17. The REAL Pros and Cons of Offering CFO Services (Part 3 of 4)

There is so much hype around virtual CFO services. And if you listen to that hype, you might be led to believe that virtual CFOs make all the recurring revenue. They get all the best clients, they basically work like five hours a week. They get endless access to brand new seasons of Bridgerton. They're basically living the best life possible. But if you're anything like me, you're probably wondering if that's all legit or if it's just hype. Welcome to the third part of this four part series where I'm breaking down all things virtual CFO services. In this episode, I'm going to give you three pros and three cons from behind the scenes so that you can determine if offering virtual CFO services is the best move for you. Let's do it.

Hey there. My name is Michael King. I'm the creator of the Connected Accountant and the founder of KFE Solutions. And my firm has been offering CFO services for over six years now. Honestly, CFO services are some of the most rewarding and fulfilling work that I've ever done in my professional career. But I also recognize that CFO services aren't for everybody. So I'd like to share with you some behind the scenes pros and cons that you may not have considered. The first potential con to offering CFO services is that those services require absolute critical thinking. What I mean by that is first you're having to analyze the financial data. You're having to pull out key insights and come up with actionable items for the client. But you also have to simultaneously balance that against the client's goals and their tendencies, their habits, their fears, their apprehensions. And you've got to take those insights and those client behavioral things and marry them together to come up with the right suggestions for that client. You can't do one without the other or you're going to lose the client. And so that requires a constant and deep level of critical thought. And it's not that other services like bookkeeping or accounting don't take critical thinking. I'm not suggesting that at all. It's just that I've found that CFO services require a much deeper level of critical thought. You absolutely can't just phone in CFO services. You've got to do the work. The first pro is that CFO services typically mean that you make more money with higher margins while working less time. I remember when we made the shift from offering bookkeeping and accounting services years ago. We went from charging $500 a month to about $1,500 a month in our first 30 days. In the months and years since then, we've gone from 1500 to 2,500 to 3,000. And now we're in excess of $4,000 and beyond. And because of that, that means that you can serve fewer clients, have a greater impact, all while working fewer hours. And that change has made a night and day difference for my personal life because I don' at work nearly as many hours to make the same amount of money as I used to be. The second potential con of offering virtual CFO services is that, honestly, sometimes boundaries can become an issue. And when you think about accounting or tax prep, boundaries and scope of work are pretty clear, right? The books are closed out, the taxes are filed, wipe your hands. End of day, we move on to the next thing. But that's not always the case with CFO services, and there's a few reasons for that. The first one is the fact that especially newer fractional CFOs or virtual CFOs, they're not really good at coming up with the defined scope of work for their services. And you and I both know when we don't have a really clear and defined scope of work, scope creep can start to come in because we haven't really been clear on what it is we're supposed to be doing. The second reason that boundaries can become an issue with CFO services is because most of us are super passionate about serving our clients. We want to pour into them. We want to do all the things. And because of that, we oftentimes find ourselves saying, all right, let me do just this one other thing for our client. Let me just help them with this one other project, this one other thing that's outside of what I should be doing. But as you and I both know, one thing becomes two things becomes ten things. And after a while, those ten things become expectations that the client has of you to do. Right. Precedent is a real thing, because now we're doing 10 things that are outside of the scope of work. We start having to work longer hours on that client, and we start to resent the work and resent the client, and that ends tragically for everybody 100% of the time. The third reason that boundaries become an issue is because we have this mindset that we're charging all this extra money, but we're only working a certain amount of hours. We're correlating our pricing to, like, an hourly rate. Even if we're charging a fixed price, we still think like, oh, I'm earning this much per hour. And we start to feel guilty about that. And so we start to convince ourselves that we've got to do more work or additional work because they're paying us all this money. And I'm like, no, that's such a big mistake. Because you've got to shift your mindset from thinking about the hourly work that you're doing and more think about the value you're creating. And those are two very different mindsets. And a lot of times it's hard to make that shift. And honestly, it can take a lot of time, and it always takes a lot of discipline to shift from that hourly mindset to the value creation mindset. The second pro that comes along with offering advisory or CFO services is that there's a lot less complexities and a lot less risk. And here's what I mean. Those of you that do tax prep, for example, you know how crazy that life can be. The government likes to wait until right up until the end of the deadlines to announce laws and regulations and form changes. And you're like running around trying to collect 89 different documents from 32 different clients. And it's rush, rush, rush, trying to get everything out the door by April 15th. And in the midst of all of that, you've got to stay complete, completely up to date and abreast with all the law changes and the regulation changes and the form changes. Because if you goof up, it could cost your client thousands or tens of thousands of dollars or maybe more. And so that puts a lot of burden on you as a tax preparer and as a tax expert to manage all of those deadlines and all of those those dynamics that come along with it. But that ain't how CFOs role. We don't have those kind of rush, rush, rush deadlines and complexities that come along with offering some other services like tax prep. It's a much more predictable, chill, steady state world. And I get it. There are people out there that absolutely love doing tax prep and doing things associated with that. And I'm so grateful that they're out there. That's just not a life for me. The third downside to offering CFO services is, honestly, it's a downside that I grossly underestimated. And that's the fact that hiring people to help you with CFO services is a lot trickier and a lot harder than hiring somebody to help you with bookkeeping or tax prep. Here's what I mean is you've no doubt realized by now the forward looking work is very, very different than typical accounting work, bookkeeping work or tax prep work. It's a, it's an entirely different skill set and it's honestly a much rarer skill set to find. And so when you decide that you're ready to start scaling your business and you want to bring on additional fractional CFOs or virtual CFOs to help you with the work, you've got a much smaller pool of people to pick from that have that skill set. And so that means that you typically will have to bring somebody on and then train them and teach them how to do the forward looking work. And that takes in some cases a lot of time. And so there's payroll and things that come along with paying those people while you train them. I grossly underestimated how hard it would be to find people that are interested in the forward looking work, that have the technical capabilities to do it and that are willing to come in and like learn those kinds of skills and then get them onboarded and get them out there to where they're starting to generate money for the company. So much, much harder to scale your team. And because it's harder to scale your team, it's frankly harder to scale your revenue compared to compliance or non advisory services. The third and final pro for offering CFO services is the fact that those services can be absolutely transformational. And what I mean by that is when you get the right kind of client, the client that's willing to listen to you, that's willing to try some of the things that you suggest, and when you deliver them a really, really good CFO experience, you can start to see the progress that they make with their business. You get to start to see revenues increase and profits increase and cash flows change for the better, debts go down. And when those things, businesses can hire more people and they can pay people more money, and when more people have jobs and when they're making more money, they get to go buy houses and send their kids to college and save for retirement and do amazing things. And you get to sit back and look at that and realize, wow, I made a real impact. I made a real impact with real people. And you have the opportunity to see firsthand what that impact is. The other transformation that you'll see when you do it right with the right kinds of clients is you're going to see the entrepreneurs themselves evolve. They're going to start to make more informed decisions, they're going to start to feel more confident. You're going to see them mature and grow as a business owner and do even more amazing things and you're going to enable them to have an even greater impact. Like I said before, CFO Services has been absolutely my team's favorite work that we've ever done. We love getting up in the morning, we love serving our clients because of that impact, because of that transformation that I've been talking to you about. And so I want to encourage you, if you're just like noodling on the idea of maybe getting into CFO services or advisory services, I would encourage you to just pick one of those forward looking services that I talked about in the previous episode and just test them out for two or three months with one client and just see if it starts to have an impact. Just see if you enjoy that kind of work. And the good news is if you don't like it or it's not as effective as you thought it would be, you don't have to keep doing it. But I really want to encourage you to try it out. I would also say that if you want to go deeper and you're really committed to implementing those forward looking CFO services in your business, check out my brand new course called the CFO Academy. The CFO Academy is the seven playbooks that my team and I use to run our firm. If you're interested, you can learn more@the cfoacademy.com in the meantime, be sure to join us right here next week where we're going to wrap up the fourth part in our four part series on CFO services. And I'm going to lay out to you some very specific steps that you can take to start implementing CFO and advisory services in your firm. Can't wait to see you then.