Complexity: The Silent Killer of CFO Firms

Hey there. My name is Michael King. Welcome back to the Connected Accountant. This has been a big week for me because I'm in a brand new office. And for those of you that are consuming this episode on YouTube, you can probably see that I have not finished unpacking yet, but I'm like, today is a recording day and so we're gonna just play the hand that we're dealt. So here we are today. I want to tell you how absolutely encouraged I am by the sheer volume of people inside of my coaching program and on social media that are reaching out to me and telling that they're trying to grow their firms. They're not being put off by the fact that there may or may not be this recession coming. They're all in on growing their firms. But when I start asking just a couple of questions, what I'm quickly realizing is that a lot of people are actually not working to grow their firms. What they're actually doing is they're adding complexity to their firms. They're thinking that if they add more things, that's going to help their firms grow. The reality is the more complexity that we add to our firms, the harder it is to grow. The more complexity that we add to our firms, the harder it is to scale and hit the big dreams that we have. And so today, what I want to share with you are the four areas where I see so many firm owners adding unnecessary complexities to their firm that's actually going to hold them back, that unnecessary complexity that's going to kill their growth. So let's go ahead and dive in. The first area where I see firm owners adding a lot of complexity to their firms under the guise of growth is in the number of services they offer. Right? What we do is we tell ourselves this myth that the market demands that we be this like all in one firm where we handle all the things. We do bookkeeping, we do accounting, we do tax prep, we do cfo. We tell ourselves that we've got to offer all of those things in order to get the best clients, in order to be able to charge the higher prices. But I'm here to tell you that that is simply untrue. The reality is that the clients that you want to work with, the best clients that are out there, they understand that the more services that a firm offers, the less likely that firm is to be world class at any of them. The more things that you do, the less likely you are to be excellent at any of them. What those firms want or what those clients want from a CFO firm is somebody that's world class at the strategic, forward looking things. They don't want you to be a mediocre bookkeeper, accountant, tax preparer and cfo. They want you to be excellent at the CFO thing. I can tell you we've got multiple eight figure clients that really that's all they want from us. And when I got okay with the fact that we didn't have to do more, that we could just really narrow it down and deliver the fractional CFO service without excellence, our growth skyrocketed. And I'll share with you that today we only have three service packages. We've got our CFO core package that has a fixed scope of work. We have our CFO advanced package that is the same thing as core, but we add in tax strategy. And we have our executive package which adds on some FaceTime with me and Carlos with them once a year. But if you go back to the video or the podcast episode that I just did a couple of weeks ago, we'll put a link in the description where I talk about the CFO services, the core services that every CFO has got to offer. I'm like, if you'll just stick to that, you can build a high multiple six figure firm probably even into the seven figures without even doing the tax strategies and the executive stuff I talked about. You've got to just be really, really good at that one CFO package and that'll take you really, really far. So closely related to offering more services. The other thing that I see so many people doing is they're like, oh no, no, I got to add more pricing packages. I've got to have more options, more ways for people to pay so that I can kind of meet everybody where they're at. And I'm like, no, no, no, no, no, no. Right. See people, what I see them doing is they're like, we've got this hourly rate over here for this particular service and then we got a higher rate for this because it takes more thinking power. And oh, by the way, we've also got our monthly retainer and then over here we've got these projects that we bill a flat rate for. And I'm like, when you get on a sales call with a prospective client and you've got like all of those 42 different ways that you bill them and you're on that sales call and they're like, okay, well how much does it cost to work with you? And then you've got to go into this whole diatribe, diatribe I think that's the word I'm looking for here. You go into this whole explanation of, well, you know, it kind of depends on if you do this or this. And then there's this package, and then we charge hourly. They're like, oh, my gosh, I'm confused. I have no idea what it costs to work with you. And as Donald Miller says, when you confuse, you lose, right? So I'm like, just come up, figure out the package or a couple of packages, and then put a fixed price on each of them, right? That monthly recurring kind of pricing, it makes it super predictable for the prospective client, but it also has benefits for you. You know, first of all, when you've got a fixed fee for just two or three kind of core packages that you offer you, it makes doing budgets and projections for your own firm a heck of a lot easier. It makes goal setting a lot clearer for you inside of your own firm. And on top of that, it makes invoicing so much easier. I used to be the COO of this IT company that was doing 5, 6 million dollars a year, and we had all these different pricing options, right? Then it comes time to do invoicing, and you sit down and you're so overwhelmed, right? You're like, well, should I invoice them for these hours or should I do this? No, no, come up with those fixed packages. The fixed pricing invoicing is like, automated at that point, right? They just automatically go out in QuickBooks at the beginning of the month. You know, you set up autopay easy day. So really, just I want to encourage you, get clear on a couple one, two or three service packages and then throw a fixed price on them. I promise you, future you is going to thank me later for that. The third area where I see people adding so much complexity to their business is in technology. And I'm like, oh, my gosh, there's so many great tech platforms out there, right? There's the app and the zap and the integration. And it's going to be so amazing because, you know, when the customer does this or they click this button on our website, it fires off all of these other things. And, you know, it sounds great in theory, right? It all sounds great in theory until you finally get it all set up, and then one thing goes wrong. Like, one thing doesn't fire or trigger or zap the right way, and the whole house of cards starts tumbling down. And then what we're left with is you as the CEO or maybe somebody on your team, you know, you're distracted from the work that you should be doing. And now you gotta go off and figure out which zap was it that didn't connect to the right app and caused the integration to work, right? And so you're distracted from doing the high level work that you need to be doing, the stuff that you've started your firm to be doing. But the other reality of that is that the ultimate person that normally loses when those things break is the customer. The customer is the one that normally gets inconvenienced or has a bad experience. And that's just deadly for your business. The last thing you want to do is have your customer emailing you, hey, I'm trying to pay this invoice and it's telling me page 404, error not found. So when you're confronted with the idea that, well, I'm going to put my website over here on WordPress and we're going to have our podcast over here, I'm going to put my blog over here on this other platform and marketing emails are going to go out over here. When you're confronted with those things, all those different integrations, really ask yourself, is this thing that we're thinking about doing, is it going to add more value to our clients? Is it going to elevate the client experience? Is it going to really save your firm real time that can convert into real net profit and cash? And if the answer is no, you probably just need to say no to it. If it's not a clear path to a yes for one of those things, be okay walking away from it. And if after like six months, you still getting that nagging like, ah, gosh, we should have done it, revisit it, but have the discipline to stay laser focused on customer experience, customer value, and really making your life and your team's life easier. The fourth place. This is the biggest one. The fourth place that I see so many firm owners adding unnecessary complexity is in reporting and KPIs. Similar to the services thing. We tell ourselves this story that if we want to charge more money, if we want to get better clients, we've got to have fancier reporting, We've got to have fancier KPIs and analytics, right? It looks great, it looks sexy. I'm here with you. My master's degree concentration is in data analytics. I am here for some data. But the truth is your clients just don't care about that. In fact, this is what your clients do care about. Your clients want to know what's going right in their business, what's going wrong in their business? What things do you see in the future that are coming their way? What potholes can you see that are coming down the road that they need to be dodging and looking out for? They want to know how in the world is their business going to help them accomplish their goals and their dreams and their aspirations and, and how did the finances help them get there? But when you take a hard and honest look at the fancier charts and graphs and reporting KPI kind of things, the reality is very few of those things answer those questions for your clients. And so when you start teeing those kinds of things up for your clients, they get confused like, well, what does this really mean for my business? And they may not tell you that. That's like the really, I think, silent killer in all this. A lot of times your clients aren't going to tell you, hey, I don't really like some of this stuff. It's confusing to me. They'll just email you one day and say, we're going with another firm because they don't feel like you're connected to those future looking things. Everything's got to connect to the goals, dreams, aspirations, fears and uncertainties that your clients have. And if your fancier charts and graphs and KPIs aren't connected with that, then you're going to lose clients. So instead of thinking about the sexier looking chart or graph, what I want you to do is invest some time and money in learning how to tell stories better. Learn how to take the data that's in the financials, convert that into information, and then use that information to tell the story of the action that's going to be required to be taken by your customer. Because when you get good at connecting those dots for your clients, they're there for life because they feel and they see that you're truly connected with the things that are most important to them, not the things that are most important to you. Right, the graphs and the KPIs, they typically just serve to make our egos feel a little better. Look how smart I am. I think if you'll take an honest look at that, it normally is more about us than it is about the client. Look, I'm so excited that people are eager to grow their firms and they're eager to do all the things. But if you're anything like me, when you started your firm back, whether it was last month or 10 years ago, you didn't start it with this idea of I want to have a business that just Has a lot of complexity to my life. When you started your business, you didn't say, wake up one morning and say, what can I do today in my business that will make things just a little bit harder? What things can I do that are going to add just a little bit more complexity? They're going to increase the likelihood that sales are a little bit harder or that we're going to have a negative impact on the client experience. That's not why we started our business. For me, the reason I started my firm, one of them, and I've got three. But one of the reasons I started my firm is because I wanted to have a business that served my personal life. That my personal life is the thing that's most important to me. I want my business to serve that. But when we start adding all of these layers of complexity and challenge and technologies and the apps and the zaps and the integrations, it robs us of that opportunity to have the business that serves our personal life. And over time, you'll find that your personal life ends up serving your business because you're having to work after hours to fix the integration. You're having to work longer hours because your service packages aren't scalable and repeatable and so you don't have processes, so it takes forever to get them done. All of these things add up the more and more complexity you add to your business. So really want to challenge you. Anytime that you recognize that you're adding more, more complexity, more services, more pricing, more technology, ask yourself like, hey, is this really serving my. Why is this serving me and my family? Is it serving my clients and adding a better experience or additional value for them? And if the answer is no, then I would really just encourage you to say no to whatever that more thing is and go out there and learn how to storytell, learn how to connect the dot again from the finances to turn that data into information and turn that into action. That's what's gonna move your firm forward. That's what's gonna move your clients forward. And at the end of the day, that's really why we're all here. Look, I know a lot of this stuff is hard. I know it's hard to build a firm on your own, because I did it. If you want more help, if you wanna go deeper on things like this, I would love for you to check out the Connected Accountant Pro. Connected Accountant Pro is my monthly group coaching program where myself and my team, we go live and. And we teach things just like this, where we go really deep we help give you the information and those actionable steps that you need to start, scale or optimize your advisory services. So go to theconnectedaccountant.com coaching and check it out. See if it's right for you. If you found this episode helpful, it would mean the world to me if you would give us a five star review on YouTube or on Apple Podcasts, Spotify, whatever your platform is, it really does help us get the word out to more people. In the meantime, my friend, I can't wait to see you right back here in this office with the lights that are out and the boxes that are behind me. I'll see you next week. Thank you.