The #1 Challenge I Am Facing As A Fractional CFO...
A fractional CFO firm's biggest bottleneck is lead flow to support growth. The speaker recommends hiring a new CFO once you hit 3 clients, since one person can handle 10-12 clients, and targets cutting onboarding time from 60 days to 30 days.
Questions this video answers
July 9, 2024
Eight and a half years
From ~60 days toward ~30 days (incrementally: 60→50→45→35→30)
When a new CFO reaches their third client
About 10–12 clients
Chapters
What's the number one thing that you guys are struggling or biggest challenge that you guys are facing right now?
In our firm, there's this balance that just keeps coming up as a challenge time and time again. When's the right time to hire in relationship to the funnel? I've been doing this eight and a half years now. It seems like there's always a new curveball, a new variable, a new twist on the equation.
What's the number one thing that you guys are struggling or biggest challenge that you guys are facing right now in.
Our firm right now? This, this big, the big hairy thing in the room. There's two of them. One, just like a lot of us, it's, it's the lead flow required to hit the ambitious goals that we have. And again that's, that's solvable with the right amount of activity. Number two is there's this balance that just keeps coming up is a challenge time and time again with when's the right time to hire in relationship to, to the funnel? I've been doing this eight and a half years now and it seems like there's always a new curveball, a new variable, a new twist on the equation that a lot of times it feels like we're answering the same question for the first time, but it's not the same. It's the same, but this time it's a little bit different for various reasons. And I think kind of the answer I always come back to is there's never going to be the perfect time. There's never going to be this like, you know, if been on a spreadsheet where if the cell's green then it means it's the optimal time to hire. And so you just gotta go like as a CEO, you've gotta trust that gut instinct of like now is is the time to hire. The, the cool part about it is if you hire too soon, it lights this fire under your ass to get the activity on the business development side ramped up because you don't wanna have to pay out of pocket for, you know, for that salary that's, you know, that burden salary that only handling X$X client dollars and you're paying Y dollars, which Y is greater than X, you know. So it really does encourage you to do that. The other piece that, that we're tackling with that is how do we reduce the onboarding time for our fractional CFOs? What can we do to take that from a, let's call it a 60 day process to a 45 day to a 30 day process. And one of the things that I'm trying, mindset wise to work around with that is I try to swallow the whole elephant at the same time. You know, it's, I want to get it from a 60 day process to a 30 day process. And what I'm trying to check myself on right now is, okay, it doesn't have to go from 60 to 30 in one swing of the bat. Let's get it from 60 to 50 to 45 to 35 to 30. And that might be over the rest of this year that we get it, you know, one increment or the next increment and just trying to, trying to be patient with that process. But what, what I do sometimes is I'm like, well, if I can't get it from 60 to 30 with this one project, screw it. It just, it's not working, you know, like we got to do something else. It's something I was journaling on this weekend actually, is be okay with it. Improve 1% incrementally. And over time, that 1% every single at bat or every single day is going to pay dividends. But it's, it's the, the lead flow to hit the goals that we have and then balancing hiring the next fractional CFO against that lead flow and trying to get the timing right.
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Yeah. Do you have, do you guys have any sort of numbers? Where's your gut on that? Right. Like, is it, hey, when you know, we've got 10 clients per and we feel this other person that we've, you know, just onboarded is now at like 5, 6, now we feel like we need to start doing it or. What does that threshold look like for you?
It's actually sooner than you think. Always, I believe. And again, I've got eight and a half years of experience doing this now where I think that when the engine is running optimally, both on the marketing and the lead flow side and the onboarding side, I, I think it's when a new CFO has his third client, it's time to start the hiring process again. For our firm and our scope of work and kind of the way we do things, a fractional CFO should be able to handle 10 to 12 clients on, on average. And I believe the, the kind of, the way I see it all flowing is given an, you know, a dialed in lead flow that new a CFO has his third client. And let's assume that a CFO can onboard two, maybe three new clients at once. And that's. Three is a big ask for a new cfo. That's, that's a tall order. So let's call it two. So by the time they're at their third, then that means that we, we need to start posting on LinkedIn. Hey, we're hiring and just knowing how long our interview process takes and background checks and, and our onboarding process, by the time they're through that whole cycle of, of job post to the interviews to background check to onboarding to I'm ready to take on my first client. It's. It's early. Like I said, I started this. It's earlier than you think it's. For us, I think it's around three clients. That's our trigger point to start hiring the next cfo.
Yeah, that would, I mean that feels significantly earlier than you would think. You'd want to feel like, oh no, I can actually fill that plate before I have to start hiring. The. But to your point, I think the environment that you put yourself in forces the output that you desire. Right. And so that feels really uncomfortable. What action does that then drive you to do is powerful.
Right. The actions are limited. Right. It's okay. Well, I either need to increase my lead flow or I need to reduce the onboarding time. It's very clear there's only a couple things to optimize for there, but it forces you into one or both of, of those activities and at the end of the day like the result if you don't execute well on one or both of those is you're going to pay out of pocket to compensate somebody. But, but again knowing what those, those couple of things are and just knowing where, where to go, which levers to pull makes, makes all the difference. Now what's the, what's the flip side of that? Well, if you wait too long then it backs up your lead flow, it slows down your growth or what most of us, most of us, myself included, lack the discipline to slow down the lead flow. And so then we end up overburdening our team which ends up in a couple of bad outcomes. You either have a bad new client onboarding process or you overwork overstress your team. And neither of those are a good thing. You know, I'll add to that that the client experience is further downgraded because you're going to onboard them with an existing CFO on your team knowing that you're going to have to hand them off to a new cfo. So they've onboarded with one CFO at this point and now you're going to have to hand them over and rush onboarding probably with that CFO because they've got a full client roster already and now they're the most time intensive process is new client onboarding. So they've got a full client roster and they're onboarding another client and that client's going to end up being handed over to a brandy new CFO at some point in the next 30 or 60 days. The client loses there. So it's, it's a lose lose all the way around. So do it earlier than you think you need to do it.
Yeah, I agree. I also it, I just love the position that it puts you in because then again to what we have discussed in previous conversations, like I am a big proponent of intentionally putting yourself in a position that is vulnerable and forces you to be accountable so that you are able to realize the dreams that you have and that those come to fruition. But it starts with you putting yourself in uncomfortable positions first.
