Fractional CFO Myths

It's no secret that scaling a fractional CFO firm is hard work. I should know. I've been on this journey for eight years now. But along the way, I found that there are some deeply embedded myths in our industry that destroy firms growth and their impact. Even after all these years, I continue to see people talking about and even spreading these myths. And so they end up perpetuating and hold back even more firms. In today's episode, I'm going to uncover and debunk seven myths that are likely holding your firm back. Now, I guarantee that you've probably bought into at least one of these myths. So you're definitely going to want to check this out. Let's dive in. The first myth that I see in our industry is that we have to respond immediately to client communications. In fact, this is one of the most toxic myths in our industry. And it's this idea that anytime a client reaches out to us, it doesn't matter what day of the week it is or what time of day it is. We have to respond right away. And this is patently false. Yes, timely communication is important, but immediate communication is detrimental. But because we bought into this myth, we respond right away. And so what ends up happening is that our actions end up signaling to our clients that we will respond right away. And that ends up telling our clients that they should expect an immediate response from us. In other words, we've set a very dangerous precedent. We've set this whole new expectation with our clients, and when we don't meet that new expectation, they get upset. That's why it's important to let clients know what your communication response policy is during the sales and onboarding process. But maybe even more importantly, you've got to have the discipline to stick to that policy throughout the relationship. My firm has adopted this policy to respond to all client communications within one business day. That doesn't mean that we're answering the question or solving the problem. We just respond so that the client feels seen and heard. Then in that response, we set expectations on when they should expect a resolution. The truth is, clients don't expect an immediate answer, and certainly not when they email you or message you after hours. If you strayed away from that, that's okay. Just reset expectations through a clear and honest chat with your client. I promise you that they'll be cool with it. And if they're not, my hunch is that they're probably a crappy client anyway and you've known for a while that you need to let them go. Speaking of bad Clients. Another myth is that we've got to keep bad clients. I think this myth comes from those of us who worked at accounting firms. You know, the ones leadership forced you to bow down to the almighty billable hour. There was just no such thing as a bad client, just good billable hours. I think you know what I'm talking about. By now, we've all had clients that we know that we need to fire. But we tell ourselves the story that we've got to keep them around for various reasons. We need the money. Maybe the client will get nicer, maybe they'll start paying their invoices on time. But look, the truth is you don't have to keep them. You don't even need to keep them. By keeping them, you're holding your firm back. If nothing else, they're an energy and joy suck from you. What's the point in being in business if you have to deal with that? And if you've got a team, what message do you think keeping bad clients is sending to them? Those bad clients are actually eroding your culture. In my experience, letting go of a bad client usually results in a new door opening with a new client very shortly thereafter. I want you to be on the lookout for the scarcity mindset here. There's this idea that you have to keep bad clients because there just aren't enough new opportunities out there. But remember, there's something like 30 or 40 million small businesses in the United States, and there's only something like 17,000 fractional CFOs. There are more than enough clients out there, and most of them will respect your boundaries. The third myth that I see in our industry that's so deadly is this idea that you should only do business development when you actually need clients. Look, over the last eight years, I've learned that the business development activities that I do today will start to pay off for me 60 to 90 days from now. And so if you wait to do those activities until you need new clients, you're 60 to 90 days behind where you need to be. That's why it's so important to have business development as part of your daily operating system. It doesn't matter if you know you need clients today or not. You've got to be finding new leads, filling that funnel up, and nurturing them through. A lot of people will say, well, if I can't handle any new clients today, what's the point of doing business development? And I would say this is a great opportunity to either start a wait list or to raise your Prices. This is a great opportunity for you to go out and hire somebody new. Don't wait until you need new clients to start doing business development or you're going to find yourself always in this season of feast or famine. That's not a fun way to run your firm. The fourth myth that I see in our industry is this idea that you know you need to hire, but you tell yourself that whoever you hire isn't going to do as good of a job as you do. And here's the truth. They're probably not. But here's another truth. They don't need to. For most things that we do in business, good enough is good enough. Okay is okay for a reason. And so you just have to let go of this need for everybody to do everything to the level that you do. Now. There are certain things where people need to do as good of a job as you do. And that's why it's really important to document those key processes and procedures where things have to be done a very certain and specific way. Normally those things are related to the client experience. So that might be how you do financial analysis or how you handle CFO calls. Get those things dialed in, put a training program together and teach them on those things. But let them do their job on the rest of the things and recognize that it won't be done as good as you do and that it's okay. Here's a fact too, that will slap you in the face just a little bit. Sometimes your way isn't always the best way. If you do a good job of hiring great people, they're going to come in and they're going to put their spin and their flavor and their experience and expertise and perspectives on the things that you do. And in most cases, they're going to actually start to do things better than you do. And as a result, it's going to level up your firm. Oh, man. Another huge myth in our industry is this idea that you have to offer bookkeeping if you want to get clients. When I first started my firm, I thought that the only way that I could charge the prices that I wanted to charge and get the number of clients that I wanted would be if I was like a one stop shop firm bookkeeping, maybe even taxes, CFO services, because who's going to pay if I don't offer everything? And so we tried to do everything and we were miserable for years. And what I found over time is that this was total bs. There are plenty of great businesses that want somebody that's great at handling their books to handle. Their books also want someone that's great at being a fractional CFO to just be their fractional cfo. And they're totally okay if those are two different people. I would argue that this is the most ingrained myth in our industry. And I still see people arguing to death about it today. I see so many fractional CFOs that are absolutely miserable because they're doing bookkeeping and they have no interest. And again, what's the point of being in business if you've got to do miserable things? Take my firm as an example. We have absolutely no interest in doing bookkeeping, which is why we've decided to partner with Decimal. Decimal is passionate about handling all of the financial operations like bookkeeping and taxes, A.R.AP. those are the things that make my eyes gloss over and roll back in my head. And they're passionate about doing it. And the cool part is, is they've got the back end systems to do it at scale. So now when my firm finds a client that needs those things done, we just refer them to Decimal and we focus on the strategic work that we're passionate about. If you'd like to learn more about Decimal, you can go to decimal.com or check them out using the link in the description below. For what it's worth, ladies and gentlemen, in eight years of being a fractional CFO firm owner, I have lost a grand total of zero clients because we don't or wouldn't offer bookkeeping. Take that for what it's worth. Another huge myth that's prevalent in the fractional CFO space is that we have to say yes to whatever our clients ask for. If you are in the game long enough, you're going to have clients that ask for things that are outside of your scope of work. They might ask for help on things like setting up software or for you to train their bookkeeper. I even had a client once call me to ask me to get on the phone with their merchant processor on more than one occasion. I can tell you that it is 100% perfectly okay to say no to those request. And the truth is, your clients are very unlikely to get their feelings hurt over it. This is a tough one because I know so many of us have this heart for service. We want to help our clients. We want to be part of solving their problems. But we can't scale our own firms if we're trying to be all of those things to all of those other people. So it's very important that you have the discipline to say No. I would also encourage you to try to find them some resources or people or firms that are built to help them with whatever problem is that they're asking for help with. That way we're still serving, albeit not in the way that the client asked for. But that's completely okay. You've got to stay true to your firm and what you're built for. The seventh myth that I see in our industry all the time is this idea that we need more letters after our name in order to get more credibility so that we can get more clients. When I started my firm, I thought really long and hard about going back to school so that I could sit for the CPA exam. I also thought long and hard about sitting for the CMA exam. I even bought all of the study materials. I told myself that I needed more letters after my name to have credibility. And it was this credibility that was holding me back from getting more clients. Sure, I had an mba, but surely our clients would want a CPA or at least a cma. I can tell you that one of the best decisions I ever made was not doing either of those things. Why is that? Well, after eight years, I have had a grand total of. Drumroll please. Zero leads, zero clients ever ask me if I'm a CPA or a CMA or what my degree is even in. They don't give a shit. And all they want to know is can I help them get results? And that's really all they should care about. I'm so glad that I didn't buy into this myth and chase after additional letters that would have bought me absolutely nothing on my journey. Now look, having a CPA license or a CMA or an MBA or anything else. They're not bad things if you've already got them. Just don't go chasing more letters if you're trying to build a fractional CFO firm. Because frankly, nobody cares. If you want to learn more about what it does take to build a 7 figure fractional CFO firm, then I'd love to invite you to join me at the 2024 CFO Accelerator Live, happening May 15th through 17th in Dallas, Texas. This is the only conference in the world held exclusively for fractional CFOs. But here's the thing. We are almost sold out of tickets. So if you've been thinking about joining us, you're going to want to grab your ticket right before they're gone. You can go to the CFO accelerator live.com or click the link in the description below to learn more in the meantime, I can't wait to see you back here next week, my friend. I'll see you then.