telling them that they're making a mistake, that you're going to show up and deliver the bad news. I would say it's a responsibility to show up that way when our clients need us to.

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 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 in 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, 2023 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 firm 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 enjoy 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.

Thinking back again to Covid we had a client that was running an urgent care facility in the Cayman Islands. If you thought that the catering industry took a hit. The only thing that keeps urgent care facilities open in the Cayman Islands are dumb Americans that visit the Cayman Islands and drink too much and they cut off all travel into and out of the Cayman Islands. I think it was like 80% of their revenue gone overnight. Now the thing about the Cayman Islands, it's an extremely poor country. Tourism is everything. If you're not in tourism, you're poor. And you're probably poor if you're in tourism. So the jobs that those people had was everything to them. Their family members weren't bringing in a lot of money. And I don't know if you know this or not, but the Cayman Islands, no ppp, no Eidl, there was no government bailout. They don't have an economy where they can even dream of doing something like that. And so our client, he's like, I'm not going to shut the doors, right? I got to keep feeding people. But the only way I can do that is I've got to lay off about 25% of my staff got to happen. He's a smart guy, lawyer, brilliant business guy. So we get on our CFO call, and he says, we're going to lay off 25% of our staff. But I don't want to do it yet. I want to wait. I want to wait another month. I recognize that we've got to lay the staff off, but I want to wait another month. I want to see how this Covid thing plays out. I want to see if it really ends up being as bad as everybody says it's going to be, because I know I got to lay these people off, but I also know that their families are likely going to go hungry, their electricity is going to get cut off if I fire them. And so I've decided to wait another month. I said, brother, you can't wait another month. Because when all of our money's dried up, when there's no revenue coming in the door, every dollar you have today is critically important. And if you wait another month with that full payroll burden, you're putting everybody at risk. You can't wait another month. And this is. This is a fairly large practice, right? So a 20, 25% payroll cut, significant. I said, brother, you can't wait another month. That next dollar is not promised. And so if you want to have the Runway, the maximum Runway possible, we've got to make changes today. He hadn't thought about it before because of his passion or his people, how critically important the dollar was today. And the fact that if you wait another month and you keep that burn rate going, there's nothing to make up for it. Once it's gone, it's gone. So I said, what if there's another way that we could take action today? We get payroll down where it needs to be to get us. Our goal was to get a year's worth of Runway, right? We wanted. We said, if we can make it a year, we'll make it through this thing. If we can't, you know, if in a year the island's still closed down, then, you know, we gave it our best shot. So I said, what if instead of laying off 25% of our staff in a month, which would shorten the Runway by months, I said, what if we cut everyone's payroll by 25% today? That way, nobody's going without pay. We don't have to send anybody home to tell their families that they're not getting paid anymore, and we just spread some of that pain across everybody, including the owner. And he said, I like that idea.

A lot more.

So he brought the team together, the whole staff, who was terrified, by the way, because they're not fools. They know that there's no patience coming in. They know that the chopping block is in front of some of them, and.

So they're freaking out.

So he calls the team together and he says, look, we got to make some changes, but I don't want to send anybody home without getting paid. So what I'd like to do is, across the board, 25% pay cut. And they rallied. They were all in on it. They loved it. It was a massive culture boost for them because they knew that he was going to do whatever it took to make sure that everybody kept some money coming in. And then, as Covid continued, people weren't worried about losing their jobs because he had been so transparent about the finances and what had to be done. And it really solidified his team. But if I hadn't stepped into that role that day and said, sam, if you don't make a change today, then your business will not last. And in hindsight, it would not have stayed open. They would not have had the Runway they needed until tourism picked back up those extra four or five, six months. Whatever we bought was critical for them. So we're going into a recession. Maybe. You think I'm worried about losing that client? Not at all. Because he knows when he's getting ready to step on that landmine, he knows that. That the KFE team's gonna come in and tell him what he's making a mistake and help him brainstorm and figure out other opportunities. That's what we gotta do. Ladies and gentlemen. It's not the cash flow forecasts. It's not the projections, although those are tools. These are the kind of conversations that people will pay you thousands of dollars a month more for than what you're making today. When they have that trust that you're gonna show up for them, you're gonna tell them they're doing a great job, when they're doing a great job, that you're gonna teach them, you're gonna pour into them, you're gonna show them how to make smarter decisions, but you're also go. Going to push further, you're going to push harder. And when they can trust you to tell them that they're screwing up at a high rate of speed, and you're not going to let them step on the landmine, that's where you get a client for life. That's what they need. That's what they want, not better KPIs not more metrics. That's the stuff that they need, and that's the stuff that they'll pay you for. And that's the stuff that they will pay you for years for. 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.