July 17, 2025 • 26 mins
You’re not broke, but you might be bleeding.
What if your biggest profit leak isn’t your pricing or marketing… but the decisions you’re not even tracking?
🎙 In this episode, fractional CFO Tom Schultz (48+ clients, $1M - $80M businesses) breaks down:
• The hidden cost of founder “gut calls”
• What really happens when you scale without financial structure
• Why money in the bank ≠ a healthy business
• The mindset shift that separates operators from real CEOs
• The hiring mistake that quietly kills growth
⏳ This episode might save you six figures, or years of rework.
📬 Want to connect with Tom?
Reach him via LinkedIn or at CFO2Fractional.com
This episode is brought to you by Bill.com
- Ready to take your finances to the next level? See how BILL Spend & Expense can power up your business—and get that free grill—at bill.com/cfochronicles
Terms and conditions apply.
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We help Bookkeepers, Accountants & Fractional CFOs generate consistent local leads, book perfect-fit appointments, and close premium clients, without cold outreach or ad guesswork.
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Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome back to CFO Chronicles, the podcast where we
go beyond the numbers and intothe boardroom with the financial
minds who keep businesses aliveand scaling.
Today's guest is Tom Schultz, aseasoned fractional CFO the guy
companies bring in when they'veoutgrown their bookkeeper and
the wheels are coming off at 60miles an hour.
Tom isn't just managing cashflow, he's building financial
(00:21):
infrastructure.
He's helped companiesstreamline ops, raise capital,
prep for acquisition and justclean up the financial mess that
most founders don't evenrealize they're sitting on.
If you're a founder operator orjust someone trying to make
sure your business doesn't diefrom cash burn this episode's
for you.
We're going deep on.
The moment you actually need aCFO Spoiler, it's probably
before you think.
The moment you actually need aCFO spoiler, it's probably
(00:43):
before you think how to build toscale without blowing the
budget.
And the financial BS is stillfloating around LinkedIn.
That Tom can't stand, and Ithrow in a couple of wildcard
questions in the middle just tokeep him and you on your toes.
Let's get into it.
You've worked with businessesfrom scrappy startups to scaling
machines.
Speaker 2 (01:06):
When did you realize finance was your lane?
Well, I started actually backin my MBA program.
I was in my MBA program atUniversity of South Carolina and
they started giving us casestudies as part of the
curriculum and I just didexceedingly well, to the point
where my professors usuallywould never call on me because I
(01:27):
would always have a good answeron a case study.
And then that evolved into Iworked as a consultant for the
Small Business DevelopmentCenter and so through my MBA
program I was meeting with smallbusinesses of all sorts and
they you know, if it'saffiliated with the Small
Business Administration, theyall want to come in and borrow
money.
So I kind of evolved down.
(01:49):
I put together my first threestatement projection model back
when I was still in the MBAprogram.
It was just something that younormally don't get to until
after you get out of school, butI did it back then and that I
just it came natural to me.
Speaker 1 (02:07):
Interesting, that's cool, and when you just find
your knack, something's workingsuper natural for you.
I'm curious what's the biggestmyth you see floating around
CFOs or finance leadership ingeneral?
Speaker 2 (02:21):
In finance CFOs general, the biggest myth is
that you need to be a CPA andneed to have an accounting
background to be a CFO.
I don't have a CPA.
I don't have an accountingdegree.
I did get my MBA in finance butto this day I oversee
(02:41):
relationships with CPA firmsoutside CPA firms for my clients
and usually it comes up at somepoint.
They assume I'm a CPA because Ican talk the talk, walk the
walk, I understand debits andcredits.
That's always come natural tome and just you know.
You learn as you go along andthat's all you really need.
What you really need is the CFO, the high level stuff, and
(03:04):
accounting really is just afoundational requirement.
Speaker 1 (03:08):
Interesting.
That's cool.
When a founder tells you we'redoing fine without a CFO, what's
your gut reaction?
Speaker 2 (03:17):
Well, how much better could you be doing if you had a
CFO?
So usually I get that kind ofresponse either they are too
small, which you know, some ofthem are too small, but
sometimes I get a.
I've talked to people thatthey've got $10 million in the
bank.
They have no debt.
All they're really doing isjust looking forward to the next
(03:40):
year and how much money theycan take out of the company.
Well, a CFO could even helpthere.
I mean, I help client companiesinvest their money smarter.
I also do my projections in thefuture so that they can get to
the mid part of the year andknow how much they're going to
be able to take out by the endof the year.
(04:00):
Know how much they cancomfortably take out out by the
end of the year.
Know how much they cancomfortably take out.
Also, they typically look attransitioning or exiting later
in their lives and if you don'thave a CFO in place, you're
going to rely on your CPA andyour lawyer and they're going to
come up with this greattransition estate plan and
(04:23):
there's going to be moneyinvolved somewhere.
Well, as a CFO even a part-timeCFO I can help them translate
what's going to be the financialimpact.
Do we need to save up somemoney in order to affect that
transaction?
Do we need to borrow some money?
How much do you need in yourretirement?
So there's lots of differentways.
(04:45):
Everyone comes at it from adifferent way, but I do get that
question a bunch.
Speaker 1 (04:53):
How do you normally overcome that?
Because a lot of people don'tlike change, and if they feel
they're doing well, it's likewell, I don't really need you
though, so you can see and youknow what the benefit looks like
.
But for someone else who's like, well, we've got it, we've got
this far, we're doing fine, likereally, how much better could
we be doing?
Like I'm not, I'm not feelingany pain, why would I make a
(05:15):
change?
Why would I invest in this?
How would you navigate that?
I guess objection or yeah,let's call it an objection, I
mean in a sales conversationobjection or, yeah, let's call
it an objection I mean in asales conversation.
Speaker 2 (05:29):
Yeah, first of all, I don't encounter too many of
those because most of myopportunities for clients come
from referrals and they'veusually kind of pre-qualified.
There's usually a pain point ora need that they've, they're
talking to me and so I canaddress that need.
And so if they say, well, Ineed this need addressed, but I
don't need you long term, I justneed you short term, and I say,
(05:50):
all right, I'll just come inand address your need, but let's
, let's do that.
I'm going to be trying todemonstrate to you what kind of
value I can provide over thelong haul and you know it is the
case.
Sometimes they don't needsomeone like me and we can
mutually agree on that.
But almost always someone willbring me in for one thing and in
(06:11):
the first week or two I'll findsomething else where I can add
value and I'll do it and it'llbe like whoa, you know the owner
will be like, well, that'spretty cool.
And so it's really up to me.
If I can get in the door andspend a little bit of time, I
can show them the value.
Speaker 1 (06:27):
Yeah, awesome.
That's really cool, tom.
At what point does a business,in your opinion, actually need a
CFO, or even a fractional?
Speaker 2 (06:38):
CFO, yeah, typically it needs to grow to a certain
size.
I say typically, but in realityif anything is investor
financed, capitalized, so ifit's a you know angel investor,
if it's a you know pre-revenuetech startup, vc based, if
you're reporting to investors,the investors are going to want
(07:00):
a CFO there, even if you'repre-revenue or way before making
a profit.
So in that case the investorsare only putting in a little bit
of money at a given time, maybein phases, and they can't
really afford a full-time CFOanyway and certainly not keep a
full-time CFO busy.
So if there's a startup that'sbacked by investors, that's a
(07:24):
good point for a fractional CFO.
Also, then you know it's goingto grow so or it's going to come
in at a growth level.
So I kind of use minimum 3million in sales, but that's
really just an arbitrary number.
And to need a part-time CFO ofsome sort, and it depends on the
(07:46):
complexity If they're borrowinga lot of money, you probably
need a fractional CFO.
If you're just doing a smallbusiness that's doing not a lot
of transactions, a lot of highdollar transactions, maybe all
you need is a bookkeeper.
But when you start making a lotof profit and start hiring a
lot of people.
At some point it will behelpful for you to have a
(08:08):
fractional CFO, and I use theanalogy when the owner stops
signing their own checks, thepayables checks when they stop
doing that, they probably need afractional CFO of some sort to
help them sort through the dataand give them the reports,
because then they don't havetheir fingers through the data
and give them the reports,because then they're not.
They don't have their fingersin the trenches anymore of all
the dollars that are going in,and out.
Speaker 1 (08:31):
Yeah, that's the litmus test.
Speaker 2 (08:33):
Now, yeah, now let me just tell you, though
separately.
I've been at clients.
I had $80 million company whereI was a two day a week
fractional CFO and people say,well, don't they need a
full-time CFO by the time theyget to 80 million?
And the answer is it wasworking just fine.
I had a very strong controllerand he did everything that
(08:54):
needed to be done on aday-to-day basis for all five
days, and I was able to do justthe CFO stuff two days a week.
And so that's you's.
I don't know that there is anupper limit for fractional CFO.
Speaker 1 (09:08):
Yeah, and I guess it all.
Every business is different,right?
No, no business is the same andit depends on the systems they
have in place and the teammembers.
So it correct.
Yeah, that's interesting, it'sa cool take.
What?
What are the common financiallandmines that you see in
businesses doing one mil to 10mil a year?
Speaker 2 (09:28):
Well, the financial landmines typically are one
growth oriented.
So if they I've had companieswhere they they're 3 million in
sales and they land a big $3million opportunity, so they're
going to double in sales, it'slike, oh okay.
So they run to the banker andthe banker says, well, I need
this and this and this and this,and then I'll lend you the
(09:50):
money.
But if no one does theprojections to see how the
cashflow is going to beimpacting, if you have a big
spike in growth, it's going tosuck a lot of cash into it.
And sometimes, too, the ownergets to the end of the year and
says, well, I doubled my sales,doubled my profits, so I'm going
to take even that much moremoney out of the company
(10:16):
no-transcript.
Speaker 1 (10:17):
Yeah, that's tough, though.
Sometimes as the owner, if youhave a good year, you're like,
well, I'm going to reward myself.
But again, if you don't havethat financial support looking
over understands the numbers alittle bit better you can find
yourself in a sticky situation.
Correct, how do you helpfounders understand the
difference between cash, profitand growth and how to prioritize
(10:39):
between them?
Speaker 2 (10:42):
cash, profiting growth, and how to prioritize
between them.
Well, I mean, they all need todance together.
So everyone wants to grow, growsales, grow profit.
And you know the but the cashhas to be there because, as as
you know, as I'm sure all,probably all our podcast
(11:06):
listeners know that you need tohave cash to be able to fuel the
growth working capital needs.
And so, you know, a lot oftimes companies just pull off
their, their income statementand that's all they see and
think that that's not, that'sgood enough.
But that's why I always look asa CFO and really as an FP&A
person you look forward.
You look forward at the cash Ifwe're growing.
Do we have enough cash?
(11:28):
What do we need to do?
Do we need to, you know, factorin some money, some debt?
Do we need to have a big enoughline of credit?
So it's they all dance togetherand you need to harness them
all together.
You can't look at themseparately.
Speaker 1 (11:43):
Yeah, I like, I like that.
That they all, they all mesh,they all dance together.
That's.
That's cool, Tom, what's one ofthe most impactful changes
you've ever made inside abusiness?
Something where you know thenumbers turned around relatively
fast, based off of a changethat you were able to spearhead
fast, based off of a change thatyou were able to spearhead.
Speaker 2 (12:03):
So I've had 48 clients and I've had some really
interesting ones.
Usually I have not been able tocontribute to the bottom line
by my action.
One thing I did do I went intoa company and he just wanted a
CFO fractional CFO because hewas transitioning to his next
(12:26):
generation.
His three kids were in thecompany and he wanted to make
sure all the financials were inright.
And I'm actually helpingeducate them.
But in the first week there Ilooked at his bank debt and it
was probably three or four yearsago and he was paying too high
an interest rate and his debtservice was too high.
So I went to the bank and thebank banker knew that I knew
(12:50):
other banks and I said listen,we need to restructure this
thing.
And literally within a fewweeks we had dramatically
lowered the interest rate,interest rate, we had stretched
out the payments and I think inmy first month on the job we
reduced $100,000 a year ininterest expense and $1 million
lower in debt service payments.
(13:10):
So that's one thing, but a lotof what I do is I model
something.
I provide data to a companyowner so he can make better
decisions he she can make betterdecisions and that allows them
to then make impactful bottomline things.
If they're thinking, ah, maybeI can do this, maybe I can do
(13:33):
that, and I show that model itfor them and say, hey, you can
do this and we can support it bythis, then they can go out and
do that, and that's happened anumber of times.
Speaker 1 (13:45):
I mean being able to knock off $100K.
Not a bad first couple weeks onthe job.
Speaker 2 (13:52):
Right, right right.
Speaker 1 (13:54):
Where do most founders leak profits and never
realize it?
They and I'm listening extraclose on this one Founders leak
profits and never realize it.
Speaker 2 (14:02):
They.
Speaker 1 (14:05):
And I'm listening extra close on this one.
Speaker 2 (14:08):
Where did founders leave profits?
They leave them.
Speaker 1 (14:13):
A leak, oh, leak yeah , yeah, leak yeah.
Speaker 2 (14:17):
Where do they leak profits?
They leak it in makingdecisions based on what they
think is right instead offactoring in what is appropriate
.
So I'll give you an example.
I had one assignment once andthe owner of the company was
very particular on theappearance of his building and
(14:41):
his operations and it lookedbeautiful.
I mean it was a manufacturingoperation.
He looked like he could eat offthe floor.
But to keep it that way wasvery, very expensive.
I mean, you know full-timejanitors, full-time, you know
lawn grounds people.
I mean everything was just assoon as something broke it was
(15:04):
fixed immediately and you knowthere's nothing wrong with that,
but it was very expensive forhim to do that.
The other vanity thing he didwas he wanted a building he was
building to be higher up, so itwas higher profile from the road
, and he spent quite a bunch ofmoney trucking in dirt to build
(15:28):
up the land to put that.
It wasn't needed because it wastoo low.
It was just needed to build upthe property.
So that's just one example.
But they, you know they leakprofits all over the place.
You know people, too manypeople, if you've got someone on
staff that's been there a longtime and they're not
contributing anymore.
Owners will be reluctant topull the plug on that, and so
(15:53):
they're carrying excess staffing, just because they don't want
to face that.
That's another leak.
Just because they don't want toface that.
Speaker 1 (16:02):
That's another leak.
This one's off the cuff.
But what's your take on eitherhaving the perfect amount of
staff, Does that?
Speaker 2 (16:14):
exist in a company.
It doesn't really exist untilmaybe 20, 30 years from now,
when your staff is AI, but forright now, I'll tell you it's
something you strive for.
So one client company we wentthrough the COVID period and our
(16:34):
sales overnight dropped 30%,40% and our mantra during that
whole period was 40%.
And our mantra during thatwhole period was we want to
right size the workforce tomatch the workload.
And what we did is we used atthe time and here in the United
States we had that unemployment,extra $600 unemployment so we
(16:55):
did voluntary furloughs for ourstaff and we only did furlough,
allowed that it wasoversubscribed.
Everyone wanted to do it becausethey were making a lot of money
to stay home, and so we wereable to right-size the workforce
to match the workload throughthose voluntary furloughs.
That being said, it's notsomething that you can.
(17:17):
It's a moving target becauserevenue comes in, revenue goes
out.
People sometimes come in basedon your hiring, but sometimes
they leave before you're readyfor them to leave.
So it's never going to beperfect, but you can strive for
that and you should alwaysstrive for that, because that's
your optimal profit level.
Speaker 1 (17:37):
Yeah, it's tricky, though.
Like you said, revenue goes up,revenue goes down.
People can work out really well, people cannot work out.
It's a tricky dance, right.
Speaker 2 (17:56):
What's the real reason so many companies stall
financially even when revenuelooks healthy?
I'm the CFO person, so I'm justthrowing pot shots outside our
group.
But I've been in situationswhere the sales group gets too
conservative and so I can onlydo so much.
I can kind of whisper in theowner's ears.
Usually.
I'm, you know, developed arelationship with whoever the VP
(18:18):
of sales is and I can offer mytwo cents worth.
Relationship with whoever theVP of sales is and I can offer
my two cents worth.
But I've seen that too manytimes where the sales force gets
pretty conservative and focusesmore on cost of the sales
effort rather than.
I always view sales and revenueas a return on investment
equation.
So you're not spending moneyout of your profit on sales.
(18:44):
Uh, in the sales departmentyou're investing money and so
you're going to look for areturn on your investment.
So that typically when I seesales to all, that's that's
what's happening there.
Interesting.
Speaker 1 (18:59):
Yeah, Us, us salespeople.
It could be an interestingbreed.
Speaker 2 (19:03):
So you're, you would call yourself a salesperson.
Speaker 1 (19:06):
Yeah, I do.
I do majority of the sales hereat Nine Two Media.
I really enjoy it and I've,I've.
I did it for years beforestarting this business about six
years ago.
But right, yeah, there's a lotof interesting personalities you
come across in sales.
Speaker 2 (19:21):
Yeah, there's a lot of interesting personalities you
come across in sales.
Oh yeah, well, you know, weCFOs we're not really
salespeople by training.
But you know, if you're goingto be successful as a fractional
CFO, you've got to have somekind of sales streak in you 100%
?
Speaker 1 (19:35):
Well, just anyone running a business.
You need to have a bit of salesacumen and just know how to
have those conversations.
All right, Random question foryou, Tom.
If you could instantly masterany non-financial skill in the
world, what would it be and why?
Speaker 2 (19:55):
Like your random questions here.
Non-financial skill I've got it.
Can you edit this out?
Sure, Okay, I just I needed tothink more about that.
Speaker 1 (20:21):
I just it's raw, it's authentic.
Take your time.
Speaker 2 (20:24):
Yeah, so non-financial skill I would like
to be more, have betterphysical attributes.
I'd like to be an athlete.
I'd like to be more, havebetter physical attributes.
I'd like to be an athlete.
I'd like to be, you know, goingout there and winning races and
things like that.
I went through a period in mycareer where I was doing
triathlons until my body startedbreaking down on me.
But I would have loved to, youknow, been up there leaders and,
(20:49):
uh, in some of those races.
But I, I was good.
Speaker 1 (20:53):
But I wasn't that good.
I mean to to complete atriathlon.
I feel like there's a very,there's a very small group that
can say they've done that.
So how many triathlons have youcompleted?
Speaker 2 (21:07):
a dozen or more.
I did one ironman.
I did.
I did one Ironman and that wasmy.
That's incredible.
That was kind of it was once Ihit that on my bucket list.
That was all downhill fromthere.
The mental toughness, themental toughness for that.
Speaker 1 (21:22):
I can only imagine what that's like.
Speaker 2 (21:25):
Well, the Ironman was 13 hours and 25 minutes and you
know know, started withswimming at the crack of dawn
and finished with my running inacross the finish line.
Speaker 1 (21:36):
It was getting dark already, so it was yeah, quite a
quite an achievement, but yeah,no kidding, something I could
do now talk about a full day ofwork yeah, exactly 13.
A lot of overtime yeah, yeah,yeah, that's right, wow,
congratulations.
That's incredible, that'sreally cool.
Thank you for sharing that.
(21:56):
Yeah, tom, what's the bestpiece of advice you've ever
heard business or life that'sstuck with you.
Speaker 2 (22:05):
Well, when I first became a CFO, my very first job,
the owner of the company calledme in and he said you know,
I've got a lot of faith in you.
I was a controller and I wantyou to be my CFO.
The VP of finance was retiringand he was in his sixties and
the owner of the company wasyoung and he said listen, I'm
(22:28):
going to make you my CFO and Ijust want you to remember one
thing.
He said never let us run out ofcash.
And I keep coming back to thatas a CFO.
That really at the core ofeverything you know and there's
really multi facets to that,because you're going to look
down the road to make sureyou're not going to run out of
(22:49):
cash.
So that's been kind of my NorthStar always through my whole
CFO career Never let us run outof cash.
Speaker 1 (22:59):
That's great advice for anyone listening Personal or
business never run out of cashCorrect.
I love it.
It sounds so simple, butthere's a lot behind that.
Tom thank you so much forcoming on and sharing your story
, sharing your insight.
This was an amazingconversation.
How can others get in touchwith you if they want to reach
(23:22):
out or continue the conversationwith you?
Speaker 2 (23:24):
Okay, Well, of course , my LinkedIn profile.
A lot of people see my postsand that's one good way.
Also, I have a website for mycoaching activities.
I coach would-be fractionalCFOs, and that is a really easy
to remember website name.
Can't believe it was availableCFO2Fractional
C-F-O-T-O-Fractionalcom.
Speaker 1 (23:47):
Perfect.
We'll put that in the shownotes so that people can get in
touch with you.
I highly recommend everyonedoes.
Tom.
Again, thank you so much forcoming on.
This was incredible.
Thank you, james.
Thanks for tuning into thisepisode of CFO Chronicles the
secrets behind success.
I hope you found value intoday's conversation.
As we wrap up, I'd love for youto do two things.
First, make sure to subscribeto this podcast so you don't
(24:09):
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If you enjoyed today'sdiscussion, please rate and
review the show.
It helps others discover theinsights we share here.
Second, if you're ready to takeyour business to the next level
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Call.
It's time to position yourselfas the advisor your clients need
(24:30):
.
And don't forget you canconnect with me on LinkedIn to
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We've got exciting topicscoming up, so stay tuned for the
next episode of CFO Chronicles.
Until then, keep pushingforward.
Your growth is just onestrategic move away.
Speaker 3 (24:48):
Thanks for listening to CFO Chronicles the secrets
behind success.
We hope today's episodeprovided valuable strategies to
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Be sure to subscribe, followand share with fellow
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Connect with us on LinkedIn andleave a review or comment to
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Your feedback helps us bringyou the best insights in finance
(25:11):
and marketing.
Until next time, keep strivingfor success and unlocking your
business's potential.
Welcome back to CFO Chronicles, the podcast where we
go beyond the numbers and intothe boardroom with the financial
minds who keep businesses aliveand scaling.
Today's guest is Tom Schultz, aseasoned fractional CFO the guy
companies bring in when they'veoutgrown their bookkeeper and
the wheels are coming off at 60miles an hour.
Tom isn't just managing cashflow, he's building financial
(00:21):
infrastructure.
He's helped companiesstreamline ops, raise capital,
prep for acquisition and justclean up the financial mess that
most founders don't evenrealize they're sitting on.
If you're a founder operator orjust someone trying to make
sure your business doesn't diefrom cash burn this episode's
for you.
We're going deep on.
The moment you actually need aCFO Spoiler, it's probably
before you think.
The moment you actually need aCFO spoiler, it's probably
(00:43):
before you think how to build toscale without blowing the
budget.
And the financial BS is stillfloating around LinkedIn.
That Tom can't stand, and Ithrow in a couple of wildcard
questions in the middle just tokeep him and you on your toes.
Let's get into it.
You've worked with businessesfrom scrappy startups to scaling
machines.
Speaker 2 (01:06):
When did you realize finance was your lane?
Well, I started actually backin my MBA program.
I was in my MBA program atUniversity of South Carolina and
they started giving us casestudies as part of the
curriculum and I just didexceedingly well, to the point
where my professors usuallywould never call on me because I
(01:27):
would always have a good answeron a case study.
And then that evolved into Iworked as a consultant for the
Small Business DevelopmentCenter and so through my MBA
program I was meeting with smallbusinesses of all sorts and
they you know, if it'saffiliated with the Small
Business Administration, theyall want to come in and borrow
money.
So I kind of evolved down.
(01:49):
I put together my first threestatement projection model back
when I was still in the MBAprogram.
It was just something that younormally don't get to until
after you get out of school, butI did it back then and that I
just it came natural to me.
Speaker 1 (02:07):
Interesting, that's cool, and when you just find
your knack, something's workingsuper natural for you.
I'm curious what's the biggestmyth you see floating around
CFOs or finance leadership ingeneral?
Speaker 2 (02:21):
In finance CFOs general, the biggest myth is
that you need to be a CPA andneed to have an accounting
background to be a CFO.
I don't have a CPA.
I don't have an accountingdegree.
I did get my MBA in finance butto this day I oversee
(02:41):
relationships with CPA firmsoutside CPA firms for my clients
and usually it comes up at somepoint.
They assume I'm a CPA because Ican talk the talk, walk the
walk, I understand debits andcredits.
That's always come natural tome and just you know.
You learn as you go along andthat's all you really need.
What you really need is the CFO, the high level stuff, and
(03:04):
accounting really is just afoundational requirement.
Speaker 1 (03:08):
Interesting.
That's cool.
When a founder tells you we'redoing fine without a CFO, what's
your gut reaction?
Speaker 2 (03:17):
Well, how much better could you be doing if you had a
CFO?
So usually I get that kind ofresponse either they are too
small, which you know, some ofthem are too small, but
sometimes I get a.
I've talked to people thatthey've got $10 million in the
bank.
They have no debt.
All they're really doing isjust looking forward to the next
(03:40):
year and how much money theycan take out of the company.
Well, a CFO could even helpthere.
I mean, I help client companiesinvest their money smarter.
I also do my projections in thefuture so that they can get to
the mid part of the year andknow how much they're going to
be able to take out by the endof the year.
(04:00):
Know how much they cancomfortably take out out by the
end of the year.
Know how much they cancomfortably take out.
Also, they typically look attransitioning or exiting later
in their lives and if you don'thave a CFO in place, you're
going to rely on your CPA andyour lawyer and they're going to
come up with this greattransition estate plan and
(04:23):
there's going to be moneyinvolved somewhere.
Well, as a CFO even a part-timeCFO I can help them translate
what's going to be the financialimpact.
Do we need to save up somemoney in order to affect that
transaction?
Do we need to borrow some money?
How much do you need in yourretirement?
So there's lots of differentways.
(04:45):
Everyone comes at it from adifferent way, but I do get that
question a bunch.
Speaker 1 (04:53):
How do you normally overcome that?
Because a lot of people don'tlike change, and if they feel
they're doing well, it's likewell, I don't really need you
though, so you can see and youknow what the benefit looks like
.
But for someone else who's like, well, we've got it, we've got
this far, we're doing fine, likereally, how much better could
we be doing?
Like I'm not, I'm not feelingany pain, why would I make a
(05:15):
change?
Why would I invest in this?
How would you navigate that?
I guess objection or yeah,let's call it an objection, I
mean in a sales conversationobjection or, yeah, let's call
it an objection I mean in asales conversation.
Speaker 2 (05:29):
Yeah, first of all, I don't encounter too many of
those because most of myopportunities for clients come
from referrals and they'veusually kind of pre-qualified.
There's usually a pain point ora need that they've, they're
talking to me and so I canaddress that need.
And so if they say, well, Ineed this need addressed, but I
don't need you long term, I justneed you short term, and I say,
(05:50):
all right, I'll just come inand address your need, but let's
, let's do that.
I'm going to be trying todemonstrate to you what kind of
value I can provide over thelong haul and you know it is the
case.
Sometimes they don't needsomeone like me and we can
mutually agree on that.
But almost always someone willbring me in for one thing and in
(06:11):
the first week or two I'll findsomething else where I can add
value and I'll do it and it'llbe like whoa, you know the owner
will be like, well, that'spretty cool.
And so it's really up to me.
If I can get in the door andspend a little bit of time, I
can show them the value.
Speaker 1 (06:27):
Yeah, awesome.
That's really cool, tom.
At what point does a business,in your opinion, actually need a
CFO, or even a fractional?
Speaker 2 (06:38):
CFO, yeah, typically it needs to grow to a certain
size.
I say typically, but in realityif anything is investor
financed, capitalized, so ifit's a you know angel investor,
if it's a you know pre-revenuetech startup, vc based, if
you're reporting to investors,the investors are going to want
(07:00):
a CFO there, even if you'repre-revenue or way before making
a profit.
So in that case the investorsare only putting in a little bit
of money at a given time, maybein phases, and they can't
really afford a full-time CFOanyway and certainly not keep a
full-time CFO busy.
So if there's a startup that'sbacked by investors, that's a
(07:24):
good point for a fractional CFO.
Also, then you know it's goingto grow so or it's going to come
in at a growth level.
So I kind of use minimum 3million in sales, but that's
really just an arbitrary number.
And to need a part-time CFO ofsome sort, and it depends on the
(07:46):
complexity If they're borrowinga lot of money, you probably
need a fractional CFO.
If you're just doing a smallbusiness that's doing not a lot
of transactions, a lot of highdollar transactions, maybe all
you need is a bookkeeper.
But when you start making a lotof profit and start hiring a
lot of people.
At some point it will behelpful for you to have a
(08:08):
fractional CFO, and I use theanalogy when the owner stops
signing their own checks, thepayables checks when they stop
doing that, they probably need afractional CFO of some sort to
help them sort through the dataand give them the reports,
because then they don't havetheir fingers through the data
and give them the reports,because then they're not.
They don't have their fingersin the trenches anymore of all
the dollars that are going in,and out.
Speaker 1 (08:31):
Yeah, that's the litmus test.
Speaker 2 (08:33):
Now, yeah, now let me just tell you, though
separately.
I've been at clients.
I had $80 million company whereI was a two day a week
fractional CFO and people say,well, don't they need a
full-time CFO by the time theyget to 80 million?
And the answer is it wasworking just fine.
I had a very strong controllerand he did everything that
(08:54):
needed to be done on aday-to-day basis for all five
days, and I was able to do justthe CFO stuff two days a week.
And so that's you's.
I don't know that there is anupper limit for fractional CFO.
Speaker 1 (09:08):
Yeah, and I guess it all.
Every business is different,right?
No, no business is the same andit depends on the systems they
have in place and the teammembers.
So it correct.
Yeah, that's interesting, it'sa cool take.
What?
What are the common financiallandmines that you see in
businesses doing one mil to 10mil a year?
Speaker 2 (09:28):
Well, the financial landmines typically are one
growth oriented.
So if they I've had companieswhere they they're 3 million in
sales and they land a big $3million opportunity, so they're
going to double in sales, it'slike, oh okay.
So they run to the banker andthe banker says, well, I need
this and this and this and this,and then I'll lend you the
(09:50):
money.
But if no one does theprojections to see how the
cashflow is going to beimpacting, if you have a big
spike in growth, it's going tosuck a lot of cash into it.
And sometimes, too, the ownergets to the end of the year and
says, well, I doubled my sales,doubled my profits, so I'm going
to take even that much moremoney out of the company
(10:16):
no-transcript.
Speaker 1 (10:17):
Yeah, that's tough, though.
Sometimes as the owner, if youhave a good year, you're like,
well, I'm going to reward myself.
But again, if you don't havethat financial support looking
over understands the numbers alittle bit better you can find
yourself in a sticky situation.
Correct, how do you helpfounders understand the
difference between cash, profitand growth and how to prioritize
(10:39):
between them?
Speaker 2 (10:42):
cash, profiting growth, and how to prioritize
between them.
Well, I mean, they all need todance together.
So everyone wants to grow, growsales, grow profit.
And you know the but the cashhas to be there because, as as
you know, as I'm sure all,probably all our podcast
(11:06):
listeners know that you need tohave cash to be able to fuel the
growth working capital needs.
And so, you know, a lot oftimes companies just pull off
their, their income statementand that's all they see and
think that that's not, that'sgood enough.
But that's why I always look asa CFO and really as an FP&A
person you look forward.
You look forward at the cash Ifwe're growing.
Do we have enough cash?
(11:28):
What do we need to do?
Do we need to, you know, factorin some money, some debt?
Do we need to have a big enoughline of credit?
So it's they all dance togetherand you need to harness them
all together.
You can't look at themseparately.
Speaker 1 (11:43):
Yeah, I like, I like that.
That they all, they all mesh,they all dance together.
That's.
That's cool, Tom, what's one ofthe most impactful changes
you've ever made inside abusiness?
Something where you know thenumbers turned around relatively
fast, based off of a changethat you were able to spearhead
fast, based off of a change thatyou were able to spearhead.
Speaker 2 (12:03):
So I've had 48 clients and I've had some really
interesting ones.
Usually I have not been able tocontribute to the bottom line
by my action.
One thing I did do I went intoa company and he just wanted a
CFO fractional CFO because hewas transitioning to his next
(12:26):
generation.
His three kids were in thecompany and he wanted to make
sure all the financials were inright.
And I'm actually helpingeducate them.
But in the first week there Ilooked at his bank debt and it
was probably three or four yearsago and he was paying too high
an interest rate and his debtservice was too high.
So I went to the bank and thebank banker knew that I knew
(12:50):
other banks and I said listen,we need to restructure this
thing.
And literally within a fewweeks we had dramatically
lowered the interest rate,interest rate, we had stretched
out the payments and I think inmy first month on the job we
reduced $100,000 a year ininterest expense and $1 million
lower in debt service payments.
(13:10):
So that's one thing, but a lotof what I do is I model
something.
I provide data to a companyowner so he can make better
decisions he she can make betterdecisions and that allows them
to then make impactful bottomline things.
If they're thinking, ah, maybeI can do this, maybe I can do
(13:33):
that, and I show that model itfor them and say, hey, you can
do this and we can support it bythis, then they can go out and
do that, and that's happened anumber of times.
Speaker 1 (13:45):
I mean being able to knock off $100K.
Not a bad first couple weeks onthe job.
Speaker 2 (13:52):
Right, right right.
Speaker 1 (13:54):
Where do most founders leak profits and never
realize it?
They and I'm listening extraclose on this one Founders leak
profits and never realize it.
Speaker 2 (14:02):
They.
Speaker 1 (14:05):
And I'm listening extra close on this one.
Speaker 2 (14:08):
Where did founders leave profits?
They leave them.
Speaker 1 (14:13):
A leak, oh, leak yeah , yeah, leak yeah.
Speaker 2 (14:17):
Where do they leak profits?
They leak it in makingdecisions based on what they
think is right instead offactoring in what is appropriate
.
So I'll give you an example.
I had one assignment once andthe owner of the company was
very particular on theappearance of his building and
(14:41):
his operations and it lookedbeautiful.
I mean it was a manufacturingoperation.
He looked like he could eat offthe floor.
But to keep it that way wasvery, very expensive.
I mean, you know full-timejanitors, full-time, you know
lawn grounds people.
I mean everything was just assoon as something broke it was
(15:04):
fixed immediately and you knowthere's nothing wrong with that,
but it was very expensive forhim to do that.
The other vanity thing he didwas he wanted a building he was
building to be higher up, so itwas higher profile from the road
, and he spent quite a bunch ofmoney trucking in dirt to build
(15:28):
up the land to put that.
It wasn't needed because it wastoo low.
It was just needed to build upthe property.
So that's just one example.
But they, you know they leakprofits all over the place.
You know people, too manypeople, if you've got someone on
staff that's been there a longtime and they're not
contributing anymore.
Owners will be reluctant topull the plug on that, and so
(15:53):
they're carrying excess staffing, just because they don't want
to face that.
That's another leak.
Just because they don't want toface that.
Speaker 1 (16:02):
That's another leak.
This one's off the cuff.
But what's your take on eitherhaving the perfect amount of
staff, Does that?
Speaker 2 (16:14):
exist in a company.
It doesn't really exist untilmaybe 20, 30 years from now,
when your staff is AI, but forright now, I'll tell you it's
something you strive for.
So one client company we wentthrough the COVID period and our
(16:34):
sales overnight dropped 30%,40% and our mantra during that
whole period was 40%.
And our mantra during thatwhole period was we want to
right size the workforce tomatch the workload.
And what we did is we used atthe time and here in the United
States we had that unemployment,extra $600 unemployment so we
(16:55):
did voluntary furloughs for ourstaff and we only did furlough,
allowed that it wasoversubscribed.
Everyone wanted to do it becausethey were making a lot of money
to stay home, and so we wereable to right-size the workforce
to match the workload throughthose voluntary furloughs.
That being said, it's notsomething that you can.
(17:17):
It's a moving target becauserevenue comes in, revenue goes
out.
People sometimes come in basedon your hiring, but sometimes
they leave before you're readyfor them to leave.
So it's never going to beperfect, but you can strive for
that and you should alwaysstrive for that, because that's
your optimal profit level.
Speaker 1 (17:37):
Yeah, it's tricky, though.
Like you said, revenue goes up,revenue goes down.
People can work out really well, people cannot work out.
It's a tricky dance, right.
Speaker 2 (17:56):
What's the real reason so many companies stall
financially even when revenuelooks healthy?
I'm the CFO person, so I'm justthrowing pot shots outside our
group.
But I've been in situationswhere the sales group gets too
conservative and so I can onlydo so much.
I can kind of whisper in theowner's ears.
Usually.
I'm, you know, developed arelationship with whoever the VP
(18:18):
of sales is and I can offer mytwo cents worth.
Relationship with whoever theVP of sales is and I can offer
my two cents worth.
But I've seen that too manytimes where the sales force gets
pretty conservative and focusesmore on cost of the sales
effort rather than.
I always view sales and revenueas a return on investment
equation.
So you're not spending moneyout of your profit on sales.
(18:44):
Uh, in the sales departmentyou're investing money and so
you're going to look for areturn on your investment.
So that typically when I seesales to all, that's that's
what's happening there.
Interesting.
Speaker 1 (18:59):
Yeah, Us, us salespeople.
It could be an interestingbreed.
Speaker 2 (19:03):
So you're, you would call yourself a salesperson.
Speaker 1 (19:06):
Yeah, I do.
I do majority of the sales hereat Nine Two Media.
I really enjoy it and I've,I've.
I did it for years beforestarting this business about six
years ago.
But right, yeah, there's a lotof interesting personalities you
come across in sales.
Speaker 2 (19:21):
Yeah, there's a lot of interesting personalities you
come across in sales.
Oh yeah, well, you know, weCFOs we're not really
salespeople by training.
But you know, if you're goingto be successful as a fractional
CFO, you've got to have somekind of sales streak in you 100%
?
Speaker 1 (19:35):
Well, just anyone running a business.
You need to have a bit of salesacumen and just know how to
have those conversations.
All right, Random question foryou, Tom.
If you could instantly masterany non-financial skill in the
world, what would it be and why?
Speaker 2 (19:55):
Like your random questions here.
Non-financial skill I've got it.
Can you edit this out?
Sure, Okay, I just I needed tothink more about that.
Speaker 1 (20:21):
I just it's raw, it's authentic.
Take your time.
Speaker 2 (20:24):
Yeah, so non-financial skill I would like
to be more, have betterphysical attributes.
I'd like to be an athlete.
I'd like to be more, havebetter physical attributes.
I'd like to be an athlete.
I'd like to be, you know, goingout there and winning races and
things like that.
I went through a period in mycareer where I was doing
triathlons until my body startedbreaking down on me.
But I would have loved to, youknow, been up there leaders and,
(20:49):
uh, in some of those races.
But I, I was good.
Speaker 1 (20:53):
But I wasn't that good.
I mean to to complete atriathlon.
I feel like there's a very,there's a very small group that
can say they've done that.
So how many triathlons have youcompleted?
Speaker 2 (21:07):
a dozen or more.
I did one ironman.
I did.
I did one Ironman and that wasmy.
That's incredible.
That was kind of it was once Ihit that on my bucket list.
That was all downhill fromthere.
The mental toughness, themental toughness for that.
Speaker 1 (21:22):
I can only imagine what that's like.
Speaker 2 (21:25):
Well, the Ironman was 13 hours and 25 minutes and you
know know, started withswimming at the crack of dawn
and finished with my running inacross the finish line.
Speaker 1 (21:36):
It was getting dark already, so it was yeah, quite a
quite an achievement, but yeah,no kidding, something I could
do now talk about a full day ofwork yeah, exactly 13.
A lot of overtime yeah, yeah,yeah, that's right, wow,
congratulations.
That's incredible, that'sreally cool.
Thank you for sharing that.
(21:56):
Yeah, tom, what's the bestpiece of advice you've ever
heard business or life that'sstuck with you.
Speaker 2 (22:05):
Well, when I first became a CFO, my very first job,
the owner of the company calledme in and he said you know,
I've got a lot of faith in you.
I was a controller and I wantyou to be my CFO.
The VP of finance was retiringand he was in his sixties and
the owner of the company wasyoung and he said listen, I'm
(22:28):
going to make you my CFO and Ijust want you to remember one
thing.
He said never let us run out ofcash.
And I keep coming back to thatas a CFO.
That really at the core ofeverything you know and there's
really multi facets to that,because you're going to look
down the road to make sureyou're not going to run out of
(22:49):
cash.
So that's been kind of my NorthStar always through my whole
CFO career Never let us run outof cash.
Speaker 1 (22:59):
That's great advice for anyone listening Personal or
business never run out of cashCorrect.
I love it.
It sounds so simple, butthere's a lot behind that.
Tom thank you so much forcoming on and sharing your story
, sharing your insight.
This was an amazingconversation.
How can others get in touchwith you if they want to reach
(23:22):
out or continue the conversationwith you?
Speaker 2 (23:24):
Okay, Well, of course , my LinkedIn profile.
A lot of people see my postsand that's one good way.
Also, I have a website for mycoaching activities.
I coach would-be fractionalCFOs, and that is a really easy
to remember website name.
Can't believe it was availableCFO2Fractional
C-F-O-T-O-Fractionalcom.
Speaker 1 (23:47):
Perfect.
We'll put that in the shownotes so that people can get in
touch with you.
I highly recommend everyonedoes.
Tom.
Again, thank you so much forcoming on.
This was incredible.
Thank you, james.
Thanks for tuning into thisepisode of CFO Chronicles the
secrets behind success.
I hope you found value intoday's conversation.
As we wrap up, I'd love for youto do two things.
First, make sure to subscribeto this podcast so you don't
(24:09):
miss any future episodes.
If you enjoyed today'sdiscussion, please rate and
review the show.
It helps others discover theinsights we share here.
Second, if you're ready to takeyour business to the next level
and attract the high-endclients you deserve, head over
to accountingleadsnowcom orclick the link in the show notes
to book your strategy.
Call.
It's time to position yourselfas the advisor your clients need
(24:30):
.
And don't forget you canconnect with me on LinkedIn to
stay up to date on what'shappening in the world of
accounting and financial growth.
We've got exciting topicscoming up, so stay tuned for the
next episode of CFO Chronicles.
Until then, keep pushingforward.
Your growth is just onestrategic move away.
Speaker 3 (24:48):
Thanks for listening to CFO Chronicles the secrets
behind success.
We hope today's episodeprovided valuable strategies to
help you attract more highpaying clients.
Be sure to subscribe, followand share with fellow
professionals.
Connect with us on LinkedIn andleave a review or comment to
join the conversation.
Your feedback helps us bringyou the best insights in finance
(25:11):
and marketing.
Until next time, keep strivingfor success and unlocking your
business's potential.
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