154. 9 Years Later: Fractional CFO Advice I’d Give on Day 1

Foreign.

At the time of this recording, I've been running my fractional CFO firm for nine years. But if I had the opportunity to go back and give my old self advice back on day one on how to build a fractional CFO firm faster, here's what I'd say. Number one, you don't have a business if you're the only one that can sell. Last summer, one of my business mentors looked at me and he said, michael, do I have your permission to give you some advice that's probably not going to feel very good?

I said, absolutely.

And so he looked at me and he said, the biggest problem that you have in your firm is that you're the only person that knows how to sell. He was like, heck, you're the only person that even knows how to go out and find new leads. Until you can solve for that, you really don't have a business. He was absolutely right. His advice didn't feel very good. But he also wasn't wrong. Sales are the lifeblood of a business. And for many of us running firms, we're doing a dozen things at any given time. We're onboarding new clients, we're talking with bookkeepers about whatever went wrong with a reconciliation, working with our vendors. There's all these different things that take away time and attention from prospecting and from sales. And it's easy to go days or weeks or even months without giving a second thought to prospecting and sales because we're so busy. And when that pipeline dries up, so does any chance of growing the company. And so if I could go back to day one, I'd tell myself, listen, priority number one is to figure out how to find leads in closed sales and then document that process and then hire somebody to help with it asap, even if they're just there on a part time basis. Now, that mentor, that same mentor, he also told me that I needed to start working with bigger clients. Which leads me to the second lesson that I would share with myself back on day one. And that is solve big problems for bigger clients instead of solving small problems for broke clients. The reality is that small clients are typically broke. And with broke clients comes drama. They tend to expect the world from you. They're really hard to work with. Plus, it's true that sales are hard. It doesn't matter if you're selling to big clients or small clients. It's the same exact process. It takes the same amount of time, investment. It's the same everything. And so why not take that same everything and go after clients that have more money, less drama, and more realistic expectations. And that leads me to a huge realization that I would share with my day one self. And that is the best clients pay for outcomes, not your time. When I was first getting started, it seemed like all the clients that I was talking to on sales calls were asking, well, how much time are you gonna be spending on this and how much time do I give you on that and how much time are you gonna be working with me and how much time are you gonna be working with other clients? And what I've realized is the clients that we ideally wanna serve, the clients that we can have the most impact for, they really don't give a rat's batootie. Sorry about the French. About how much time I'm gonna spend working on their individual account. All they care for are the outcomes that my firm and my be able to help them accomplish. They care about the profitability that we're going to help them achieve, the systems or processes that we're going to help them implement, the exit that they're trying to get after. And really, at the end of the day, they don't care if we spend one hour getting them to that point or if we spend a thousand hours getting them to that point. All they really care is about the outcome. And so my advice to my day one self would be when you start working with prospects and potential clients or even actual clients, and they start hounding you about how much time you're spending on their account or working with them, that's a big problem. And if it's happening before you close the sale, it might mean that that's not an ideal client for you. And if it starts happening after you close the sale, it might mean that there's something wrong with your service. But watch out, watch out for those clients that are so fixated on hours versus outcomes.

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The fourth thing that I would go back and tell my OG self back on day one is that middle bandwidth is so much more valuable than time. I think there's this it's a kind of a semi truth in business where people are talking about the most valuable resource that you have is your time. And over the last nine years I've just found that that's not actually accurate. Yes, time is really valuable, but I don't think it's the most valuable resource that you have. For me anyway, I found time and time again that the most valuable resource I have is my mental bandwidth. Because even if I have all the time in the world, but my mind is just so inundated with putting out fires and on the tactical things in the minutiae things and I'm always worried about whatever emergency is right in front of me. It doesn't give me that space to about the future of the business. It doesn't give me that space to think about how we're going to solve bigger problems for our clients. I guess it's like that old saying of you need time to work on the business instead of in the business. And for me like the mental bandwidth in the business versus on the business is a really important distinction. And so if I could go back and Talk to Day1Self Nine years ago, I would say yeah, focus on getting yourself more time. Find different ways that you can leverage team and systems and processes and automations to get more time but also really, really protect your mental bandwidth. Give yourself space to think and solve big problems. And one of the big tools that's been helpful for me in that is just journaling, sitting down and brain dumping those things that are just like occupying my space and keeping my mental bandwidth full of things that aren't serving me well, just having that opportunity to get them out on paper. I use an iPad instead of pen and paper. But actually going through that physical process of writing to get those things out of my head so that I can focus on, you know, decisions in the, in the firm that are worth hundreds of thousands of dollars or millions of dollars. That's incredibly important. And I think that is actually more important dollar for dollar than my time. Number five, simple scales. Complexity fails. The more things that you add to your firm, the harder it gets to scale and it could even lead to your business tanking. In fact, I have this framework called the Fundamental truth of running a Fractional CFO Firm. And it goes like this. Simplicity leads to understanding, understanding leads to action, and action leads to outcomes. I found this to hold true for just about everything that a fractional CFO firm can do. From deciding which software to use to which roles to hire for, what opportunities to go after, what services to offer clients, even which deliverables to serve up to your clients. When you can keep things simple, life is so much easier and scalability is so much easier and faster. But every single time you start adding in an additional layer of complexity, it rarely results in a positive roi, it just results in headaches. My advice to myself from nine years ago would be to just let no be the default answer to pretty much anything that comes your way until a really good business case has been made on how it's essential to your firm's growth or your clients outcomes. Then and only then, start considering saying yes. Number six, solve problems that are staring you in the face today, not the problems that you think will exist tomorrow. On any given day, running a fractional CFO firm, you're going to have one or maybe two big problems that are bottlenecking your entire firm in the early. That's probably going to be getting more leads in the door over time that might evolve into onboarding clients faster or hiring more team. Who knows what it'll be now? Those are usually really hard problems to solve or else they wouldn't be your biggest problems. You'd have already solved them. But hard problems are also the easiest problems to avoid. The default response for me anyway can be to go solve some problem that I think is going to happen in the future. Today I would tell myself stories like, yeah, I know I don't have any leads right now, but I should probably go and review my new client onboarding process so that it's better once I do get clients on the door. Saying that out loud sounds really foolish, but for me Anyway, I found myself getting into that trap time and time again. It's way easier to go and fix the onboarding process that I don't really even have any clients in onboarding right now, but it's easier to go fix that process than it is to go get leads.

I mean, how silly is that?

I'm fixing a problem that doesn't even exist today and it's normally just an excuse to avoid what's right in front of me. My advice to my former self is to first acknowledge that yes, the problem in front of you is hard. Maybe it's really freaking hard, but then to aggressively tackle today's problems head on. The seventh bit of advice I would give to my former self is that the more I'm willing to niche, the easier life gets. I don't know why, but there is so much haterade in the fractional CFO industry about niching. But for me, it has been a massive unlock. Yes, it's true that there are plenty of firms out there that don't niche and do well. But again, for me, it's fractional CFO scaling on easy mode. I mean, literally everything becomes easier once you've decided to niche down. Sales becomes easier because you have more credibility Prospecting because easier because you know who you're prospecting to Process become easier because you've only got one industry that you're trying to come up with. Processes for hiring becomes easier because you know exactly what skill sets and experiences, experience and expertise you need to hire for client. Onboarding becomes easier. New CFO onboarding becomes easier. Literally everything becomes easier the more that you're willing to niche. But I avoided this for years because I kept telling myself that if I niche down, there's not going to be enough clients to go around. If I niche down, I'm not going to have any business. But that was just really a scarcity mindset. In fact, I found the opposite to be true. The more I niche down, the more referrals that I'm getting, the easier that marketing is becoming, the more I'm able to charge because of the credibility factor that comes along with just saying I work with construction clients or I work with e comm businesses that are over $2 million a year. Whatever your niche is, it really does unlock easy mode. Number eight. No one in your company is going to care as much as you do, and nobody in your company is going to do it as well as you do. And both of those things are okay. I think there's a reality here that nobody that's going to work for you has put in the time, the effort, the blood, the sweat and the tears and the risk into getting your business up and off ground as you do. And so they're simply not going to be as invested in it as you are. And that's okay. I mean, why should they be? It's not their company. They're here to do a job. This is your family, this is your life, this is everything that you've got is like riding on your fractional CFO firm. And so naturally they're not going to be as invested as you are. And I don't think that it's fair to expect somebody to be as invested or to care as much as you do. If you want them to be as invested and care as much as you do, give up some of that sweet, sweet equity. Until that day comes, then keep your expectations in check. Number two, part of this is that nobody is going to do things, whatever those things are as good as you. And I think that mostly that is a complete myth. If you hire well, if you train well, if you have good processes and procedures, then you'll find that maybe people don't do things the same that you do, they'll do things differently. But I think that you'll find that over time, if you're hiring well and you're setting expectations and doing all those things well, you'll find that your team can get things done as well as you, if not better. If they're not, that's probably a you problem, not a them problem. The ninth bit of advice I would share with my former self is probably the most important one. And it's that the hardest part of scaling a fractional CFO firm is unlearning what made you successful at the last level. We've all heard that old cliche that what got you here won't necessarily get you there. But applying that is really hard. And sometimes it's extremely difficult to see exactly what that looks like on a practical level. It's hard to see what we're doing day to day that's keeping us from getting to that next level because we're just so ingrained on what worked before that we just keep doing. And you can't see the forest through the trees. And so some examples of that are like replacing the hustle with systems. You know what got me to the half a million dollar mark was just working really, really hard, working a lot of hours or working weekends, and just brute forcing my way to get there. But to get from half a million dollars to a million dollars or 5 million or certainly $10 million hu going to get you there, you're going to hit a ceiling, you're going to burn out and you're going to stall out and your business might actually fail. Another example is that I know that I've got to build marketing and sales playbooks rather than just relying on referrals. The referrals, I mean, gosh, they'll get you to multiple six figures a year, but if you're trying to get to seven figures or multiple seven figures, referrals just aren't going to do that. I also learned early on, and I wish I'd learned it sooner, that hiring and mentoring other fractional CFOs, that's what it takes to scale. Not just me being the only expert, being the only fractional CFO on the team, it's really hard to get out of that because the work that I did as a fractional CFO was really effective. The work that I did as a fractional CFO resulted in some amazing outcomes for my clients. But in order for me to get to that next level, I can't do fractional CFO work anymore. And I wish I had learned that lesson earlier. I also learned that you've got to shift from being busy to optimizing for profit and efficiency. There's so many things that like, filled up the calendar that I thought were necessary in order to get to that next level that it was hard for me to keep my eyes on the firm's profitability and the firm's efficiency. And if I had learned that sooner, we would have been able to scale. But again, being busy, a lot of those things that I was doing back in the day, they were absolutely required. But today I know to get to multiple, multiple seven figures. And ultimately on this journey to an eight figure firm, being busy isn't the best use of my time. It's how do I maximize our margins and how do I maximize the firm's efficiency.

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.