Why Fractional CFOs Should Avoid THIS Type of Work

Today, I'm going to hit you with one of the biggest, if not the biggest mistakes that I see virtual and fractional CFOs making literally every single day. My name is Michael King and this is the CFO Report. I talk about starting, scaling, and optimizing fractional CFO services. What is this massive mistake that I'm seeing every day? Well, it's fractional CFOs that start offering services outside of our core competencies. We're experts at financial strategies, but a lot of times, because we have this massive heart for service, we want to offer advice on things like marketing, sales, operations. Things normally don't end up well when we start offering advice in those areas. And the reason for that is because we're not experts. In today's episode of the CFO Report, I'm talking to one of my private clients, Erin Fox. Erin found herself in this situation where she was not only offering CFO services, but she was also getting into operations consulting and marketing consulting for her clients because she thought she had to. This ended up with Aaron feeling burnt out. Her customers weren't super happy. She wasn't sure what she needed to do. Next this episode, I'm going to share that conversation with Aaron Fox and and I'm also going to share with you the practical advice that I gave Erin so that she could right the ship. Let's dive in. Talked about pricing, but where are you really stuck? Erin, what's going on?

Probably about a year ago, I decided that I needed to pivot from just bookkeeping and tax, that ultimately my goal was to take on clients who already had a bookkeeper. And I was just doing the high level strategic advisory, getting out of the day to day, like the we of the numbers, right? So what ended up happening was I took on one new client at the rate that I wanted, but I still was doing the bookkeeping work. I did it all in one package. I mean, I'm glad I took that client on. But then I feel like the clients that I still have now, I'm in the process of upgrading them to a actual CFO level package or referring them off to a bookkeeper. So far, everybody has been like, oh, no, I don't want to lose you. You know, let's move forward with your new services. I think ultimately when I'm dealing with the current clients that I have and then taking on new clients, I thought that I had a really good offer, like a solid offer of what I was gonna include. But I'm finding that as I'm going through this offering, it's a lot. And I'm putting a lot of pressure on myself to do a lot in a short amount of time, like, so I think even though I actually just went through a six month course of like, so solidifying my offer, solidifying the pricing, going through consults, like the whole thing, at the end of the day, when I go to share this offer with people, I'm like, this is a lot. I don't know how I'm going to accomplish all this. I just don't know if I'm doing what I should be doing.

Real quick, you're not alone, right? So the reason I have two specific calls, right? If you look on that page, it's to talk about this, and then I've got another one because so many people have this very specific problem. You're not alone. It's enough that I created a specific call just to cover these things. So, yeah, you're in the right place when you say that it's a lot. I want to make sure I'm clear here. Are you saying that as you present the service, like on the sales call, it's like a lot to cover it all, or are you like over promising, like, there's a lot you have to deliver to meet the promises that you're making on the sales call? What, what specifically are you hung up on, Erin?

It's what I'm including in my offer. I am going above and beyond the operational cfo. That was kind of like my previous job and why I left because I felt that they were too rear view mirror looking instead of out the windshield. And I didn't feel like they were truly giving the clients the value of, hey, this is what we can do for you to help your business move forward. Rather just the regular monthly meetings to go over the numbers. Right. Originally I left because I was like, I'm going to become a business coach. Like, that's how I'm going to help people. But then I was like, but I know the numbers. Like, at the end of the day, the numbers is what ultimately drives transformation. And I feel like that's what I do really well at explaining to people. But then I got lost in, well, how do I help them with marketing? How do I help them with employee retention? So then I started going down this operations avenue and I read the book, the EOS traction book, and I was like, this is it, this is what I want to do. And then I realized an EOS implementer cost like $30,000 to go through their programming training. And I was like, no, that's not it. So I kind of crafted my own, like eos. Slash this framework around focusing on the finances but being like building business owner success and team success and customer success and ultimately that leads to financial success. I'm getting all these coaching calls with my clients, going through their team structure and their ideal client and their messaging around their ideal client. And I feel like, am I doing too much? Like, is this really what a CFO from a strategic standpoint does? Like, and I think that's where I think this call probably came from is like, what is it that you're doing to help people? And I think I went back through the rabbit hole and saw a bunch of your stuff about like a lot of CFOs want to just, you know, do all the things and it's like really simplify it. You don't need to offer all those things because to me, you know, it is really easy for me to think that this is easy stuff. And for them, like, it's probably over their head, I think. I don't know if that makes sense, but it's just total sense.

It makes total sense. Bless your heart. Bless your heart. The struggle for a lot of people and I feel like you're cut from the same cloth as I am in this way. We want to serve, we want to pour into people, we want to help them. We see that they're struggling and it's like, let me just do more. We can quickly get in over our heads where it's not a. It's not sustainable for us. We've over promised, we've overcommitted, they start to get resentful. We're resentful because we're working all these hours. We're not making much money. It's this deadly thing where I think we can get into trouble is, you know, I don't know if you saw the video I did on this, but I talk about is fractional CFOs. We kind of live in the wild, wild west of financial services because the IRS doesn't say what a fractional CFO is. GAP doesn't say what a fractional cfo. I mean, AICPA doesn't say. I mean, we can do whatever we want, right? But that's that blank slate or canvas can get us in trouble because we want to do all of these things. That said, what I'm going to share with you isn't the right answer or the only answer. I'm just going to tell you kind of what I've learned from building My firm. And from coaching, you know, well over 100 other firm owners. Now, what I've kind of found to be true, you can take this and do it. You can do a version of it. You can say, mike, that was the dumbest thing I've ever heard. Am I going to do any of it? Okay. When I start hearing conversations about, like, the, well, we got to get more clients. As an example. Right. The marketing piece. The question I have for you is tell me about your expertise in marketing. You know, tell me about how you've built out a marketing program where you've grown a company from X to Y because of your marketing insights. My guess is you don't have that story.

No. And my goal is to get them, like, 50% there just to be like, okay, well, here, let's get you where we can get you without having to pay somebody. And then once you've honed in on, like, who your ideal client is and your marketing message, then you can go pay somebody to take that.

And the problem is, like, that's not your area of expertise.

Right, Right.

And I know you want to help them with it, but I looked at your LinkedIn, you know, you've got however many years of background as a controller and do like, that's. That's your skill set, you know?

Yeah.

So what I've learned is, despite us wanting to help on those things, based on where your experience is, you've got to work with clients that have already solved those problems. That, to me, is where the answer lies. And we'll dive into why, I think, why. I see a lot of people doing this, but you've got to. You've got to start working with clients that have already figured out their ica. Have you read Traction, the EOS book?

Yeah.

So they break it down. They said, like a business has. I think they call them pillars or three, whatever. But it's sales and marketing, operations and finance really, where a CFO can add value, especially at the price points that I saw on your. Thing is they figured out sales and marketing, they figured out operations, but they've hit a glass ceiling because they don't have the cash and the profitability to reinvest in more sales and marketing, more operations. Our job as the CFO is to come in and help them solve those puzzles so that they can double down on those other two pillars. You see what I'm saying?

Yeah.

Right. So that's where it's tough. And so what. I see a lot of business owners, like, I see a lot of early fractional CFOs doing. You play small, right? You're working with the businesses that are doing 150, 200, 300, 400k a year. They got something, but they haven't really figured it out yet. They're just too small for you to be able to come in and do the stuff that you know how to do. You've got to start getting to the point where you're working with businesses that are, you know, on the low, low end, you know, 750 to a million. But really where I found the sweet spot is like 3 to 10 million. And I see a lot of people like, where do you get. There's no, they're not out there. They're, they don't exist, right? And I'm like, no, you're fishing on Facebook and Instagram, right? And that's, that's where the earlier stage business owners hang out is Facebook and Instagram. So that's, you know, you're fishing from the wrong pond. You got to learn where do those bigger business owners fish, right? Or where are they hanging out so you can fish in those ponds? You know, to get to, I think you put three to five thousand a month was your target, is that right?

Yeah, yeah.

Three to five. You want to be somewhere 15 or north of 1 5. 1.5 million a year to really be able to command that. Now all of that said my firm for years now only offers. I mean, we have a very tight scope of work for CFO services. You know, our core package, 5,000amonth, you get a monthly call where we go over our CFO reports, we get a bi weekly check in call, right? There's Slack access. I mean it's a very tight scope of work. What we cover, what we don't cover. And I've proven time and time and time again, you can charge 5,000amonth for that and not do the employee retention stuff, the marketing stuff, the bookkeeping, the accounting, the tax prep. You can do it, you can do it, but you've just got to work. You've got to stretch yourself to work with some of those bigger businesses.

So I think I saw one of the things that you said maybe in the Slack channel that you, your businesses are like 3 million to 10 million. Is that kind of what you have for your $5,000 a month?

So our 5,000 is like that 3,3ish. Then we've got a 6,500. Now I think we just, I think we just bumped prices. 55. Then we have 65. And it's 65. It's the same scope, but we include tax strategy. So it's an annual tax strategy. 8000 is both of those. But they get. Normally it's EOS clients that do this because we're an EOS company too. We go for their annual. Their like annual planning session where it's all day kind of thing. So the EOS implementers, there we come. It's 55 to 8,500.

I guess you said that you don't work with companies then that, like, when you come in and they have a marketing problem with, like, okay, well, we do need more sales. Like, how are we gonna get more sales? Like, you're just like, hey, you know what? I'm gonna stay in my lane and you're gonna go somewhere else or get somebody else to help you with that.

We won't touch it. But there's a way. There's a way you've gotta present it so that you don't sound like a jerk. You know, like, oh, we don't do that. Right. Like, that doesn't sound like. It's not a team approach. But what I tell people is, you know, look, if you've got a sales problem, that's a big deal. My team and I have been trained for decades how to help profitability, how to increase tax flows, how to maximize taxes, efficiencies. Right? The problem you have, you need somebody that is deeply experienced with that, that knows for a business like yours in your industry, how to turn that around. And while I would love to help you with that, I'd be doing you a disservice if I tried to get it because I know it's such a big problem. Now what we can do is when you do bring somebody in or you're considering this, we can help you understand the financial viability of it. We can understand if you can afford it. We can help you think through, you know, like pricing and, you know, cost of goods and cost of services and are those margins sustainable? So it's really around, like, setting that boundary. I talk about three things. Interest, experience, and expertise. We don't have the interest, experience and. Or expertise to help you with this, but then it's reframing it on how we can help them with that problem. So we're not going to teach you how to run more efficient ads. We're not going to show you how to handle a better sales call for your plumbing business. But what we can do is this. So we're still part of the solution, but we're in our Lane. All right, my friend. I hope you found this episode helpful. If you're interested in working with me, just like Aaron, go to the cfoaccelerator.com there you'll find all the ways that we can work together to help you start, scale or optimize your advisory firm. In the meantime, I can't wait to see you back right here next week, my friend. See you then.