How to Level Up as a CFO

And so when you get to that advanced level or the expert level where you're pushing them, you're motivating, inspiring them to achieve the impossible. That's how you do that, right? Is you're like, you find ways to have them go creatively, figure out what they've got to do in their business to achieve those financials that you painted for them. Hi, Ashley.

Hi, Michael. How are you? I asked you about, you had a Instagram post about like proficiency levels as CFOs and so I didn't know, kind of like how you can move through the ranks, right? How can you increase your proficiency level as a cfo?

How do you move from that beginner stage where you're producing reports, you're doing forecasts, you're doing projections. Intermediate stage, you're helping your clients set goals. The advanced stage is you're showing them how to achieve the goals. The master stage, you're motivating, inspiring and challenging them to achieve the impossible. Okay, so we'll go from I'll talk kind of step to step, how to get there. So the first one is just kind of doing the report generation. And as CFOs, those should always be forward looking reports, right? So very specifically in that post, right? It's forecast, projections, those kind of things, right? Once you have that roughed out, as you're working with your clients to get those things in place, the next thing you want to start doing is asking them about their goals. And as you're working with them, some of those things are going to naturally come out. Ashley, from conversations. But this is kind of, this is typically how it goes, but specifically around.

That goals and maybe to narrow in my question, I asked about the goals and I have the goals. And sometimes my disconnect is, all right, this is where they are, this is where they want to be. What do I as a CFO need to be doing to help them close that gap?

Give me an example and I'll walk you through how I would do it. You can just make one up or use a real one.

I'm thinking about a client in particular. So she has a particular revenue goal and so she's pretty much trying to double that revenue goal, right? So I know that that's what she's trying to do. And so we're looking at her offers, we're looking at pricing, client retention, you know, all of that. So I think like in my mind I kind of know what she needs to do. But how do I lay that out in a story? How do I help her to figure out the things she needs to do on her side in order to achieve the goal.

Yeah, yeah, thank you for the context. That's very, very helpful. Let me start. In fact, this was. I was about to bridge what you just said with what I was talking about before you gave me more context. So this is great. Normally when you start working with clients and asking them for goals, Everybody listen to this. Because this 100% applies across the board. I've yet to meet a client that this isn't true for. They're going to 99 times out of 100 give you a revenue goal. Revenue goals are really shitty goals because they're arbitrary. Right? That's normally where you have to start with your clients, though, because that's all they got, right? Normally we're lucky if they even have a revenue goal. But the revenue thing isn't really the number. It's a misinformed first goal. Right? So I always go back to the five things that I talk about, like during sales calls. Goals, dreams, aspirations, fears and uncertainties. Right? Your client has some kind of goal, right? That's gonna move the needle for her as a person. Buy the new house, pay off her college tuition, pay for her kids college tuition, have two Teslas in the driveway, and be able to take trips to France four times a year. Right? Those are the real goals. Right? What we do, then we got to get to the bottom to figure out what those goals are, the personal goals. Then we got to transform those into cash goals in the business because those goals are funded by the cash that comes out of the business. Do you agree with that? Yes, we understand the cash goals from the business. Right. That looks a lot like the balance sheet. We work backwards through the balance sheet to a net profit goal on the P and L because we understand their numbers, we know their net profit margins, gross profit margins. We can work backwards through the P and L using those margins. Example, $100,000 a year in net profit. Let's say they have 20% net profit margins. That would mean they need $500,000 in revenue. Connecting with me how to do that. The real goal isn't the $500,000 in revenue. The real goal is the $100,000 in additional net profit, which gives them $100,000 cash. Okay? Once you kind of weave it back like that, you can take what you know about their business with their margins, their service offerings, everything. Now this is where I'm going to answer your question. Your job is to show the financials that need to be true in order for her to have the two Teslas and the France vacations, then you got to turn it back around on her and say, look, based on what you're doing with your services or your products, this is what it needs to look like. Go and brainstorm and come back, tell me what are three or four things that you can do to achieve those? And so it may be it's revenue related, maybe it's SG and a reduction related, maybe it's, you know, gross profit margins need to go up 3%. Which, which four vendors can you go renegotiate your terms with? Right. To me, that's, that's kind of that progression that I was talking about in that post, right? And so when you get to that advanced level or the expert level where you're pushing them, you're motivating, inspiring them to achieve the impossible. That's how you do that, right? Is you're like, you find ways to have them go creatively, figure out what they've got to do in their business to achieve those financials that you painted for them. And when you get to that level, you're like this with your clients, right? When you're like pushing them, like, no, no, no, go back and try again. This isn't going to get us there. Go. What else, what else can we do? How can you raise your prices some more? How can you offer this? Right? That's how you kind of move from those stages, right? From that first one where you're just producing reports, then you dabble a little bit with the goals, then you're showing them what they need to do to achieve those goals from a financial perspective. But then you get into challenging them and you're pushing them, you're having them solve their problems and you're just the guide. You're the Yoda, right? Luke had to go out and fight Darth Vader on his own, right? Star wars nerd over here, Baby Yoda, you can't see him over there, right? It's their business. At the end of the day, they're the ones that know the specific things. You just got to show them the kinds of things they need to be doing and pushing them and keeping them uncomfortable, pushing them towards those goals and remind them about France or the house or the tuition. Does that make sense?

It does.

And that's a skill. That's not a thing, in my opinion, that you just do different tomorrow, right? You've got to learn how to pull that stuff out of them and like getting to those kind of fundamental goals, personal goals, Honestly, it takes a little bit of trust and a little bit of rapport. They gotta feel safe kind of sharing those things with you a lot of times. Because that revenue goal, that's an ego goal, right? That's the stuff we brag about on the golf course. If you're a guy or at the bar with your girlfriends or in your coaching programs, they're vanity goals, right? And when people, when that's all they've got for a goal, you burn out. It's like a bad New Year's resolution. You know, you set this vanity goal that's not connected to a deeper why. You get three months into doubling your revenue, and you're like, shit, this is a lot of work. I'm just gonna go back to doing what I was. But if you've got that underlying why that you can point them to and show them how, hey, if you can figure out how to increase your GROSS Profit margins 3%, this is how it gets you closer to your ultimate goals. And you can connect. That's where that storytelling comes in. That's what I'm talking about with storytelling. That's how all that kind of ties together.