74. New Fractional CFOs: LISTEN TO THIS! (4 Show Stoppers)

Foreign.

If you're even thinking about starting a fractional CFO firm in 2023, then you've got to be aware of the four roadblocks that stop virtually every new fractional CFO firm owner dead in their tracks. In today's episode, I'm going to explain why right now is probably the best time in history to start a fractional CFO firm. I'm going to share the four roadblocks that are stopping so many people before they even get started. And I'm going to tell you the four secrets to success. The four things that you've got do to maximize your chances of getting started and being successful as a fractional CFO firm owner. Let's dive in. I think everybody on this call knows the basics. You got to figure out what services, you got to figure out your pricing, you got to figure out your ica. We all know that stuff. But the reality is not everybody's doing it. And so what I want to talk about today is four non obvious steps to get started. And I think the time that we're in right now is absolutely perfect for those of us that are just thinking about CFO services or maybe those of us that have dabbled, but we haven't fully committed yet. I don't know if any of you have had a chance to look at the news today, but the Fed just had a leaked memo. They're getting ready to raise interest rates another three quarters of a point. If we haven't hit the checks in the box for recession yet, we're very close to it. And I'm like, even if, even if we don't go into a full blown recession, is now even a good time to be thinking about CFO services? And I'm like, right now is probably the best time to be thinking about it. And here's why. What I think that we're going to start seeing as we start getting into the swing of this downturn, commodity type services are going to start to get really compressed from a pricing perspective. People are going to be looking to cut back on those expenses that aren't driving real tangible value for them. And not that my message is that compliance services aren't valuable, but think through it through the lens of the customer, right when they start looking at some of these services that they could honestly go to the Philippines and get a licensed CPA to work $5 an hour, they're going to be looking at making those changes. But then when you think about CFO services and how, how is that impacted as a CFO you're focused on helping them get through the crises. You're the one that's showing them the cash flow, forecasting. What changes do you need to make right now, today, on June 15, so that on October 15, if we're neck deep in a recession, you've already been set up for success. You're already helping them think about hiring decisions. You're already helping them think about strategic goal setting. You're establishing yourself now as that person that they can't live without, because you're working on those things that are all in the future, right? And you hear me talk a lot about those five things you got to hit on. Goals, dreams, aspirations, fears, and uncertainties. Those things all live in the future, right? The recession that's coming, that lives in the future. If you're that person that's walking alongside them, you're not just their cfo, you're a peer CEO. And you're helping them think through those strategic kinds of things. Planning for the future, minimizing risk, giving them advice, not just giving them reports. You're set up for success, but now's the time to do it. Because if we wait until Q3, Q4, or maybe Q1 of next year, when the economic downturn has started, it's going to be infinitely harder to sell the concept to people. They're already in the thick of it. And so I'm like, what you got to do now is get in the game. You've got to establish yourself as that strategic advisor now. Don't wait. Start now. So that when the downturn starts to come, I mean, we're feeling it in the grocery store, we're feeling it in the gas price. It's going to get worse when they start to really start, feel the economic pressure in their business. You've already got some miles and some credibility with them. You've been working with them for a couple months, and they're like, there's no way I could work without her. Right? I know we're getting ready to go into the muck. There's no way that I can't have Shawna on my team. There's no way that I can't have Amber on my team. Right? Terrence is too critical. We'll cut other expenses, but it ain't gonna be Terrence. So I think right now, like, this is the time if you've been sitting on the sidelines, if you've just been thinking about it, you've been dabbling in it, don't sit on the sidelines anymore. Let's Go. This is the time. That said, I see a lot of people talking about it. A lot of people DM me and ask me questions, A lot of people post about it. But the number of people that I see getting started is a lot lower than the number of people I see talking about it. And back when I worked in manufacturing, one of my bosses introduced to me this idea of the human action model. And if you have pen and paper, I want you to write this down because this is. We're going to use this through the lens of you starting advisory services. But this is applicable to anything in life. What I'm about to share with you, it's gold. Okay? Three conditions must exist in order to get a human being to take action on an idea, to get them to move forward on something. And so we're going to start today. I'm going to talk through this human action model and I'm going to tell you, I know you're stuck right here. We don't even have to get. I already know where you're stuck. You're stuck right here. But I'm going to share with the whole model with you and then we're going to talk. If you're stuck here, this is what you got to solve for. These are the four barriers that are keeping you stuck here. These are the four non obvious steps that you've got to take to really move forward. Sound good? This is way better than figure out your scope of services and your pricing. And yeah, I'm more excited to talk about it. All right. Anytime we want somebody to take action in life, the first condition that has to exist.

They have to be uncomfortable with the status quo. We have to be uncomfortable with the status quo. If Diana comes to me and she's like, michael, I want you to go do this. If I'm like Diana, Diana tells me to buy a new chair. I'm like, Diana, my chair's super comfy. I'm not on. It's great. Why would I buy a new chair? There's no way she's going to get me to go buy a new chair. There's no discomfort with the status quo. You know, one of my big goals is to get healthier this year. I didn't do it before, didn't get started before because I wasn't uncomfortable enough with my pants. My pants finally got to the point they were super uncomfortable. And I was like, okay, human action model step one exists. So there's got to be this discomfort for a lot of you through the lens of starting advisory services. What does that discomfort look like? It might look like you're working 80 hours a week across 50 bookkeeping clients. We just finished tax season. Gosh, I guess it's been 60 days ago now. It feels like. It feels like it was two weeks ago. Maybe the discomfort was coming out of tax season. And for the eighth consecutive year of your life, you're chasing around people doing. You need basic information for tax returns. Maybe you're tired of working all those hours and making tens of thousands of dollars a year. But that discomfort has to exist. And I see the discomfort when I talk to you guys. I see the discomfort not loving the work. Step two, or condition two, that must exist.

You got to have a vision of a better state. You've got to have a clear vision of a better state. I think back to when I used to run competitive triathlons, and I'm like, man, I was super fit. I had hair and I was fit and my pants fit, and it was awesome. Or maybe my chair is uncomfortable, and I think of like, well, I've had comfortable chairs before, so maybe Diana's onto something. I can imagine this awesome chair that's super comfortable. I can do all this creative work in it. You have to have that clear vision of a better state. And for advisory services, a lot of times you look at people that are doing it. You know, you look at what Carlos and I are doing with KFE. We've got 10 or 12 clients in the hours that we work, the revenue that we're doing, you look at Shannon or Shawna or Jenny and some of the stuff they're doing with their clients, the money they're making. And I think five of four of the six people in the mastermind decided drew a line in the same. They're not doing taxes for anybody ever again. They're done. You can see that better state. You see the vision of the future. You know what it could be. I think most of us have that when it comes to advisory services. So what are we missing? What's that missing element that's keeping us from moving forward? And I know it's this one, because this was the one that held me back for so many years.

You've got to have this belief that you can reach the better state. You've got to believe that you can get there. We'll go back to the health example. One of the things that slowed me down earlier this year is I'm like, yeah, I'm uncomfortable. I know what good looks like. But, gosh, there's diet, and there's exercise and better sleep. There's all these things and I'm like, what do I do first? What's the next step? As busy as I am running two businesses and we're in the adoption process and oh my gosh, now we're moving, do I even have time to do the things that I need to do? And I didn't have that belief that I could do it because of all these other barriers that I was putting up. This can be applied. If you've got clients that don't show up for calls, as an example, how many of you have clients that sometimes don't show up for your one on one calls immediately go back and just ask yourself, one of these conditions doesn't exist 100% of the time. If you've got a team member that's not getting things done on time, one of these three or more of these three things exist. If you've got kiddos and you can't get the kiddos to do the thing you want them to do, it's one of these things. This is a great framework to go back to for the rest of your life. Anytime you're struggling to get a human being to take some kind of action and they're just not doing it. So yesterday as I sat down and I talked to several of the people in the, in the mastermind, in the community and it became apparent to me that there's four belief barriers that are causing people to not take these four actions to really commit to getting started. And what I want you to do is as we go through these, I want to challenge you to practice what I call intellectual integrity or intellectual honesty. Just be honest with yourself. Is this one speaking to me? Is this the reason I'm not moving forward? Because it's going to be important to identify which one or ones of these is holding you back when we get over here. So the four belief barriers that I see holding people back from getting started.

Number one, you don't bring enough value to the table for your clients. I'm a bookkeeper. I've spent my whole year doing books. I'm an auditor. I do taxes. I want to charge this premium price. But because of insert story about yourself here, I don't bring enough value to the table for my clients. Yeah, I see Mike charging 3, 4, 5, 6, $7,000 a month. I see all these other people doing that. I can't do that because I don't know enough. I don't bring enough value to the table and nobody will pay me that. How many of you have told yourself that story before. If you're not raising your hand, you're probably lying.

Okay. Or maybe you're just doing something you're busy writing. That's probably more fair than you're lying. This is a big one that holds people up. The number two belief barrier that I see is around complexity. You have this belief that in order to offer CFO services, there's got to be like 59 different things that services that you're offering to your clients. Well, if I want to offer CFO services at this price to make the value worth it. Oh, boy. Let's get the list out. What all do I have to offer here? Well, I probably have to do all the normal stuff Mike talks about with cfo. The forecast, the projections, the goal setting. They're probably going to want me to do tax strategy, too. I don't know anything about tax strategies. Gosh, you know, come to think of it, they probably. For that price, I'm going to have to offer bookkeeping, too. And you know what? They. I see everybody talking about it. If I'm going to offer bookkeeping, I got to do AR and ap, which means I probably got to do payroll, too. To get that $3,000 a month. There's 1099s. I got to do 1099s for them. If I'm doing all that, I probably have to do taxes, too. They're going to tell me I have to do their taxes, too. If I'm going to do all these other things, I got to do taxes because they want all the things under one roof. I'm like, you're wrong. You're wrong. There's just some basic, basic things you have to do. And one of my. One of my YouTube videos I did recently, I kind of, you know, it kind of cheeky talked about how those of us that do CFO services, we live in the wild, wild west of financial advisory services or whatever. And I'm joking, but it's serious because it can be whatever you want it to be. For a long time. When we burnt out a couple of years ago when Carlos and I fired all our clients and everything, it's because we were doing all the things we told ourselves we had to and because we had told ourselves that story. And I'll be fair to Carlos, it was probably me that told us that story more than us telling ourselves that story. But we go out, and that's the clients that we attract. We attracted the clients that required all of those things. And I'm here to tell you I've not had one good client that requires all of those things they normally suck. Because the good clients are the ones that value specialty. They're the ones that value. You have a tight scope of work and you're world class at it. And so this, this idea that it has to be this super complex offering is. It's just bs. What do you have to do? Well, like I said, you can offer anything. But I'm like, really? At the end of the day, for me, those Core 4 services you have to offer, cash flow forecasting, budgets and projections go setting, right? It's the basic, basic forward looking stuff. Can you do more? Absolutely. But you don't have to. So get out of your head. Quit telling yourself this story that you have to be all the things in order to charge more money, because it's just wrong. Been doing this six years now, lots of evidence. It's just wrong. Can be super simple. The third belief barrier capability. You're telling yourself that you don't have what it takes. Tori's shaking her head. You're telling yourself you don't have what it takes. And I'm like, really think about, like, at the core, what is cash flow forecast like at its core? And I will tell you, Carlos, raise your hand. Tell me if I'm wrong. The number one thing that we do for our clients that adds more value time and time again than any of our other services is cash flow forecasting. Is that accurate, Carlos? Is that, that's the thing that they come back to, how do I make smarter spending decisions? Can I afford this marketing budget? Can I pay myself more? Can I hire this person? Can we get a bigger, like, can I, can I can. And I'm like, okay, what is cash flow forecasting like at its core? What is cash flow forecasting? Four things. How much money do you have in the bank today? At the beginning of the day, how much money is going into the bank today? We're going to add those two together. Then we're going to subtract the money that's going out of the bank today because you've got expenses. And then you're left with your bank account balance at the end of the day. Is that wrong? No. And so I'm like, instead of just looking at today, we're going to look at weeks or months into the future. That's it. And so you work alongside your client to figure those things out. You know, when are your launches, what are, when are you hiring and when are you giving pay raises? Right. So you ask some questions to get some. Some clarity on those. But you and your client work on that together. That thing alone right there is a game changer for most clients. I mean, going into a recession. I mean, think about how many of your clients would love to have that picture painted for them right now where you're just looking into the future with them, helping them be conservative with their cash inflow estimates, helping them be a little bit more aggressive with the outflows so we get the most conservative picture possible on those end a week or end of month bank account balances. How many of your clients would love to have that right now? And I'm like, literally, it's that simple math, right? And that's the number one, hands down, most valuable thing we do for, like. They love it. They love it. They love it. Let's go back to 2019 when Covid hit. You know, KFE wasn't around in 2008 when the last recession hit. But for business owners, 2019 looked a lot like a. Like a recession on crack. Right? Because it just kind of came 30 days. You know, businesses tanked within 30 days. It was fast. What'd we do? We talked about cash flow forecasting with them until, like, our teeth hurt from talking about it so much. Still. We have clients talk about the sage advice. We have a client that owns a medical facility, references back to the sage advice we gave them during COVID around cash management. And I mean, it's as complicated as this. You need to make those cuts now rather than later, because once the money's gone, the money's gone. Right? And so it sounds very obvious to us, but our clients are in the thick of running their businesses. And I mean, this guy, he's an attorney. He's a lawyer, international attorney that runs a doctor's office. You know, you would think that guy super smart. He's going to look at you and tell you, like, slap you. Why would you tell me that? Obviously, I know that, but that's just not the case. Right. So I want to remind you, you are capable of doing these things, forecasting, projections, basically, cash flow forecasting. And you tack on gross profit margins and net profit margins. Right. It's really not much more complicated than that. Yeah, you get into accrual accounting or if they've got inventory, it gets a little more complicated. But at the end of the day, it's a cash flow forecast with margin percentages. Right. Goal setting. It doesn't matter if we're in the biggest upturn or the biggest downturn in the history of the World clients need help with setting goals. I look at the stuff that you all are talking about on social media and in your businesses and I'm like, everyone in this room is smart enough to do that kind of stuff. You don't have a capability problem. You have a belief problem. And it's holding you back from doing these steps over here. It's holding you back from helping your clients freak out a little bit less about what's going on in the world right now. And I'm like, you're cheating yourself and you're cheating your clients. All right, the fourth belief barrier.

Scarcity. Scarcity? What are you talking about, Mike? Scarcity of what? This one spoke to my heart when I first got into this. I'm like, how in the world am I going to find enough clients to help me hit my million dollar goal? Where does anybody else struggle with that? Or is it just me? Because I'm not a marketer. I'm trying, I'm learning, I'll get there, but I'm not a marketer. But look, let's do some quick math. Who here would love to do a million dollars? Top line is million dollars like a pretty good goal? Cool, let's look at some quick math.

In fact, let's make it a little bit more. A little bit more bite size. Anybody here would love to do 360,000? I like simple math. Sorry, 360 grand, is that a good goal?

What does that come out to per month? I got a bunch of accountants. Nobody.

30,000 bucks a month. Let's just get crazy and say that we're going to charge $3,000 per client for our advisory services. And that's not a stretch, people. That's super dope.

You need 10 clients, you just need 10. You don't even have to be good at marketing to get 10. You just have to like show up and post some stuff and ask for clients to get 10. And you don't even have to get 10 all at once. You know, you can drip those in. And I'm like this thought that you've got to be this world class marketer and you've got to have ad spend and you've got to, you know, Facebook and ads and Google and all this crap. And you've got to drive all these people to your opt in page. You've got to have this awesome, you know, lead generator for people. I'm like, no, no, no. You just need 10 clients. This changes the game for most of us. $360,000. Gosh. Even if you have A team of people. And you're paying, you know, payroll of 50% of revenue. That's still $180,000, you know, and that's if you're super just blowing money on great talent. I mean, Carlos, I want to go get 10 more clients now. What are we doing, man? If the idea of how am I going to get, you know, and again, if it's a million bucks. 30. You need 30 clients at 3,000. And I'm telling you, if you get the right clients, $3,000 is kind of just getting in the game. It's achievable. You got to work to get there. But it's doable. So I'm like this idea around. I'm not a good marketer. There's not enough clients. Oh, no, sticky bomb.

It's a story that we tell ourselves. So what do we do? How do we move past this? I do think there's four non obvious steps to take to move past them.

Number one, Carlos came up with this yesterday. I like it. Come clean with yourself. Which one of these stories are you telling yourself? Maybe it's all four. This one. This one. This is what held us back for years. Scarcity and complexity. I know a lot of, a lot of you tell this story in the story to yourself too though. Value and capability. But I think the first thing you've got to do is wait. What story am I telling myself? Be honest about it.

I love worst case scenario planning. Love worst case scenario planning. What do I mean? Thinking about getting into CFO services.

What's the worst thing that could happen? Well, I put together an offer, come up with my pricing. I offer it to all of my clients, my existing clients. I put it on social media, I email my list, and nobody buys it, nobody upsells. And I'm having to do the 80 hour work weeks during tax season or 100 hour work weeks. I'm having to manage 59 bookkeeping clients. I'm having to manage a team of four bookkeepers. Two of them don't even show up for work half the time. They never get stuff done right. And you're running yourself ragged and you're completely stressed out. And I'm like, guess what? You're already living your worst case scenario. You are already neck deep in your worst case scenario. And for me, when I walk through that process, it takes some of the pressure off of me to move forward. And it sounds cheesy, but it's very true for most of us, we're already living the worst case scenario. It doesn't work, we got to go work for somebody else. Worst case scenario, basically, you're where you're at now. The blessing, I think, for the type of work that we all do, we don't have to go and spend hundreds of thousands or millions of dollars on software. We don't have to go get investors. We don't have to do all of those things. All we've got to do is just be bold enough to try it, and so there's very little risk involved with it. Right. The downside is minimal. But the downside normally involves our ego. Downside involves sometimes worrying that other people are going to see that we didn't succeed in that thing that we were going to do. And that's terrifying. But I'll also ask you this. You think back across your career, probably through your life, when have you ever really failed you personally? When have you really truly failed at anything you've tried to do? My guess is it's not very often. And in fact.

I'll hit that other point on the last sticky. Got ahead of myself. You've won most of your life. Does this advisory thing coming out the other end look exactly the way you think it is? Probably not. But that's okay, right? You get in the game, you learn, you make some mistakes, you scratch your knees along the way. You know, I can tell you as somebody that's done it, six years later, we're still here. We have screwed up and made more mistakes, but we're still here because we always find a way. We figure it out. And I bet that's true for you, too. Haven't you always figured out a way in life? Haven't you always? I like to call it adapt, improvise, and overcome. Why do you think this is going to be any different? And again, that the good news is, if it is different.

You'Re already living your worst case scenario. It's not a failure if you learn too along the way. It's not a failure if you learn something. Number three, Jenny helped me come up with this one a long time ago. The third thing, take a bold baby step. You know, when we think about starting something new, like advisory services, if you're like me, a million things start going through your head. All right?

But I probably need to change the name of my business because it's Barb's Bookkeeping right now. So if I'm an offer cfo, it probably needs to be something more clever than Barb's Bookkeeping. And if I do that, I'm going to need a new Logo. And if I get a new logo, that means my whole website's got to be redone. Then I got to find what are my five pricing packages. And then how am I going to hook that up to Kajabi? Should I use Stripe or should I use QuickBooks? Maybe I should use Practice Ignition, right? You can come up with this list of 59 twice. I've used that as an arbitrary number. You come up with this list of 64 things really fast. And if you're like me, when I have that long list of things that I need, I just stop. So I'm like, pick one. Pick one bold baby step. And when Jenny and I were talking about this, this is how I think of a bold baby step. What's the one thing that you can do that makes you just a little bit uncomfortable? Maybe that means offer sending out an email to your list and saying, hey, so excited. After being an accountant for the last 19 years, Barb's Bookkeeping is offering advisory services. It's perfect for companies that look like this. This is the problem that it's going to help solve. But I'm only taking one or two people to start.

Here's the link to apply. Maybe that's the first bold baby step. That one that's just a little bit uncomfortable. Maybe it's posting something on LinkedIn or Instagram. Maybe it's picking up the phone and calling your existing clients and offering it to them. Most of us have one client that we're kind of like. We're a little bit like this with, you know, where you're like, is she my client or my friend today? Because we're really tight. It's somebody that you trust, somebody that's going to have a lot of grace. Maybe that's your first bold baby step. But make it, make it. And notice I said that's the first step. The first step wasn't the logo and the website and the pricing packages and Docusign and getting all that other stuff. That's. Those things aren't uncomfortable. Those things are the easy things. That's why those are the things that we tend to do. And then we turn around six months later and we still don't have a client. Right. So if the thing you're doing is comfortable, I want to challenge you. Are you doing the right thing that's going to move you forward? Because if it's comfortable, it's probably not the right thing you need to be doing to change your life. Because growth happens outside of our comfort zone. This is growth stuff.

Thanks. Jenny, I've used that bold baby step thing like 12 times now. I'm going to keep it in my pocket.

And here's the last thing. This is what I was kind of alluding to earlier. Bet on yourself. Bet on yourself. When was the last time you pushed your chips all in on yourself? Earlier I talked about the history, your history. You probably don't have a history full of just completely failing and falling flat and just quitting. Is that anybody's background on Just be honest, if that's your background, this program is probably not for you anyway. This is a resilient group of people. You don't get into entrepreneurship even part time. If you're not resilient, you figure shit out. You'll figure this out. Bet on yourself. I'll use another example. Shannon, she's sick right now, so I'm not gonna ask her to unmute. Earlier this year, I think it was February. Jenny, Was it February when Shannon did this? Shannon bet on herself. She bet big. She had a multiple six figure job in addition to financial and she quit. She went all in on herself. She bet big on herself. She's like, I know I can do this. And honestly, we walked through this stuff here. Worst case scenarios, the next step, she bet. And she's already replaced her income. It's ridiculous. And I know that that holds true for all of you. Bet on yourself. 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 Podcast, 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.