Why 99% Of Fractional CFOs Lose Clients

Would you be interested if I told.

You that there is one thing that you could put in place that would unlock up to 10 times more earning potential, not just for your fractional CFO clients, but for you as a firm owner as well? I thought you might be. What am I talking about? Let's find out.

Hey there.

My name is Michael King, and welcome to the CFO Report, where I talk about starting, scaling, and optimizing fractional CFO services. So what is this magical thing that you need to put in place to unlock all this additional earning potential? It's strategic goals and an action plan to achieve those goals. Now listen, before you say anything else, I know you're probably thinking, yeah, yeah, yeah, Mike, I know that I should have strategic goals in place for my clients. Yeah, yeah, yeah, Mike, I know that I should have an action plan in place for my clients to achieve those goals. But let me just ask you this one question. Do you actually have those goals and the roadmap in place for your clients to be able to achieve them? My guess is probably not. And that's a very dangerous place for fractional CFOs to be. Because the truth is, if you're not helping your clients set goals, if you're not helping your clients understand exactly what they need to do to accomplish those goals, then you're likely to not have that client for very much longer. Fractional CFO is like one of the things that we're called to do for our clients is to help them set strategic goals and to help them put the roadmaps that they need to follow in place so that they're more likely to achieve those goals. But look, I know it's hard to do that because the truth is, our clients, they don't give us the information that we need a lot of times to help them set the goals, much less to put the action plans in place. So what are you supposed to do? In today's episode of the CFO Report, I'm sharing a replay from one of my recent inner circle group coaching calls where I share the five steps that my firm follows to help get our clients to put meaningful goals in place so that we can help them put the roadmap in place to unlock that extra earnings potential and to unlock the highest probability possible that they'll achieve those goals. What are those five steps? Let's find out.

Setting strategic goals for 2024. Before we dive into it, I want to anchor us back on this fundamental truth. For those of you that are new, you've not seen this Before. For those of you that have been here, I'm going to talk about it again because I keep seeing people screw this up, myself included. As we get into the goal setting, this is going to be really applicable. But just time and time again, everything Success for fractional CFOs hinges on simplicity. Because when we make things more simple for our clients, they understand what they need to do. The video that I posted on the CFO report today hits on this, right? The more simple that we can keep things for our clients, the more clearly they understand what it is we're telling them and what they need to do with what we're telling them. And when they understand what they need to do, they're significantly more likely to take action. They're significantly more likely to take action. And when they take action, and only when they take action, will we, as fractional CFOs see some level of impact. And like the veterans to this program, will attest, this is true not just with our clients, but also internal to our own firms as well. And so as we go into this idea of setting strategic goals, I want you to continue to focus on how can I make the process and the outcomes as simple as possible for my clients? How can I make sure that they're super clear on the things that they need to do in order to hit their goals next year? And then how can I use that to help them drive to action? Is anybody familiar with the Harvard, Harvard Business School study that was done a few years ago on goal setting is mind blowing, if you've never heard of it. Basically this was done back, I think in the 50s or 60s, and they went to a group of first year business school students at Harvard and they asked a simple question, a couple of questions. Do you have goals and are they written down? And so when we typically think of Harvard Business students, we're thinking like, oh, these are the best and brightest. These are like the people that know how to take action. They know all the things, they're doing all the things. What they found, I think the results were really interesting. What they found is across this whole freshman group of Harvard business school students, 84% of them had no goals whatsoever, which is mind boggling to me. I'm like, Harvard, Harvard doesn't have goals. 13% of these business school students had clear goals, but they weren't written down, which means only 3% had actual clear written goals. Now the second phase of this study is the study givers, or whatever you call those who conduct studies. They went back to these same students Ten years later, after they, you know, graduated from Harvard with their MBAs, and they're out doing things in the world, and this is what they found just 10 years later. The 13% that had the unwritten goals, like, they had clear goals, but they were written down, they were earning two times more than the 80% that had no goals. Twice as much on average. This is the part that blows my mind. This part right here. The 3% that had written goals were earning 10 more, 10 times more than the other 97% combined. The 3% that had written Goals were earning 10 times more than the other 97 percent combined. Crazy talent. And I think the, the thing about this is like, yeah, we all know in theory that we need to have written goals. Like, as I sit here and I'm like, hey, we need to have written goals. No one on this call is like, holy Mike. That's the thing. I didn't realize I needed to have written goals. We all know that we need to have written goals. But then the question becomes, why do we struggle to do it? Why. Why is it that we're not doing it? And I think there's like, primarily a couple of big reasons that we struggle with it. And this is also true for our clients as well. Number one, most goals tend to. To feel arbitrary. Most goals tend to feel arbitrary. And where we see that materialize a lot of times is like random revenue numbers. You know, it's, we're out there with our buddies, you know, on the golf course. For those of us that don't live in the north, you know, holiday times, we're have some cigars on the golf course with our buddies. And it's like, yeah, you know, next year, I want to hit $5 million in revenue. I want to hit $10 million in revenue. They're just kind of arbitrary revenue goals. We're throwing stuff against the wall and seeing what's next. And goals that are kind of arbitrary, we tend to not follow through with them. And after enough times of not following through with our goals, we're just like, ah, goals are kind of stupid. They don't work for me. It never really works. And so we quit trying. The other reason that I think that a lot of us struggle with goals is we just don't have any accountability. We don't have any accountability. And so we set these ambitious goals. We, we, you know, put stuff up on out in the world and, you know, we claim our goal, we put our flag in the ground. We're going to do this, but we don't have anybody holding us accountable. And so we end up not following through on the tactics that are going to result in our goals manifesting. If you're into the woohoo words or becoming a reality. Third is, like I said, we tried setting goals before and it didn't work out. And beyond just the arbitrary part of it, it's despite our best efforts to set goals and to set tactics, it didn't work. Like, hey, I set this goal to do $3 million and it didn't work out for X, Y and z reason. And so, like, the whole process of goals just doesn't work. And I think the big kind of the thing that most often than not, more often than not, drives unsuccessful goal setting is that there's no roadmap for. For achieving the goals. And so we set the big goal. We have the big idea, but we don't put a plan in place, a written plan in place for us to achieve the goal. And so when it comes to setting strategic goals for your clients, I want to start by reminding you about the Human Action model. And the Human Action model proposes that three conditions must be present or must exist in order to get somebody to take an action they wouldn't otherwise have taken. And the first act, the first component of the Human Action model is you've got to first make the other person uncomfortable with the status quo. So the first condition is discomfort with the status quo. And so let's take weight loss as an example. And so we're like, all right, we're going to set this goal that we're going to lose weight before we can expect someone to take action to lose weight, they've got to have britches that are a little bit too tight. The muffin top has to be expanding out over the belt sufficiently far that it's just really uncomfortable to weigh the current weight anymore or to have the amount of belly fat anymore. We've all been there. It's like, all right, my pants are so tight, I'm not going to go buy new pants anymore. The discomfort is literally there. Time to take action. The second component that has to exist in the Human Action model is a clear vision of a better state. So they got to be uncomfortable with where they're at, but we've got to paint a picture for them of a better future. Wouldn't it be great if you didn't have the muffin top and you didn't have to secretly have your pants unbuttoned on the top button in order for you not to risk splitting your pants Wouldn't it be great if you could walk into the room with confidence because you're all slim and trim now? Wouldn't it be great? So we got to have that vision of a better state. And then the third, third condition that must exist in order to get people to take action is we have to have a path from A to B, a path from the status quo to the better state. If people understand like, all right, I get it by I've got to lose 30 pounds in order for me to not feel like this anymore. But I don't know how to do it, they're not going to take action. So we've got to have the discomfort, the better state in the clear path between the two points. And the same thing holds true with our clients when we get into goal setting. And so as you get into the goal setting process, as you get into Q1, I want you to constantly audit this human action model and say like, are my clients feeling the discomfort with where they're at? If they don't change, what is the future going to look like and is it sufficiently sucky for them? That's first question number two is do they see what good looks like? Have you shown them what a better state looks like? And I think the best tool to do that in is through projections, right? Let's show them the projections of what the future state looks like so that they can see what's going on. And then the tactics, the month to month tactics and goals, that's the roadmap, that's the clear path between the status quo in the future state. I think that having strategic goals in place is a cost of doing business for fractional CFOs. If you want to be a fractional CFO, nothing is more important than having goals for your clients. It is, it is the thing that will continue to bring them back month over month. If you are just spitting out PNLs and balance sheets and statement of cash flows and cash flow forecasts and budgets and projections and they're not tied to goals, you won't have clients very long. And that's why I hit so hard. For those of you that have gone through the CFO academy, for those of you that were in accelerator, for those of you that have even watched my free sales training, it's why I hit so hard in the first half of sales calls on figuring out what are their goals, dreams, aspirations, fears and uncertainties. Those are the foundation for setting strategic goals for your clients. And I'm telling you, if you've got a problem with your clients churning like you get clients and they're only sticking around for three months or six months or a year. And I'll argue that a year probably not long enough for you to keep a client. You should be targeting two, three, four or five years with your clients. If you're not hitting a lifespan of multiple years with your clients, Normally I'd say 80% of the time it's because there's a lack of goals or a lack of a roadmap for them to accomplish their goals. And so I really want everybody on this call. Audit yourself. Like am I doing a good job of not just setting the goals but also putting the roadmap in place? We're going to talk today about how to do that.

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In setting strategic goals. Like I said, it all starts with the goals, the dreams, the aspirations, the fears and the uncertainties. So step one is to identify those. And let me break that down one piece further. Start with the fears. Start with the fears. So with new clients, the question that I love to ask, what's the thing that keeps you up at night? What's the thing that scares the out of you about being a business owner? What's the thing that causes your spouse to not be sure if you should be in this game or not? Start with the fears. Fear is the biggest human driver of action. I mean it goes back to some Maslow's hierarchy of needs kind of stuff, right? Those fears. And if we can understand what those fears are and we can address those, first is fractional CFOs. We're set up for success. So as we're building out the goals. Start with the fears. What goals can we set that are going to help them get the fears off the table? Once you've got the fears, then hit the uncertainty. So an uncertainty is like a fear that's a little bit watered down. And you know, normally the, as you guys get into this, as you've been in the industry longer and longer, you're going to find it's typically the same things when it comes to fears and uncertainties. It's uncertainties or fears about. It's normally related to cash, right? It's, I'm, I'm worried about making payroll. You know, I remember six months ago I had to put money in the business because I realized that we weren't going to be able to make payroll on Friday. I never want to be there again or I haven't been able to pay myself and my wife's starting to get burned out or I got hit with the big tax bill and I had no idea. Most of the fears come, come from cash related things. Once you get the fears and the uncertainties, then we can start working on some of those like goals and dreams and aspirations, those kinds of things. Build on those. But make sure you start with the fears. Because if somebody's talking about, hey, I've got this, this goal that I want to, my family wants to bring home a million dollars, take home next year and you build your strategy and your plan around that. But in the back of their head, they're freaking out about the lawsuit that's pending against their company. If they're freaking out about making payroll, if they're freaking out that their industry's down 34% year to date and they're worried about how are they going to Bring in enough revenue to keep the lights on. If you're focused on the big goal thing and they're freaking out about something, there is a fundamental disconnect and you won't be around long. You have to address the fears first or at least in parallel with some of the goals, some of the more aspirational future looking. Wouldn't it be cool if kinds of things. And I don't want to belabor this point, but I have screwed this up more times than I care to admit. And we've got some big, hairy, audacious goalsome, cool thing we're working towards. And then you get fired and it's like, hey, you know, my wife says that we gotta cut costs because we haven't paid ourself enough in the last six months. And you're like, shit, I've been working towards this thing over here, when really this was the thing that was front of mind. Make sure you're getting in front of it. With the fears you guys may have heard on my my YouTube videos. There's really four kinds of goals that I want you to think about with your clients. There's four, four types. And when you're setting goals with your clients, always start with personal goals and then work those into the business goals. We'll talk more about how to do that in a minute. But when it comes to identifying goals with your clients, I want you to think about four different types. Family goals, income goals, lifestyle goals in community goals. I'll give those to you again. Family income, lifestyle and community. As you start talking about goals with your clients, most of them are going to have, if they have anything, an arbitrary revenue goal. I would say most are not. They're not going to have anything. In fact, the sales meeting I had last week, the one I was telling you guys about with the security company is I was telling him how we work. I said, what we're going to do is we're going to take your goals and we're going to start putting a roadmap together to show you how to accomplish them financially. You know, what do you need to do in January and February specifically for you to be able to hit your goals next year? And he was like, I don't. We're too early to work with you. And I said, what do you mean you're too early? And he's like, I don't have any goals. I've never had any goals for my business. And so he's like, I think I got to get the goals figured out before I hire the cfo. And I was like, shit, my bad. We actually part of our onboarding process and CFO process is to help you establish goals. I assume this guy, he's been in business like 14 years. I assumed he already had some goals in place. He didn't. And so know that that is a very common thing for the business owners not to have goals. But as you get into it, what we want to do is get away from the arbitrary revenue goals and we want to figure out, like, as a person, not as a business, but as a business owner, as the person elements. What are your family goals? What are your income goals? What kind of lifestyle do you want to. What kind of impact you want to have on your community? If you haven't seen my YouTube video on this, I do like a whole deep dive. It's like a 20, 30 minute video on how to do this specific part. And so I don't want to take up too much time talking about how to get those, those four kinds of goals. But make sure that as you develop the relationship and the trust and the rapport with your clients, start working towards identifying those four personal goals. And just know out of the gate, you're not probably going to get much out of them in the ways of those personal goals because it does take time for them to open up and start to share those things with you. One of the mindsets or frameworks that I like to use when I'm trying to help them identify goals, dreams, aspirations, fears and uncertainties. If they're hitting mental roadblocks, I ask them this question. This is an awesome question. Write this one down. I say, look, if it's December 31, 2024, New Year's Eve, and you're toasting with your friends and family to an amazing year that you just kill, had the best year ever. You killed it this year in business. What are you toasting to? What happened last year that made it such an amazing year? And just giving them that little scenario a lot of times will open up their mind. Like, oh, got it. Yeah. On December 31, 2024. Gosh, if I was able, if I was able to pay myself $250,000, that, that would be awesome. If we were able to get all of our credit card debt in the business paid off, man, that would be a win of a year. If I was able to put the employee stock option program in place for my team by the end of next year, that'd be awesome because I've been talking about it for five years, it could be getting the back Taxes paid off, it could be finally having a profitable business. Who knows what's going to come out? But just asking them that question, that little bit of a frame of what do you toast into at the end of next year? A lot of times you'll see, give them, you know, a minute to think about it. You'll start to see the light bulbs going off. It's awesome. As you're working through with them to identify the personal goals in the business goals, I want to encourage you to have your clients include their spouses in the conversation. Include the spouse in the conversation with them. So as they're thinking about the goals, have them talk to their husband or their wife or their partner or whatever that looks like for their relationships and get buy in. It's really, really easy to lose clients or to really submit your clients all based on their spouse. If their spouse sees you as the fractional CFO is the person that's helping support his or her goals, dreams and aspirations, they're way less likely to can you when times get toug. But if you're over here talking about paying off the company trucks and the spouse is like, yeah, paying off the trucks sounds great. However, we've been running a multimillion dollar business for five years and we're still only taking home $48,000 a year. You have a problem. So really work to get the spouse buy in. And then as the list starts to unfold, I'm like, just pick two to four for the year. And this goes back to that fundamental truth I talked about earlier. The simpler that we can keep things, the more likely everybody's going to understand what they've got to do to hit those goals, what the tactics are to get there, what the metrics are to make sure that we're driving them in the right direction. And so avoid the pull to have nine big goals for each of your clients, like just pick two or three, max four. And then as fractional CFOs, this is really undervalued skill in focal points. But I want to encourage you, like help your clients think through how the goals are going to help. Not just their, their wealth, that's the easy one, but also their health and relationships. When we can establish ourselves not just as the person that's helping the bottom line or the bank account, but as somebody that's helping them in terms of their health and also their relationships, we become extremely invaluable and irreplaceable. And so as you're setting these goals and thinking them through, talk about those Things. And so you're like, well, how do we help somebody with their relationships? Well, one, having spouse buy in is a huge check in that column. Number two is we think about team. And when we have our, we got clients that they're, they're overworked and they're overstressed and they're, you know, constantly just in the weeds. Talk about how hiring team is going to help them de stress or, hey, we got to get our margins up to this so that we've got this net profit so that you can finally hire a dispatcher, or you can hire the operations assistant, or you can hire the marketing manager, because that is going to free up four hours a week of your time that you could spend with your kids at the soccer game. You told me that was one of your family goals or whatever the case may be. And so look for those opportunities to tie back the goals to things beyond just the numbers, specifically health and relationships. And hey, if we can get your take home, pay up to 100k a year, I know that's going to help a lot of the stress that you're having with your wife. Talk about those things. Make sure that you're part of not just the wealth component, but also the health and the relationships as well. All right, so step one, figuring out the goals, dreams, aspirations, fears and uncertainties. Step two, convert all of those into an annual picture. Convert all of those into an annual picture. Let me explain what I mean. I want you to figure out how each of those two to four goals that they've identified is driven by the financials. And really, they're all driven by financials somehow. Pretty much anything somebody wants to do in the business has a financial component to it. I want to work less. Okay? That means either, you know, revenue is going to have to change or we're going to have to hire additional people as an example. Okay. And so revenue, that's obvious. Hiring additional people, that's obvious. They want to bring home more money. Okay, well, that's a revenue at a given net profit outcome. Right? Whatever. Whatever. Their goals are in some way, shape or form. There's a financial component to it. Then I want you to take that and convert them into annual goals for cash, net profit, and revenue. So the easy one is, well, I want to take home $200,000 more last year than I did this year. Well, that looks a whole lot like we're going to probably have to increase net profit by $200,000. And we know that your business typically operates at a 10% net margin. And so if you want to take home an additional $200,000, then that means that you need to generate an additional $2 million in revenue. Simple. And so now what we can say is, all right, next year our goal is that we've got to have an additional $2 million in revenue, still maintaining the same 10% net profit margin, so that we can free up an additional $200,000 in cash. Now, obviously there's some leeway in there, so we wouldn't have to $2 million if we could get our net profit margin to 15%. And so as we talk about the following steps. Know that there's ways to massage that, but I want you for this part, just to kind of convert that into an annualized goal. Then I want you to take what you just did and build it into the monthly forecast and projections. So you've got January through December 2024. We know what January is probably going to look like. We have the goal for December. I want you to map that out and I want you to start thinking about three things. Cash, timing, and margins. So for the things that have to be true in order for them to hit their goals, what are their monthly cash obligations? Once you understand what that is, think about timing. When does it make sense to put those obligations onto the projections? And then what are the necessary margins and how are the margins going to get impacted by that? Let me give you some examples. Let's say that you've got a client who's the moving industry is front of mind for me right now. One of our guys is like, they're drowning because they're not only the CEO, but they're also the dispatchers. So that means that they're the ones that are fielding the calls from potential customers and telling their, their crews where to go and when to go. And he's, he's dying. And so he's like, I've got to hire a new dispatcher. And so as we look at the 20 or the 12 month plan for 2024, we're like, okay, based on where his cash is now and what he's projecting for revenue and margins, when will he have enough cash to hire the dispatcher? Okay, so we know that he's going to need an extra five grand a month plus burden or whatever, right, to hire a dispatcher. And so if everything kind of hits the way we're projecting for January, February, March, that's their slow season, April, it starts to pick back up. And then in May, by May, he should have enough money that he can start to hire that dispatcher and have them onboarded and trained for the bulk of the busy season. That's just an example. But really think through, like, based on what you know about their business, what you know about their margins, what you know about their seasonality, Think through what needs to be true month by month in terms of cash, timing and margins for it to work out. Next, what I want you to do is I want you to map out in terms of revenue, cost of goods, cost of services, gross profit, g and a net profit. I want you to map all of it out for the year. Come up with you by yourself, knowing what you know about the business. I want you to put a month by month projection for the year. Do not try to loop the client in until you've got it mapped out. They will quickly get overwhelmed. What I found to be the best practice is I'll put it together for them, Then I'll bring them in and walk them through where my thoughts are, and I'll let them correct me where I'm wrong. I'll let them poke holes in my plan and let them get it dialed in with me together. And a lot of times you'll find that they want to bring their operations person in, or they might want to bring their sales or marketing person in. Lay this out for them, though, and then bring them in and have them help you dial it in. And the question that I like to kind of ground myself and the client on through this process is, what would need to be true in order for this to happen? What would need to be true? Well, there's some obvious and some not so obvious things that will come to mind through this process. Let's take the moving industry as an example. I love my movers. And. And we say, like, all right, so based on the client's goals, we need to get revenue increased by $2 million next year. And in order. So we'll say ask the question, what would need to be true in order for us to get revenue up to 2, an additional $2 million next year? Well, along the way of answering those questions, one of the easy things that would come up is, well, we're going to need more people, we're going to need more movers to actually do moves because the industry's struggling right now. So we can't raise prices enough to eat up that whole $2 million. We're going to just need to do more work. And so one of the less obvious answers that follows along is, okay, well, if we're going to add another six crews, which would facilitate the additional $2 million. We're also going to need additional supervisors. We're going to need another one or two managers to manage those crews. We're also going to need additional trucks because the crews, like, need something to move stuff with. Okay, well, now that opens up another can of worms. Do we want to buy the trucks, do we want to lease the trucks, or do we want to rent u hauls, which a lot of movers do. Okay, now we've got to analyze the financials for each of those three options. And so this is really where the cash and the timing and the margins considerations come into play, is once you start getting the onion two or three or four layers deep in this annual strategic planning process, and this is where you is the fractional CFO have to work with the business owner because there's a lot of these things that you just will never know. They're way more in tune with their business than you are. But where you bring a lot of value to the table is asking smarter questions like, hey, in order to get the six extra crews, do you need additional supervisors? Do you have enough trucks? What about insurance? And you help them think through all of this stuff. You know, help them think about what would need to be true in terms of hiring, what would need to be true in terms of contracts, what would need to be true in terms of maybe supplier renegotiations? You know, if you're, if you're seeing that gross margins are too low, you know, identifying like, how do we get our gross margins from 42% to 45%? What would need to be true in terms of inventory management? Do we need to bleed down inventory? Do we want to do some hedging and buy additional inventory? Think about launches in sales, volume discounts. I know a lot of you continue to poo on my idea about niching and how important niching is. But the more you niche, the smarter questions you can ask during this process, the more familiar you get with the moving industry or the construction industry or the vegan baked goods industry, you start to know what the industry cycles are looking like. You know what the industry trends are looking like. You know what the industry comps start to look like. You can really look like a smart lady or guy just by the questions you ask because of your industry knowledge. So again, start mapping all this stuff out. Then you're going to loop in the client. Number one thing I want you to remember through this process, ladies and gentlemen, is right now there's people on this call, and I know what you're selling, you're saying, I don't know all the answers to these questions. I don't know. I don't know what they need to do with supplier renegotiations. I don't know what they need to do with volume discounts and what they can possibly do. I'm not sure what they need to do with inventory. If they need to bleed inventory down or stock it up. Once you remember, you don't need to have the answers. That is one of the biggest mindsets and issues and misconceptions that we as fractional CFOs have compared to a full time CFO. We don't have to have all the answers. You will be amazed if you go to your clients and you're like, look, in order for you to hit the extra 200k take home next year, you know, we've either got to do $2 million at 10% net profit, which is going to be hard, or we could do $1.5 million. I don't know what the math is, so don't fact check me on this, but let's say 20% net profit. Does that work? I think that works something close to that. Okay, so how do we get our net profit margins from 10 to 20%? What would need to be true? Well, gosh, we see that our gross profit margin is lower than the industry average right now. Let's take a look at that and see why. And you say, hey, what would you have to do, CEO, in order to get your labor costs down 7%? You don't have to know the answer. A lot of times they will know. Or just giving them the smart question and then giving them, hey, look, over the next two weeks, I want you to talk to your operations manager and see if you guys can identify five reasons why gross profit margins are lower than the industry average or that your labor costs are 7% higher than industry average. Give them the task and let them come back with the answers. That's completely okay as a fractional cfo. All right, so we got the goals, dreams, aspirations, fears and uncertainties we've converted into those annual cash, net profit and revenue goals. We built it into the forecast and projections. The fourth thing I want you to do is to set quarterly objectives and milestones based on the annual plan. And the reason we want to do this is because we're going to make it more bite sized for the client and less overwhelming. And so I want you to break this down the, the annual into like four quarterly phases. Four quarterly phases. For those of you that are in eos. You know, we do the. We do rocks, you might call them. You know, just quarterly goals, quarterly objectives, milestones. But I want you as the cfo, to break them down into, like, these four quarterly phases for you. And I want you to tee them up for your client one quarter at a time. And the purpose is, I want you to show them what main progress needs to be made during the quarter. Hey, look, between January 1st and March. How many days are in March? I have to do the 31. Between January 1st and March 31st. What we need to do to make sure that we are making significant progress towards our annual goal of getting you an extra $200,000 take home. We need to get gross profit margins up X percent. Or we need to cut GNA by. By Y dollars. Or we need to increase revenue by this. Or we need to get our return on ad spend from 2x to 3.1x, whatever it is. But I want you to just pick two to three big milestones for the quarter max. So we're like two to four goals for the year, two to three big milestones per quarter max. Keep it simple. And then update those quarterly objectives or milestones as the year progresses. So as we're getting into late March, we're updating what we think quarter two's objectives and milestones are going to be, and then we're teeing those up for the clients as well. And so really what we're doing here is we are acting as a driver, we're being proactive, we're pushing the client. Instead of what a lot of us do is we ask the client, hey, what are your goals for next quarter? And like, I don't know. And you're like, okay, here's your forecast, here's your projections. Awesome, good luck. That doesn't work. And then use those objectives to set monthly goals. Use the quarterly rocks or milestones, whatever you want to call it, to set monthly goals. And just as a rehash, right, we want to use the smart framework. And so when we set goals, they should be specific, measurable, attainable, realistic, time based. Sorry, R is relevant. Relevant, smart, measurable, actionable, relevant and time based. So attainable means, you know, if a business was doing $3 million a year, on average, January 1, attainable. If we said, all right, we want to go from a $3 million a year run rate to a $9 million a year run rate by the end of Q1, that's probably not attainable. This is not, despite what most of our clients might want Us to believe, like that CEO optimism that drives us all nuts, right? We've got to be the person that's grounding them in making sure that they're actually attainable. The other one I want to really hit on here is the R, which is relevant. Make sure that whatever monthly goals you and your client agree on are relevant to their bigger picture goals. The goals, the dreams, the aspirations, the fears and uncertainties from step one. They've got to be relevant. Because if you're sitting over here telling them to do this goal and it's not in service to one of those personal goals that we talked about before, in some way, shape or form, the client is going to feel like you don't get them, that there's a disconnect. You're doing something independent of what they're trying to do. You've got to make sure that they're relevant to the client's bigger picture goals. And specifically, to the extent that you can paint that picture on how they're relevant to their personal goals. Because so often we get into these stages, we're like, hey, look, this month you've got to go and you've got to have a tough conversation with these three employees about taking a pay cut. And they're like, that sucks. Nobody wants to tell employees that they're taking a pay cut. You're like, okay, well, based on what your industry's doing, it's down 34%. And based on the fact that you want to take home an extra $200,000, something's got to give. And so you can either do this or you can go have those conversations. And all of a sudden they're like, okay, well, yeah, that does suck that I'm gonna have to have those conversations. But mama wants that extra $200,000, and so now I'm gonna go have it. So you've gotta show them and remind them constantly. How are these monthly goals in service to those bigger picture goals, dreams, aspirations, fears, and uncertainties? You have to do it. You have to remind them. We lost a client earlier this year because we did a poor job of making sure that the goals that we were setting for our clients were relevant specifically to the fears that that client had. They were relevant, but we didn't do a good job of communicating that relevance. We lost a five or six million dollars moving company because we didn't do a good job of it. Next thing I want you to think about related to monthly goals, right? We know that there's got to be an owner if there's A goal. There's got to be an owner, right? Not owners. There has to be one owner. But what we lose sight of a lot of times as fractional CFOs is that there's a difference between the owner and the doer. The owner is the person responsible for making sure that it gets done and following up to make sure it gets done. The doer is the one that's responsible for doing it. So here's an example, this real basic example. Let's say that we determine that in December, we need to change the chart of accounts for a client to better separate out cost of goods, cost of services so that they better line up with the various revenue streams. And we need that done before January 1st so that we can track things the way we want to. Is the cfo. Unless you're doing bookkeeping work, you're not going to be the doer of going in and changing the chart of accounts. The bookkeeper or the accountant is. You could still own that as the fractional cfo to communicate to the bookkeeper what you want the chart of accounts to look like, to follow up with the bookkeeper to make sure that the updates to the chart of account are happening and to push that forward. Doesn't mean you're the doer. So look for those opportunities as the fractional cfo. Like you can own the thing, but it doesn't mean you have to do the thing. These monthly goals need to be updated on each and every monthly CFO call. This needs to be something that's part of your normal cadence. Then at the end of every single CFO call, I think it should be the last thing you do. We're going to update what got done this month, what needs to get done next month. Is it specific? Is it measurable, is it attainable, Is it relevant? Is it time based? Who's going to do it? When's it going to be due? Are there any sub steps or subtasks that have to go with it? Let's make sure everybody understands. Bob's the CEO, you're the one. You're going to have those conversations with the vendors and renegotiate to get your cost down or, you know, whatever. The thing is, everybody's on the same page, okay, yay, we're going to do it. This is where you guys hear me talk about the executive level accountability that fractional CFO should bring to the table. This is where the accountability piece comes in. When you have this baked into your normal process and the client knows at the end of every Call. Oh my gosh, Scott's going to ask me, did I get my shit done. I don't want to look like the jerk that didn't get a shit done. They start to have this accountability built in. This is where you do it. If you skip this at the end of the calls, the accountability piece goes away and then action stops going away, starts going away. Use your check in calls every other week like we do bi weekly check in calls. The check in calls are a great opportunity for additional accountability. How are we progressing with the conversation with the vendor? How are we progressing with the hard conversation with the clients? How are we progressing with work with the marketing team to get figure out what needs to happen to get ad spend from 2 to 3.1. How's that going? What are you finding? Do you have any hurdles? What's stopping you? Do you need any additional help? Those kinds of things. Great opportunity to check in on how the goals are progressing. If you want to drop weekly accountability slack messages, that's great. If you want to do it bye week, whatever you want to do. But find opportunities to increase the cadence on the, on the accountability to the extent that your client wants it. We don't want to be annoying, but we also want to help hold them accountable. And the last thing I'll share with you on this, for every one of these goals, I gosh, I can't overstress this enough. Explicitly tie the goal back to the outcomes in the bigger picture goals every month, explicitly tie back. This month we're doing this thing because by December it's going to result in this. And you told me that the most important thing to you and your husband was this, and this is how it's going to work. And connect all of those dots again, use, I like to use the projections. That's the easy way to do it. So to the extent that you can show them all the projections. Look, if the end of this month we've got this contract renegotiated with this big supplier, this is going to be the change in gross profit. This is going to be the change in net profit. Look, I'm changing the numbers in the CFO report. See how it changes the net profit. Look how it changes cash by the end of the year. If we have 10 months of 20, 24 with our margins gone from 35% to 38%, look at how much extra cash you're going to have at the end of the year, which is going to meaningfully contribute to the extra 200 grand you want to take home. Isn't everybody so excited? Yay. Fractional cfo. That's how this stuff works. You have to tie the goal, the monthly goals, to their bigger picture goals. Show them the math on how it works. That's how you keep a client excited about the monthly goals, about working with you. You gotta tie it back. They will forget. You have to constantly do it. Now that's how you do it for your clients. How do you do it for your firm? The exact same way. Just do the same exact thing. Do the same exact thing. I don't know about you guys, but when I'm not drinking my own Kool Aid, when I'm not doing the things that I'm preaching to my clients into you guys, I get guilt bordering on shame. And if you're like, what's the difference between guilt and shame? Guilt is when you feel bad about something you do. Shame is where you feel bad about the person that you are. And when I'm not drinking my own Kool Aid, when I'm not practicing what I preach, I get guilt that borders on shame. And so as a fractional cfo, if you're going to preach the importance of having goals and having projections and all of the things, then you probably need to be doing that too, inside your own firm. In the same process works. It's the same process. It doesn't change because you're a fractional cfo. And so I'm like, just do the same thing. Have that integrity to do the things. For years, I mean, I've been talking, hey, as a business owner, you shouldn't be doing the forecast and the projections, all the other things. And I'm like, shit, I'm doing them as the business owner. I hired a fractional cfo. I have one for my firm and for the CFO accelerator. Do that for your firm. Go through the process for your firm to set the goals and to put the forecast in place. Do that for yourself. Some things I want you to look out for along the way with strategic goals for you, yourself and for your clients. Number one, yes, the plan is going to be wrong. That's one of the big pushbacks that I get is like, oh, I put the roadmap in place before I set the goals and it was wrong. And I'm like, yeah, it's going to be wrong. But this is the metaphor that I like to think of. I would much rather be wrong than lost. I would much rather be wrong than lost. Because when we're lost, we're operating in the dark, we're walking around. We have no idea where we're going. We have no idea what doing we're we're doing. We don't know not how are we going to get there. We don't even know where is when. We've got the roadmap and we've got the plan and we realized we were wrong. Yet we still have the goal. We know how to course correct. We know what we need to do next. We can figure out how to get back on course. And having the goals in the roadmap gives you the opportunity to do that in every time. I would rather be wrong than lost. If you know me, you know. You know this next one's out of surprise. Put time on the calendar Put time on the calendar to do it. Do it with your clients. Do it with yourself. Put time on the calendar to think through the goals, to set the goals, to follow up on the goals, to do the monthly things. This should say Shameless Plug, not Shameless plus, but Eos in the book Traction. If you want help, like with frameworks on how to do these things and the cadence in the conversations and some like the frameworks and stuff, Eos is an awesome platform. If you don't want to pay for an EOS implementer, read the book Traction and just do the things. Awesome. Just remember that the process of setting goals and thinking through goals with your clients and with yourself, it takes practice. It's something that over time, you're going to get better at. Like I said at the top of the hour, like, you're going to struggle to get things out of your clients. You're going to struggle to get them to tell you the fears and the uncertainties and what their real goals are. As you continue to practice having those conversations, it's going to come more natural. You're going to figure out the pushbacks and the things to say and the metaphors, the. The things like the wrong versus the lost and all of that. You're going to figure that stuff out and just know it's going to be awkward and clunky and weird, kind of like sales. But you will get better at it over time. But I can't, I cannot stress this enough. If you want to be a fractional cfo, you've got to dedicate to figuring out how to do this. You've got to dedicate yourself to figuring this out because your clients will churn in the absence of goals. In the absence of the roadmap, your clients will churn. A lot of the other stuff that we do is commodities Ladies and gentlemen, the forecast and the projections and the ratios and the industry benchmarks. Anybody can do that. The goal setting, the roadmap, helping them think through your perspectives, your understanding of the industry and the trends and what's happening. That's where you justify your existence. That's why you get paid. That's why they keep coming back for more when they know that you're the guy or the gal that's going to provide them that when it does come time to cut costs, you're going to be the last to go. So make sure this is part of your normal operating system. As a fractional CFO before we finish today, I've got just one more question for you.

Do you struggle with overcoming objections on sales calls? You know what I'm talking about. Somebody says you're priced too high or now's not the right time, or I'm just not sure if I need a fractional cfo. If you do, then I'd love to encourage you to join my Inner Circle group coaching program next month. I'm going to unlock the secrets that I've learned over the last eight years to overcome objections on sales calls.

Click the link below to get started.

Right now, risk free. In the meantime, I can't wait to see you back here next week, my friends. I'll see you then.