April 29, 2025 • 29 mins
Financial health is critical for business growth, but knowing which financial expertise to hire can be challenging. This episode explores how to align financial professionals with business needs, covering strategies to improve cash flow, track essential metrics like gross profit, and avoid costly mistakes. Learn when to hire a bookkeeper, CPA, or CFO and how each role supports strategic decision-making and long-term success. Gain practical advice to build a stronger financial foundation and scale efficiently. Join host Adam Sylvester with Paul Maskill of Blue Collar Business Advisors and Megan Schumann of Top Tier Plumber.
New to Jobber? Masters of Home Service listeners can claim an exclusive discount for Jobber at https://bit.ly/4d0KAEh
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
A lot of times someone will lookat their p and l and be like, wow,
I made $200,000 this year.
And then they look at their bank accountand they're like, there's 20 in there.
Welcome to Jobbers, masters of HomeService, a podcast for home service pros,
buy Home Service pros.
We're in Las Vegas and today we're talkingabout CPAs and what's a CFO and do I
need a bookkeeper? We're going totalk about all that stuff today.
(00:23):
I'm your host, Adam Sylvester.Today's guest are Paul Mascal.
And Megan Schumann. Welcome tothe studio guys. Thanks, Adam.
Paul, why don't you introduce yourselfand tell us who you are, what you do,
and how you got.
Here. Yeah.
I got here actually by a referralfrom Phil Richer with Flash Marketing.
He's a big fan of Mastersof Home Service podcast,
so I offer outsource or fractionalCFO work for companies in the trades.
(00:48):
Great. Awesome. Glad you're here.
Thanks, Megan.
Yeah. I own a plumbing company,top tier. We're in Wisconsin,
and I have been a jobber user since 2019,and so we do plumbing, drain cleaning,
septics, and well systems. Andmy background is I'm A CPA.
Right? You came from this world.
Too. Yep, yep. Came fromthis world. Love this world.
I think this probably has the moststigma out of anything we talk about in
(01:08):
business, in smallbusiness is the difference,
the dance between thebookkeeper and the CPA,
the CFO and fractional CFOsand all these little things.
No one really knows whatwe're talking about.
Let's put the cookies on the bottom shelffor our listeners. And first of all,
let's explain what is the relationshipand what are a bookkeeper,
A CPA and a CFO? I.
(01:30):
Have a plumbing world analogyfor this. So the bookkeeper,
I would say is your laborer. So you tellthem to cut the pipe 20 inches long,
they're going to cut it. They know howto do the data. You give them the task,
they're going to processit. They're going to do it.
The CPAs are the journeyman plumbers,so they're the ones that know the code.
They know how to do it legally. They knowhow to make sure it's done correctly.
(01:52):
Your CFOs are your master plumbers.They're the ones that know the code.
They know how to do it,
but they also know how to think outsidethe box and they know how to get
something done maybe in a difficultsituation, different difficult job site.
So I like that.
And I mean, every business needsall three, in my opinion, hundred.
(02:12):
Percent.
The bookkeeper and the CPA, they'redoing everything in the past.
So bookkeepers taking all yourtransactions, what happened?
Where does it go? Howdo we account for this?
So that way then the CPA and theCFO then have that information to do
their job. CPA is still looking inthe past, unfortunately. Most CPAs,
all they do is compliance work andthey say, Adam, here's your tax bill.
(02:36):
Here's your four quarterlies.We'll see you in 12 months.
Make sure you pay it.
Make sure you pay it. If you don't,
I'm not in the hook becauseyou signed off on it.
Whereas the CFO comes in and actuallytakes that data to do forward thinking
projection strategy and really be thefinancial guide for the business so that
way they can start to achieve theirfinancial goals, create cashflow,
and ultimately build the wealth andbuild the business they're looking for.
(02:57):
Okay, great. So bookkeepers,
make sure that all your metrics andall your financial, your income,
your expenses are all in order. Your CPAhelps you with taxes for the most part,
maybe some other things, and theCFO helps you project the future.
Anything else you'd add to that?
Yeah, I'd say CPAs, if you have bondingrequirements, they'll help with that.
They'll make sure you're hittingany of those things. Audits.
(03:21):
If you're a big enough companyand you need to be audited,
if you need compiled financialstatements, they'll do those reviews.
Business valuations too, if you wouldneed that for buying, selling, divorcing,
those kinds of things.
Yeah. Okay. Great. Okay, so bookkeepers,
what makes a bad bookkeeper andwhat makes a good bookkeeper?
We were talking about this before atthe show, Adam. I think unfortunately,
(03:42):
98% of bookkeepers are really bad atserving clients in the home service
industry Because in my opinion,
every bookkeeper out there needs to bean expert in the businesses or at least
the industries that they're serving.
Whereas if your bookkeeper's alsoserving restaurants and they're serving
e-commerce stores and maybe they'rehelping the guy with the food truck and
(04:03):
they're doing your plumbing company,
they probably don't know how yourchart of accounts should be set up.
They probably don't know howto depreciate certain assets.
They probably don't know how to setup your balance sheet, to be honest,
just because they're not anexpert in it. Unfortunately,
most of the business owners Italk to, they say, yeah, I dunno.
My bookkeeper handles allthat. And it's like, well,
what does your p and l and balancesheet look like? I don't really know.
(04:24):
That stuff doesn't make any sensebecause it doesn't make sense.
The bookkeeper doesn't knowwhat they don't know either.
So unfortunately foranybody out there listening,
I would really look to start having thoseconversations with your bookkeeper to
see if it's, you've probably had 'emfor a while. You started your business,
someone at the Chamber of Commerceor BNI or someone said, Hey,
you got to get abookkeeper. Go talk to Joe.
(04:46):
Or it's the first person youhired to answer the phone.
They answer the phone and they alsodo the books. They take out the mail,
they clean the bathroom,they do all these things,
but they actually don't knowaccounting and a bookkeeper, actually,
to what Megan said, they are the ones,once you tell them to do something,
that's what they're going to do. But ifno one's telling them to do anything,
they're going to do what QuickBooks told'em to do when they open the account
(05:07):
and said, oh,
all of your payroll just goes in hereand you don't need to worry about your
field labor. So I'm sure she canelaborate on that, but that's my opinion.
I work hand in hand with bookkeepers everyday and it can get really frustrating
when the business owner doesn't havethe data they need to make the decisions
that they're looking for.
Yeah, there are some fantasticbookkeepers out there.
So we're not batchingbookkeepers to be clear.
(05:28):
I have friends that are bookkeepers, but
industry specific is really a key thing,
whether that's your bookkeeper,your CPA or your CFO,
you want them to have had exposure tothe industry that you're in because
there are just littlequirks in every industry.
And it's not saying that theycannot transition to new industries,
(05:50):
but maybe they need somecontinuing education,
maybe they need some moretraining to understand.
Before we keep going, let'stalk about the question.
A lot of our listeners who don'thave a bookkeeper yet are asking,
do I really need a bookkeeper?Let's talk about that because gosh,
I made this mistake early onand I really wish I hadn't.
What would you guys say tothat person who's saying,
I'll get a bookkeeper down the road?
(06:10):
No, you need one. You need one right away.
I think working with tradesmen,
they're fantastic at what they do.
The vast majority are notgood at record keeping.
That's not their strong suit.
And so you need to find someone that istheir strong suit because the mess that
you can create and the money thatyou will lose by not having it, you,
(06:33):
you need one. It willfar outweigh the cost.
And I would echo that. I seea lot of business owners,
they just make all their financialdecisions based on how much money's in the
checking account. Like, alright,there's 20 grand in there.
I think we can do this. Ithink we can go buy that truck.
And to the point of you need one rightaway so you have that clean record as you
start to scale when you want to go buyvehicles or you want to go buy equipment
(06:55):
or you want to go lease a billing,they're going to say, Hey,
can I see your p and l? CanI see your balance sheet?
And if you send them a coupleof Google Docs or Google Sheets,
they're going to be like,yeah, you can't scale now.
You're probably trying to have to putit on your personal credit and do all
these things,
which makes it a lot harder to achievethe goals that everyone started their
business for a reason and it's going tobe hard to achieve those goals if you
don't have that bookkeeperin place keeping track of everything that's happened.
(07:19):
Yeah,
I have two businesses and I think I spendless than $500 a month in bookkeeping.
And so I think it's well worth thedollars and cents that it takes to have a
good bookkeeper because here's thething, it's just like a rubber band.
It'll expand as you grow,and so you need to start now,
but if you try to get a bookkeeperwhen you're hopefully pretty sizable,
the rubber band's just going to break.
You're going to feel broken becauseyou wish you'd started five years ago,
(07:42):
so you really want to start now. Soit just grows with you gradually.
Instead of being like, I need abookkeeper, let's go back five years.
Basically you're going to do all the work,
eventually do it as you go insteadof looking back for years and years.
So bookkeepers, that's onething. What about CPAs?
Yeah, so CPAs are unfortunatelythat necessary evil
(08:04):
a lot of times.
So everyone has to pay taxes and typicallythat's what you think of when you
think.
Of C. Well, about TurboTaxthough, just go out and TurboTax.
What do you think aboutTurboTax versus A CPA?
You certainly can, but I think again,
having that professional thatunderstands the industry,
that understands some tax planning,
you can pay a lot in taxes thatmaybe could have been planned out
(08:26):
and maybe avoided or there is a thingcalled tax planning and I highly
recommend doing it. And A CPAis what you can use for that.
Yeah, so I mean, whenyou're looking for a CPA,
similar to what Megan said,there's kind of two different ones,
probably similar to bookkeepers,
but there's ones that'll just docompliance work that we talked about.
(08:47):
That's your TurboTax,
whether it's TurboTax or it's a humanthat's certified public accountant,
that's all they're doing is yousee 'em at the end of the year,
you give 'em access to QuickBooks,they say, Adam, you owe this much.
Here's your four quarterlies.See you in 12 months.
If you can find somebody thatdoes tax planning, tax strategy,
there's a reason the taxcoded is the way it is,
(09:09):
is because everybody in Congressdoesn't want to pay taxes either.
They're making a lot of money.The more money you make,
the easier it is to implementa lot of these tax strategies.
So when you can get that CPI on yourside early, they can grow with you.
They know all thenuances of your business,
they know all the things that you cantake advantage of. It's not illegal.
It's them being knowledgeableof what's going on in Congress,
(09:31):
what's in the tax code, and what can yourbusiness do in order to mitigate that?
And then that flows into what I do ishelping them with cashflow that helps
cashflow significantly.So then you can scale.
Okay, so CPAs and bookkeepers, wetalked about that. Let's get into CFO,
chief financial Officer.
Let's also get into a little bit offractional like what a fractional CFO is,
but what does A CFO dodifferently from the other two?
(09:56):
And why do you thinkbusinesses need A CFO?
Yeah, that's a great question.When I talk to a lot of people,
I tell 'em what I do thefirst time. They're like,
I already have a bookkeeper inCPA. So using a car analogy,
a bookkeeper and a CPA,they're looking in the past,
they're in the rear view mirror, they'relooking at all the things you drove by,
all the toll you paid, all thatkind of stuff. Whereas a CFO,
(10:17):
A good CFO is guidingyou to your destination.
So a lot of times we as business owners,
we have these grand planswhen we start our business.
I don't want to work for Megan anymore.I'm going to go do my own thing.
I can do it better, I can do itmore efficient, whatever it is.
And then within two weeks, ournumber one goal is survival.
We have no clear destination. Wedon't know what success looks like.
So what A CFO does is figures outwhat does that success look like,
(10:40):
what does that destination looklike for the business owner?
Everyone's got different goals and thenuses all of the data that the CPA and
that the bookkeeper put togetherto then do forecasting projections.
And if you think about using the car,
we're looking through the windshield andwhere the GPSA really good GPS is going
to tell you where there'sdetours, where there's roadblocks,
where there's delays. So when youhave those forecasts and projections,
(11:03):
you can get ahead of cashflow issues.
There's a lot of business owners outthere who all of a sudden in their mind,
we just don't have any money. Well,
that thing probably startedsix to 12 months ago.
They just didn't know it becausenobody else is doing it for them.
And they're thinking, well,shouldn't my bookkeeper handle that?
Or shouldn't my CPA pick thatup? That's not their job.
They didn't sign up to dothat. So in my opinion,
that's really what A CFO does isreally helping them create consistent,
(11:26):
positive cashflow beingtheir financial guide.
So their business can not onlyget onto track, but stay on track.
Because a lot of times people are like,well, I'm doing really well right now.
But yeah, when you're doing really well,you still need somebody guiding you,
holding you accountable, and gettingyou to ultimately where you want to go.
Let's add some color to that.Do you have an example of,
because you said it's all about helpingthe business stay cashflow positive and
(11:48):
managing their cashflow.
Do you have an example to give to ourlisteners who may still have a pretty
theoretical understanding of all this?A concrete example of this happening?
So I work strictly with companiesin the trade. So we look at,
just to get into the details a little bit,
one of the big things welook at is gross profit.
So gross profit for peoplethat don't know what it is,
(12:09):
gross profits not how much money camein your business. That's revenue.
A lot of people hear the word gross.They're like, oh, that's before net.
So that's all the money that came in.
This is where I getfrustrated bookkeepers,
because the books usually aren'tset up for the business owner
Who know what their gross profit is.So for those listeners out there,
gross profit is revenue that came in minusall of the costs that were associated
(12:29):
with delivering your service. Soif you own a plumbing company,
it's going to be all the cost to actuallybe out in the field delivering that
plumbing service. The main twothings are labor and material,
but there's a lot of other things thatget missed that might not be associated
in the right category.
Small tools and equipment rentalspermits a lot of different expenses.
When we know what our gross profit is,
(12:50):
we at least then know the money cominginto the top of the business is the
right money at the right price,because if our gross profit's off,
we know that our pricing model is broken,
then our pricing model is brokeneither because our material's broken,
our labor's broken, or we arejust not pricing properly.
That gross profit is ahuge, huge thing to watch.
(13:11):
And the bookkeeper isn'tgoing to watch that.
The CPAs aren't going to watch that.That's what the CFO is going to start.
You start with that gross profit,
and then you can drill down intothe other issues, like Paul said,
finding what the problemis, what's broken.
I had a friend who sent me his pand l plumbing company actually,
and I was like, what's your grossprofit? It's not here. And he was like,
(13:31):
what do you mean? And I was like,
send this back to yourbookkeeper and have her fix it.
And about two weeks later, Igave more details than that.
Two weeks later it came back.I was like, ah, finally,
I can see what your gross profit is.
And so that totally alignswith my experience too.
A lot of bookkeepers don't even set upyour p and l so you know what your gross
profit and your net profitis at the end of the day.
I think a good CFO too is not justgoing to give you that information,
(13:54):
but they're also going to,so as a business owner,
you don't have to be anexpert in accounting, right?
That's why you have people to do it.
But a good CFO is goingto help you understand.
They're going to give you maybea dashboard, couple metrics,
couple things that you can watch andyou can understand thoroughly, oh,
that's starting to become a problem.Hey, Paul, can we look at this?
(14:16):
I think there's an issue here.
So a good CFO will help youunderstand a little bit more about the
business.
This is a great conversation. I want topause for a moment to talk about jobber.
Megan, when it comes to running yourbusiness and having a healthy business,
how has Jobber helped you make sure thatyour business is continually running
healthy?
Sure. Everything is inone place in Jobber.
(14:38):
It helps eliminate a lotof errors that can happen.
If you've got 12 spreadsheetsthat are monitoring one thing,
you have everything. Allyour time is in there,
your materials are in there for us.Jobber goes directly into QuickBooks,
our accounting software, and it's justa huge time saver and helps, again,
eliminate those mistakes that can happen.
Yeah, I mean, going from pen and paperto jobber is a world of difference.
(15:01):
So if you're using pen and paper, youshould stop and start using jobber today.
New users can exclusivediscount at jobber.com/podcast.
Start using jobber today. Iwant to ask you guys a question.
It might be an oddball question. Ireally want your opinions on this.
I've thought about this for myself alot. What happens when you have a client,
(15:21):
Paul, that you're looking at thenumbers as a CFO, and you're saying,
well, this last month wasn't very good,
so I'm projecting a bad month nextmonth, for example. And they say, well,
and they list all these outliers orall these things that don't usually
happen, or, oh, well, threepayrolls this month has said too.
What do you do with all those?Do you just say, I don't care?
(15:45):
What do you do in thatsituation? I'm curious.
You can't run your business onexceptions, but there are exceptions,
but they're not. There's patterns.What do you do with that?
And really when the numbers don't lie,
so when we run our business offemotion and ego, we get stuck.
So most business owners have that feelingin their gut, something's not right,
(16:05):
but they can't tie it to something,whereas the numbers don't lie.
It's like you don't feel good becausemoney's going out of your bank account
because your gross profits offer youroverhead's out of whack or accounts
receivable,
which means people owe you a lot ofmoney isn't where it needs to be.
So there are exceptions, however,humans, especially business owners,
especially business owners of theirown business, which is their baby,
(16:26):
will always make an exception forwhy there's going to be a thousand
excuses. In my last company, Ihad right above my desk, it said,
your excuses only soundgood to you because they do.
If someone's going to comewith an excuse like that,
but someone else out making it happen.So if someone else is making it happen,
you can make it happen.Let's stop with the excuses.
(16:47):
Let's throw our ego out and understandwe're not where we need to be,
but we have the data,we have the information,
we have the guidance to get to where wewant to go if we get rid of the excuse
mentality.
I had that situation in my business,so my husband's the master plumber.
He is very emotionally tied to customers.
We had done work for acontractor for a long time,
(17:09):
and the numbers were telling meit's not right. It's not right.
Drill down did some jobcosting on that customer.
We were losing money on everysingle job we did for him.
And so put that into black andwhite, showed it to my husband.
We make more if we do not do work for him.
So we either need to adjust our pricingor we need to not do work anymore for
(17:30):
him. And so you need to be able toseparate the emotion from the numbers.
Paul, how job costing'sa great example. Megan,
how involved should ACFO or a fractional CFO?
We'll talk about that in a minute.Be involved in actual job costing.
Exactly how much?
Yeah, and I think it'sa case by case basis.
(17:51):
I would say going back to whatwe talked about bookkeepers,
my recommendation since I justspecialize in the trades as well,
is your CFO should know your industry.
They should know roughly whatshould be the gross profit.
What's the drivers of your gross profit?What's the drivers your overhead?
What marketing strategies work inthat industry? So me personally,
I'll do some job costing forpeople if they're like, Hey,
(18:12):
can you take a look at this? If I'mworking with a landscaping company,
we priced out this job. We've beendoing work for this guy for years.
He builds 10 homes a year, we love him.And to Megan's point, it's like, yeah,
but it's not working. So my opinionon small businesses in general,
your friends should be theones paying full price.
They should be the ones supporting you.
I don't know where this thing camefrom of friends should get discounts.
(18:34):
If you really love your friend, you wanttheir business to succeed. If anything,
you should pay more. Sodoing favors for friends,
that friend's going to be reallyupset when you're like, Adam, sorry,
we're out of business.We ran out of money.
If we were to just charge youtwice as much last 10 years,
we'd be really good at like, man, Iwould've totally paid twice as much.
Now I don't have any moneyto do my landscaping. So job costing super important.
(18:54):
I'm not going to do all of it for 'embecause I'm working more on strategy,
but I'm also going to do at least a coupleof those things to get a good idea of
what's broken. So then wecan really work on the.
Strategy.
Then you would be willing to help yourclient if they had questions about job
costing, but you're not doingthat on an active recurring basis,
you would do other activities?
Correct. And I'll show them how to do it.
We'll create spreadsheetsfor their business of, Hey,
(19:14):
here's how you do job costinggoing forward. Depending on the type of business,
if it's more, here'show you do job costing,
it's more service-based where it's likeyou really have a price book of, Hey,
this is how much it is to putin this type of water heater,
or this is how much it is to put inan EV charger. That's more price book.
It's like, Hey, let's figure outthe inputs into your price book,
and then you can reallybuild that out yourself.
(19:35):
Once we figure out what doesour material need to be,
what's the markup need to be?What's our labor need to be?
So it's kind of a case by case basis,
but I want to guide them in the rightdirection, show them how to do it.
But going back to what wewere talking about earlier,
I want them to be kind of empoweredand educated and really understand the
financial health of their businessso they know when something's wrong.
They can be like, that makes total sense.
(19:57):
Let's talk about fractionalCFOs. What is a fractional CFO?
Yeah, so if you think about A CFO,
probably what most people think ofthis is what I used to think of.
So I used to work infinance, lived in Chicago,
wanted to make it to the top storycorner office, be the CFO briefcase suit,
all that kind of stuff. Andthat was my vision of a cfo,
probably most people thesame thing. Someone on Wall Street, somebody in a bank,
(20:20):
somebody for a Fortune 500 company.
What I realized I would say really kindof in the last year is I was always the
fractional CFO for all of mycompanies. I just didn't know that.
I just thought everybody like numbers.I love numbers. You're a business owner,
you should take ownership of yournumbers. And as you get into it more,
it's like, no, this personreally loves plumbing.
(20:40):
They don't want to know any numbers.
They just want to know if they'refinancially healthy and if they're not,
what do they need to do to fix it?So most companies aren't big enough,
they don't have enough work,
they don't have enough money to pay afull-time CFO because you don't need a
full-time CFO.
So what a fractional CFO does ishelps you on a fractional basis,
depending on how big or small yourbusiness is to give you the financial
guidance you need to make sureyou're on track financially,
(21:02):
all the things we talked about,but on a fractional basis.
So that allows me to servereally the people I love,
say 1 million to 10 million inrevenue. So I love working with,
that's where we can turn a couplelevers and make a really big difference.
And those are the people I've workedaround for so long versus full-time CFO,
probably 20, 30, 40, $50million company that has,
(21:22):
they're probably doing some accountingand some CFO work, but that's really,
in my opinion, what afractional CFO should be doing.
And when you're educating thatbusiness owner about their
numbers, that's where youdon't need them all the time.
You can't afford a full-time CFO whenyou're in that 1 million to 10 million
range. But then they can help youwith project-based things too.
(21:45):
You're going to be able to identifythose triggers of something's not right.
Okay, I got to call Paul. I needhim to take a look at this for me.
Another question. Our listeners bynature are trying to wiggle out.
They're trying to wiggle out of thecategory that's good for everybody else,
but I don't need that because ofwhatever special circumstances they have.
So I'm trying to talk to them here fora minute. What if someone said, Paul,
(22:08):
I got tons of cash in thebank. I just got tons of cash.
I'm not really worried about cashflow. We're good. Lots of cash.
Plenty of cash. Whatwould you say to them?
So I would say, what's your planto do with that cash? Okay, I was.
Just going to.
Say, you've got to getsuper concrete on your goal,
and there's this balancingact of profit versus growth.
(22:28):
So if you want to continue to scale,
how are you going to managethat cash to continue to scale,
to not be in a cashflow crunch?So if you're doing $2 million,
you want to get to 10 million, cool,you got a lot of money in the bank,
what's the best way to investthat to get to 10 million? Now,
if you're at $2 million andyou're making 20, 25% net profit,
tons of cash in the bank, debtfree, keep doing your thing.
(22:50):
There's nothing wrong with that.
I think a lot of times we kind of fallin the trap of listening to podcasts,
looking on social media of, wow,they build an eight figure business.
Oh my gosh, they're doing $50 million.I want to do that. But it's like,
do you really want to do thator does it just sound sexy?
So there's plenty of peoplethat I love and work with.
I just want to get to four to $5 millionwhere I don't have to be here every day
(23:13):
and we've got cash in the.
Bank.
So that's what I would say to that person.
Yeah,
I think you really need to identify whatyour goals are and your CFO needs to
understand what those goals areas well. So I think that's really,
really important because youcan make just as much money,
sometimes grossing 5 millionas you can, 10 million.
(23:34):
It just depends on the businessand what your goals are.
I want to make sure that wereally hit this idea home.
So CFOs are really gearedtowards making sure we have good
cashflow.
Are there any other metrics inthat GPS analogy that you use,
Paul?
Any other metrics that ourlisteners should expect to get from their CFO if they
(23:55):
decide to hire one?
Yeah,
so what's driving cashflow is that'sreally the main thing because a lot of
times someone will look attheir p and l, be like, wow,
I made $200,000 this year.
And then they look at their bank accountand they're like, there's 20 in there.
Where's the other ladies?
So really understandingwhere is that cash?
What's causing your cash flow tobe good or to cashflow to be bad?
(24:18):
So I look at what I call the drivers ofcash flow. So to keep it super simple,
we already talked about gross profit,so we have our cost of goods sold,
cost of service, whatever you wantto call it. And then below that,
the main three drivers aregoing to be your overhead.
So what does it cost to keep thelights on every day no matter what,
if you did $0 the next month, what'syour overhead? What's your payroll?
(24:39):
That's not in the field? So if youhave CSRs, if you have dispatchers,
you have an office manager, what's theirs?
And then what are you spending onmarketing? So those are the four main,
in my opinion, to simplify financials,which I like to do for business owners.
So they just really get a good idea ofthe four main drivers of your profit as
far as the expenses go is your cost ofsales, it's going to be your overhead,
it's going to be your payroll,it's going to be your marketing.
(25:01):
Why do you separate marketing?
Because then I want to see are weactually getting a good return on that
or is there an opportunity tostart spending on marketing or can we not spend on
marketing becausesomething else is broken?
So a lot of times we don't spendon marketing because, well,
we are a one man band and we stayedbusy enough and we haven't updated our
pricing model since Iwas turning the wrench,
(25:23):
so there's just no moneyleft for marketing,
and I can't go charge with thatguy's charge, and that's insane.
So looking at the drivers of profit,those are kind of the four main things.
And then obviously at the top of thatbucket is the money coming in and what's
our average ticket? How many jobsare we doing? That kind of stuff.
I'm so glad you said that becausethe last several months actually,
I personally have been wondering if Ididn't spend any of this marketing budget
(25:45):
this year that I spentthis year, next year,
would I still make the same revenue?
I think that's alegitimate question for us,
and I've just been thinking about that.
I don't really know how much impactour marketing is really doing,
and so I'm going to do a huge audit atthe end of this year to see what we're
doing, because I'm curious,
maybe we can still do or maybe even closethe same revenue, but save 90 grand,
(26:05):
dude, that'd be kind of nice. Right?That'd be nice to have 90 grand back.
And so I'm really glad you saidthat, Megan, to close us out.
Why do you think it's important for ourlisteners and business owners in the
trades to make decisions basedon numbers and actual reality and
metrics and not our emotions or our ego?
Sure, sure. Yeah.
I think tradesmen arereally proud group love
(26:28):
tradesmen,
and I think there's just somuch emotion that can come into,
I've done work for thiscustomer for this long.
I've done work for their grandfather,for their father. I mean,
it's a long line. I can't just not do,
or I can't raise their price. No,can't do that. They won't, right?
They won't use me.
I think you just need thatoutside person to be able to
(26:53):
help you understand, Nope,this is what it looks like.
This is what the numbers show,
this is what you need to do ifyou want to hit this profit.
I think it's just really important tohave that outside person being able to
tell you, because when you're in it, it'sreally hard. It's really hard to see.
Well, that was a reallyhelpful conversation. I got a lot out of it personally,
(27:14):
so I'm going to boil it downto three actionable items here.
Number one is you need to make yourdecisions based on metrics and numbers and
not emotion or ego.
Number two is you need tohire a specialized bookkeeper who knows your industry
today. Don't wait anylonger. Get one today.
And number three is know your grossprofit and remember to include things in
(27:36):
there you may not thinkabout. Did I miss anything?
I think one thing that we should justclarify too is that CFOs, fractional CFOs,
they also could be a CPAcertified public accountant.
So a lot of times certifiedpublic accountants are working in certain industries
doing tax work, then they mighttransition into the CFO roles.
So don't think that you don'thave a good CFO if they also
(27:59):
happen to be A CPA. It's.
Not disqualifying.
Or anything.
Correct.
Yep. Okay.
Yeah, and it's really becomingmore popular in that your CPA knows your business
fairly well already. So if yourCPA comes to you and says, Hey,
I'm doing this outsource CFO or fractionalCFO opportunity to help you with cash
flow and know your numbers,that's totally fine.
Going back to as long as they're familiarwith your industry and what kind of
(28:20):
drives everything with the industry,there's no issue with that at all.
Okay, great. Awesome. Well, thatwas a really great conversation.
I really appreciate youguys being here. Megan,
how do people find out more about you?
Sure. You can find meon top tier plumber.com.
We're also on Facebook and Instagram.
And then for me, you can go to theblue collar advisors.com, go there.
There's free pricing calculator.You can schedule call me, email me,
(28:42):
whatever works best for you guys.
Bro, I love that. Thank you foryour time and thanks for being here.
I really appreciate it.
Thanks, Adam.
And thank you for listening.
I hope you heard something today thatwill make your business healthier and help
you make better decisions, off numbers,and not emotion. I'm your host,
Adam Sylvester. As always.I'm at adam sylvester.com.
Your team and your clients deserveyour very best, so go give it to 'em.
A lot of times someone will lookat their p and l and be like, wow,
I made $200,000 this year.
And then they look at their bank accountand they're like, there's 20 in there.
Welcome to Jobbers, masters of HomeService, a podcast for home service pros,
buy Home Service pros.
We're in Las Vegas and today we're talkingabout CPAs and what's a CFO and do I
need a bookkeeper? We're going totalk about all that stuff today.
(00:23):
I'm your host, Adam Sylvester.Today's guest are Paul Mascal.
And Megan Schumann. Welcome tothe studio guys. Thanks, Adam.
Paul, why don't you introduce yourselfand tell us who you are, what you do,
and how you got.
Here. Yeah.
I got here actually by a referralfrom Phil Richer with Flash Marketing.
He's a big fan of Mastersof Home Service podcast,
so I offer outsource or fractionalCFO work for companies in the trades.
(00:48):
Great. Awesome. Glad you're here.
Thanks, Megan.
Yeah. I own a plumbing company,top tier. We're in Wisconsin,
and I have been a jobber user since 2019,and so we do plumbing, drain cleaning,
septics, and well systems. Andmy background is I'm A CPA.
Right? You came from this world.
Too. Yep, yep. Came fromthis world. Love this world.
I think this probably has the moststigma out of anything we talk about in
(01:08):
business, in smallbusiness is the difference,
the dance between thebookkeeper and the CPA,
the CFO and fractional CFOsand all these little things.
No one really knows whatwe're talking about.
Let's put the cookies on the bottom shelffor our listeners. And first of all,
let's explain what is the relationshipand what are a bookkeeper,
A CPA and a CFO? I.
(01:30):
Have a plumbing world analogyfor this. So the bookkeeper,
I would say is your laborer. So you tellthem to cut the pipe 20 inches long,
they're going to cut it. They know howto do the data. You give them the task,
they're going to processit. They're going to do it.
The CPAs are the journeyman plumbers,so they're the ones that know the code.
They know how to do it legally. They knowhow to make sure it's done correctly.
(01:52):
Your CFOs are your master plumbers.They're the ones that know the code.
They know how to do it,
but they also know how to think outsidethe box and they know how to get
something done maybe in a difficultsituation, different difficult job site.
So I like that.
And I mean, every business needsall three, in my opinion, hundred.
(02:12):
Percent.
The bookkeeper and the CPA, they'redoing everything in the past.
So bookkeepers taking all yourtransactions, what happened?
Where does it go? Howdo we account for this?
So that way then the CPA and theCFO then have that information to do
their job. CPA is still looking inthe past, unfortunately. Most CPAs,
all they do is compliance work andthey say, Adam, here's your tax bill.
(02:36):
Here's your four quarterlies.We'll see you in 12 months.
Make sure you pay it.
Make sure you pay it. If you don't,
I'm not in the hook becauseyou signed off on it.
Whereas the CFO comes in and actuallytakes that data to do forward thinking
projection strategy and really be thefinancial guide for the business so that
way they can start to achieve theirfinancial goals, create cashflow,
and ultimately build the wealth andbuild the business they're looking for.
(02:57):
Okay, great. So bookkeepers,
make sure that all your metrics andall your financial, your income,
your expenses are all in order. Your CPAhelps you with taxes for the most part,
maybe some other things, and theCFO helps you project the future.
Anything else you'd add to that?
Yeah, I'd say CPAs, if you have bondingrequirements, they'll help with that.
They'll make sure you're hittingany of those things. Audits.
(03:21):
If you're a big enough companyand you need to be audited,
if you need compiled financialstatements, they'll do those reviews.
Business valuations too, if you wouldneed that for buying, selling, divorcing,
those kinds of things.
Yeah. Okay. Great. Okay, so bookkeepers,
what makes a bad bookkeeper andwhat makes a good bookkeeper?
We were talking about this before atthe show, Adam. I think unfortunately,
(03:42):
98% of bookkeepers are really bad atserving clients in the home service
industry Because in my opinion,
every bookkeeper out there needs to bean expert in the businesses or at least
the industries that they're serving.
Whereas if your bookkeeper's alsoserving restaurants and they're serving
e-commerce stores and maybe they'rehelping the guy with the food truck and
(04:03):
they're doing your plumbing company,
they probably don't know how yourchart of accounts should be set up.
They probably don't know howto depreciate certain assets.
They probably don't know how to setup your balance sheet, to be honest,
just because they're not anexpert in it. Unfortunately,
most of the business owners Italk to, they say, yeah, I dunno.
My bookkeeper handles allthat. And it's like, well,
what does your p and l and balancesheet look like? I don't really know.
(04:24):
That stuff doesn't make any sensebecause it doesn't make sense.
The bookkeeper doesn't knowwhat they don't know either.
So unfortunately foranybody out there listening,
I would really look to start having thoseconversations with your bookkeeper to
see if it's, you've probably had 'emfor a while. You started your business,
someone at the Chamber of Commerceor BNI or someone said, Hey,
you got to get abookkeeper. Go talk to Joe.
(04:46):
Or it's the first person youhired to answer the phone.
They answer the phone and they alsodo the books. They take out the mail,
they clean the bathroom,they do all these things,
but they actually don't knowaccounting and a bookkeeper, actually,
to what Megan said, they are the ones,once you tell them to do something,
that's what they're going to do. But ifno one's telling them to do anything,
they're going to do what QuickBooks told'em to do when they open the account
(05:07):
and said, oh,
all of your payroll just goes in hereand you don't need to worry about your
field labor. So I'm sure she canelaborate on that, but that's my opinion.
I work hand in hand with bookkeepers everyday and it can get really frustrating
when the business owner doesn't havethe data they need to make the decisions
that they're looking for.
Yeah, there are some fantasticbookkeepers out there.
So we're not batchingbookkeepers to be clear.
(05:28):
I have friends that are bookkeepers, but
industry specific is really a key thing,
whether that's your bookkeeper,your CPA or your CFO,
you want them to have had exposure tothe industry that you're in because
there are just littlequirks in every industry.
And it's not saying that theycannot transition to new industries,
(05:50):
but maybe they need somecontinuing education,
maybe they need some moretraining to understand.
Before we keep going, let'stalk about the question.
A lot of our listeners who don'thave a bookkeeper yet are asking,
do I really need a bookkeeper?Let's talk about that because gosh,
I made this mistake early onand I really wish I hadn't.
What would you guys say tothat person who's saying,
I'll get a bookkeeper down the road?
(06:10):
No, you need one. You need one right away.
I think working with tradesmen,
they're fantastic at what they do.
The vast majority are notgood at record keeping.
That's not their strong suit.
And so you need to find someone that istheir strong suit because the mess that
you can create and the money thatyou will lose by not having it, you,
(06:33):
you need one. It willfar outweigh the cost.
And I would echo that. I seea lot of business owners,
they just make all their financialdecisions based on how much money's in the
checking account. Like, alright,there's 20 grand in there.
I think we can do this. Ithink we can go buy that truck.
And to the point of you need one rightaway so you have that clean record as you
start to scale when you want to go buyvehicles or you want to go buy equipment
(06:55):
or you want to go lease a billing,they're going to say, Hey,
can I see your p and l? CanI see your balance sheet?
And if you send them a coupleof Google Docs or Google Sheets,
they're going to be like,yeah, you can't scale now.
You're probably trying to have to putit on your personal credit and do all
these things,
which makes it a lot harder to achievethe goals that everyone started their
business for a reason and it's going tobe hard to achieve those goals if you
don't have that bookkeeperin place keeping track of everything that's happened.
(07:19):
Yeah,
I have two businesses and I think I spendless than $500 a month in bookkeeping.
And so I think it's well worth thedollars and cents that it takes to have a
good bookkeeper because here's thething, it's just like a rubber band.
It'll expand as you grow,and so you need to start now,
but if you try to get a bookkeeperwhen you're hopefully pretty sizable,
the rubber band's just going to break.
You're going to feel broken becauseyou wish you'd started five years ago,
(07:42):
so you really want to start now. Soit just grows with you gradually.
Instead of being like, I need abookkeeper, let's go back five years.
Basically you're going to do all the work,
eventually do it as you go insteadof looking back for years and years.
So bookkeepers, that's onething. What about CPAs?
Yeah, so CPAs are unfortunatelythat necessary evil
(08:04):
a lot of times.
So everyone has to pay taxes and typicallythat's what you think of when you
think.
Of C. Well, about TurboTaxthough, just go out and TurboTax.
What do you think aboutTurboTax versus A CPA?
You certainly can, but I think again,
having that professional thatunderstands the industry,
that understands some tax planning,
you can pay a lot in taxes thatmaybe could have been planned out
(08:26):
and maybe avoided or there is a thingcalled tax planning and I highly
recommend doing it. And A CPAis what you can use for that.
Yeah, so I mean, whenyou're looking for a CPA,
similar to what Megan said,there's kind of two different ones,
probably similar to bookkeepers,
but there's ones that'll just docompliance work that we talked about.
(08:47):
That's your TurboTax,
whether it's TurboTax or it's a humanthat's certified public accountant,
that's all they're doing is yousee 'em at the end of the year,
you give 'em access to QuickBooks,they say, Adam, you owe this much.
Here's your four quarterlies.See you in 12 months.
If you can find somebody thatdoes tax planning, tax strategy,
there's a reason the taxcoded is the way it is,
(09:09):
is because everybody in Congressdoesn't want to pay taxes either.
They're making a lot of money.The more money you make,
the easier it is to implementa lot of these tax strategies.
So when you can get that CPI on yourside early, they can grow with you.
They know all thenuances of your business,
they know all the things that you cantake advantage of. It's not illegal.
It's them being knowledgeableof what's going on in Congress,
(09:31):
what's in the tax code, and what can yourbusiness do in order to mitigate that?
And then that flows into what I do ishelping them with cashflow that helps
cashflow significantly.So then you can scale.
Okay, so CPAs and bookkeepers, wetalked about that. Let's get into CFO,
chief financial Officer.
Let's also get into a little bit offractional like what a fractional CFO is,
but what does A CFO dodifferently from the other two?
(09:56):
And why do you thinkbusinesses need A CFO?
Yeah, that's a great question.When I talk to a lot of people,
I tell 'em what I do thefirst time. They're like,
I already have a bookkeeper inCPA. So using a car analogy,
a bookkeeper and a CPA,they're looking in the past,
they're in the rear view mirror, they'relooking at all the things you drove by,
all the toll you paid, all thatkind of stuff. Whereas a CFO,
(10:17):
A good CFO is guidingyou to your destination.
So a lot of times we as business owners,
we have these grand planswhen we start our business.
I don't want to work for Megan anymore.I'm going to go do my own thing.
I can do it better, I can do itmore efficient, whatever it is.
And then within two weeks, ournumber one goal is survival.
We have no clear destination. Wedon't know what success looks like.
So what A CFO does is figures outwhat does that success look like,
(10:40):
what does that destination looklike for the business owner?
Everyone's got different goals and thenuses all of the data that the CPA and
that the bookkeeper put togetherto then do forecasting projections.
And if you think about using the car,
we're looking through the windshield andwhere the GPSA really good GPS is going
to tell you where there'sdetours, where there's roadblocks,
where there's delays. So when youhave those forecasts and projections,
(11:03):
you can get ahead of cashflow issues.
There's a lot of business owners outthere who all of a sudden in their mind,
we just don't have any money. Well,
that thing probably startedsix to 12 months ago.
They just didn't know it becausenobody else is doing it for them.
And they're thinking, well,shouldn't my bookkeeper handle that?
Or shouldn't my CPA pick thatup? That's not their job.
They didn't sign up to dothat. So in my opinion,
that's really what A CFO does isreally helping them create consistent,
(11:26):
positive cashflow beingtheir financial guide.
So their business can not onlyget onto track, but stay on track.
Because a lot of times people are like,well, I'm doing really well right now.
But yeah, when you're doing really well,you still need somebody guiding you,
holding you accountable, and gettingyou to ultimately where you want to go.
Let's add some color to that.Do you have an example of,
because you said it's all about helpingthe business stay cashflow positive and
(11:48):
managing their cashflow.
Do you have an example to give to ourlisteners who may still have a pretty
theoretical understanding of all this?A concrete example of this happening?
So I work strictly with companiesin the trade. So we look at,
just to get into the details a little bit,
one of the big things welook at is gross profit.
So gross profit for peoplethat don't know what it is,
(12:09):
gross profits not how much money camein your business. That's revenue.
A lot of people hear the word gross.They're like, oh, that's before net.
So that's all the money that came in.
This is where I getfrustrated bookkeepers,
because the books usually aren'tset up for the business owner
Who know what their gross profit is.So for those listeners out there,
gross profit is revenue that came in minusall of the costs that were associated
(12:29):
with delivering your service. Soif you own a plumbing company,
it's going to be all the cost to actuallybe out in the field delivering that
plumbing service. The main twothings are labor and material,
but there's a lot of other things thatget missed that might not be associated
in the right category.
Small tools and equipment rentalspermits a lot of different expenses.
When we know what our gross profit is,
(12:50):
we at least then know the money cominginto the top of the business is the
right money at the right price,because if our gross profit's off,
we know that our pricing model is broken,
then our pricing model is brokeneither because our material's broken,
our labor's broken, or we arejust not pricing properly.
That gross profit is ahuge, huge thing to watch.
(13:11):
And the bookkeeper isn'tgoing to watch that.
The CPAs aren't going to watch that.That's what the CFO is going to start.
You start with that gross profit,
and then you can drill down intothe other issues, like Paul said,
finding what the problemis, what's broken.
I had a friend who sent me his pand l plumbing company actually,
and I was like, what's your grossprofit? It's not here. And he was like,
(13:31):
what do you mean? And I was like,
send this back to yourbookkeeper and have her fix it.
And about two weeks later, Igave more details than that.
Two weeks later it came back.I was like, ah, finally,
I can see what your gross profit is.
And so that totally alignswith my experience too.
A lot of bookkeepers don't even set upyour p and l so you know what your gross
profit and your net profitis at the end of the day.
I think a good CFO too is not justgoing to give you that information,
(13:54):
but they're also going to,so as a business owner,
you don't have to be anexpert in accounting, right?
That's why you have people to do it.
But a good CFO is goingto help you understand.
They're going to give you maybea dashboard, couple metrics,
couple things that you can watch andyou can understand thoroughly, oh,
that's starting to become a problem.Hey, Paul, can we look at this?
(14:16):
I think there's an issue here.
So a good CFO will help youunderstand a little bit more about the
business.
This is a great conversation. I want topause for a moment to talk about jobber.
Megan, when it comes to running yourbusiness and having a healthy business,
how has Jobber helped you make sure thatyour business is continually running
healthy?
Sure. Everything is inone place in Jobber.
(14:38):
It helps eliminate a lotof errors that can happen.
If you've got 12 spreadsheetsthat are monitoring one thing,
you have everything. Allyour time is in there,
your materials are in there for us.Jobber goes directly into QuickBooks,
our accounting software, and it's justa huge time saver and helps, again,
eliminate those mistakes that can happen.
Yeah, I mean, going from pen and paperto jobber is a world of difference.
(15:01):
So if you're using pen and paper, youshould stop and start using jobber today.
New users can exclusivediscount at jobber.com/podcast.
Start using jobber today. Iwant to ask you guys a question.
It might be an oddball question. Ireally want your opinions on this.
I've thought about this for myself alot. What happens when you have a client,
(15:21):
Paul, that you're looking at thenumbers as a CFO, and you're saying,
well, this last month wasn't very good,
so I'm projecting a bad month nextmonth, for example. And they say, well,
and they list all these outliers orall these things that don't usually
happen, or, oh, well, threepayrolls this month has said too.
What do you do with all those?Do you just say, I don't care?
(15:45):
What do you do in thatsituation? I'm curious.
You can't run your business onexceptions, but there are exceptions,
but they're not. There's patterns.What do you do with that?
And really when the numbers don't lie,
so when we run our business offemotion and ego, we get stuck.
So most business owners have that feelingin their gut, something's not right,
(16:05):
but they can't tie it to something,whereas the numbers don't lie.
It's like you don't feel good becausemoney's going out of your bank account
because your gross profits offer youroverhead's out of whack or accounts
receivable,
which means people owe you a lot ofmoney isn't where it needs to be.
So there are exceptions, however,humans, especially business owners,
especially business owners of theirown business, which is their baby,
(16:26):
will always make an exception forwhy there's going to be a thousand
excuses. In my last company, Ihad right above my desk, it said,
your excuses only soundgood to you because they do.
If someone's going to comewith an excuse like that,
but someone else out making it happen.So if someone else is making it happen,
you can make it happen.Let's stop with the excuses.
(16:47):
Let's throw our ego out and understandwe're not where we need to be,
but we have the data,we have the information,
we have the guidance to get to where wewant to go if we get rid of the excuse
mentality.
I had that situation in my business,so my husband's the master plumber.
He is very emotionally tied to customers.
We had done work for acontractor for a long time,
(17:09):
and the numbers were telling meit's not right. It's not right.
Drill down did some jobcosting on that customer.
We were losing money on everysingle job we did for him.
And so put that into black andwhite, showed it to my husband.
We make more if we do not do work for him.
So we either need to adjust our pricingor we need to not do work anymore for
(17:30):
him. And so you need to be able toseparate the emotion from the numbers.
Paul, how job costing'sa great example. Megan,
how involved should ACFO or a fractional CFO?
We'll talk about that in a minute.Be involved in actual job costing.
Exactly how much?
Yeah, and I think it'sa case by case basis.
(17:51):
I would say going back to whatwe talked about bookkeepers,
my recommendation since I justspecialize in the trades as well,
is your CFO should know your industry.
They should know roughly whatshould be the gross profit.
What's the drivers of your gross profit?What's the drivers your overhead?
What marketing strategies work inthat industry? So me personally,
I'll do some job costing forpeople if they're like, Hey,
(18:12):
can you take a look at this? If I'mworking with a landscaping company,
we priced out this job. We've beendoing work for this guy for years.
He builds 10 homes a year, we love him.And to Megan's point, it's like, yeah,
but it's not working. So my opinionon small businesses in general,
your friends should be theones paying full price.
They should be the ones supporting you.
I don't know where this thing camefrom of friends should get discounts.
(18:34):
If you really love your friend, you wanttheir business to succeed. If anything,
you should pay more. Sodoing favors for friends,
that friend's going to be reallyupset when you're like, Adam, sorry,
we're out of business.We ran out of money.
If we were to just charge youtwice as much last 10 years,
we'd be really good at like, man, Iwould've totally paid twice as much.
Now I don't have any moneyto do my landscaping. So job costing super important.
(18:54):
I'm not going to do all of it for 'embecause I'm working more on strategy,
but I'm also going to do at least a coupleof those things to get a good idea of
what's broken. So then wecan really work on the.
Strategy.
Then you would be willing to help yourclient if they had questions about job
costing, but you're not doingthat on an active recurring basis,
you would do other activities?
Correct. And I'll show them how to do it.
We'll create spreadsheetsfor their business of, Hey,
(19:14):
here's how you do job costinggoing forward. Depending on the type of business,
if it's more, here'show you do job costing,
it's more service-based where it's likeyou really have a price book of, Hey,
this is how much it is to putin this type of water heater,
or this is how much it is to put inan EV charger. That's more price book.
It's like, Hey, let's figure outthe inputs into your price book,
and then you can reallybuild that out yourself.
(19:35):
Once we figure out what doesour material need to be,
what's the markup need to be?What's our labor need to be?
So it's kind of a case by case basis,
but I want to guide them in the rightdirection, show them how to do it.
But going back to what wewere talking about earlier,
I want them to be kind of empoweredand educated and really understand the
financial health of their businessso they know when something's wrong.
They can be like, that makes total sense.
(19:57):
Let's talk about fractionalCFOs. What is a fractional CFO?
Yeah, so if you think about A CFO,
probably what most people think ofthis is what I used to think of.
So I used to work infinance, lived in Chicago,
wanted to make it to the top storycorner office, be the CFO briefcase suit,
all that kind of stuff. Andthat was my vision of a cfo,
probably most people thesame thing. Someone on Wall Street, somebody in a bank,
(20:20):
somebody for a Fortune 500 company.
What I realized I would say really kindof in the last year is I was always the
fractional CFO for all of mycompanies. I just didn't know that.
I just thought everybody like numbers.I love numbers. You're a business owner,
you should take ownership of yournumbers. And as you get into it more,
it's like, no, this personreally loves plumbing.
(20:40):
They don't want to know any numbers.
They just want to know if they'refinancially healthy and if they're not,
what do they need to do to fix it?So most companies aren't big enough,
they don't have enough work,
they don't have enough money to pay afull-time CFO because you don't need a
full-time CFO.
So what a fractional CFO does ishelps you on a fractional basis,
depending on how big or small yourbusiness is to give you the financial
guidance you need to make sureyou're on track financially,
(21:02):
all the things we talked about,but on a fractional basis.
So that allows me to servereally the people I love,
say 1 million to 10 million inrevenue. So I love working with,
that's where we can turn a couplelevers and make a really big difference.
And those are the people I've workedaround for so long versus full-time CFO,
probably 20, 30, 40, $50million company that has,
(21:22):
they're probably doing some accountingand some CFO work, but that's really,
in my opinion, what afractional CFO should be doing.
And when you're educating thatbusiness owner about their
numbers, that's where youdon't need them all the time.
You can't afford a full-time CFO whenyou're in that 1 million to 10 million
range. But then they can help youwith project-based things too.
(21:45):
You're going to be able to identifythose triggers of something's not right.
Okay, I got to call Paul. I needhim to take a look at this for me.
Another question. Our listeners bynature are trying to wiggle out.
They're trying to wiggle out of thecategory that's good for everybody else,
but I don't need that because ofwhatever special circumstances they have.
So I'm trying to talk to them here fora minute. What if someone said, Paul,
(22:08):
I got tons of cash in thebank. I just got tons of cash.
I'm not really worried about cashflow. We're good. Lots of cash.
Plenty of cash. Whatwould you say to them?
So I would say, what's your planto do with that cash? Okay, I was.
Just going to.
Say, you've got to getsuper concrete on your goal,
and there's this balancingact of profit versus growth.
(22:28):
So if you want to continue to scale,
how are you going to managethat cash to continue to scale,
to not be in a cashflow crunch?So if you're doing $2 million,
you want to get to 10 million, cool,you got a lot of money in the bank,
what's the best way to investthat to get to 10 million? Now,
if you're at $2 million andyou're making 20, 25% net profit,
tons of cash in the bank, debtfree, keep doing your thing.
(22:50):
There's nothing wrong with that.
I think a lot of times we kind of fallin the trap of listening to podcasts,
looking on social media of, wow,they build an eight figure business.
Oh my gosh, they're doing $50 million.I want to do that. But it's like,
do you really want to do thator does it just sound sexy?
So there's plenty of peoplethat I love and work with.
I just want to get to four to $5 millionwhere I don't have to be here every day
(23:13):
and we've got cash in the.
Bank.
So that's what I would say to that person.
Yeah,
I think you really need to identify whatyour goals are and your CFO needs to
understand what those goals areas well. So I think that's really,
really important because youcan make just as much money,
sometimes grossing 5 millionas you can, 10 million.
(23:34):
It just depends on the businessand what your goals are.
I want to make sure that wereally hit this idea home.
So CFOs are really gearedtowards making sure we have good
cashflow.
Are there any other metrics inthat GPS analogy that you use,
Paul?
Any other metrics that ourlisteners should expect to get from their CFO if they
(23:55):
decide to hire one?
Yeah,
so what's driving cashflow is that'sreally the main thing because a lot of
times someone will look attheir p and l, be like, wow,
I made $200,000 this year.
And then they look at their bank accountand they're like, there's 20 in there.
Where's the other ladies?
So really understandingwhere is that cash?
What's causing your cash flow tobe good or to cashflow to be bad?
(24:18):
So I look at what I call the drivers ofcash flow. So to keep it super simple,
we already talked about gross profit,so we have our cost of goods sold,
cost of service, whatever you wantto call it. And then below that,
the main three drivers aregoing to be your overhead.
So what does it cost to keep thelights on every day no matter what,
if you did $0 the next month, what'syour overhead? What's your payroll?
(24:39):
That's not in the field? So if youhave CSRs, if you have dispatchers,
you have an office manager, what's theirs?
And then what are you spending onmarketing? So those are the four main,
in my opinion, to simplify financials,which I like to do for business owners.
So they just really get a good idea ofthe four main drivers of your profit as
far as the expenses go is your cost ofsales, it's going to be your overhead,
it's going to be your payroll,it's going to be your marketing.
(25:01):
Why do you separate marketing?
Because then I want to see are weactually getting a good return on that
or is there an opportunity tostart spending on marketing or can we not spend on
marketing becausesomething else is broken?
So a lot of times we don't spendon marketing because, well,
we are a one man band and we stayedbusy enough and we haven't updated our
pricing model since Iwas turning the wrench,
(25:23):
so there's just no moneyleft for marketing,
and I can't go charge with thatguy's charge, and that's insane.
So looking at the drivers of profit,those are kind of the four main things.
And then obviously at the top of thatbucket is the money coming in and what's
our average ticket? How many jobsare we doing? That kind of stuff.
I'm so glad you said that becausethe last several months actually,
I personally have been wondering if Ididn't spend any of this marketing budget
(25:45):
this year that I spentthis year, next year,
would I still make the same revenue?
I think that's alegitimate question for us,
and I've just been thinking about that.
I don't really know how much impactour marketing is really doing,
and so I'm going to do a huge audit atthe end of this year to see what we're
doing, because I'm curious,
maybe we can still do or maybe even closethe same revenue, but save 90 grand,
(26:05):
dude, that'd be kind of nice. Right?That'd be nice to have 90 grand back.
And so I'm really glad you saidthat, Megan, to close us out.
Why do you think it's important for ourlisteners and business owners in the
trades to make decisions basedon numbers and actual reality and
metrics and not our emotions or our ego?
Sure, sure. Yeah.
I think tradesmen arereally proud group love
(26:28):
tradesmen,
and I think there's just somuch emotion that can come into,
I've done work for thiscustomer for this long.
I've done work for their grandfather,for their father. I mean,
it's a long line. I can't just not do,
or I can't raise their price. No,can't do that. They won't, right?
They won't use me.
I think you just need thatoutside person to be able to
(26:53):
help you understand, Nope,this is what it looks like.
This is what the numbers show,
this is what you need to do ifyou want to hit this profit.
I think it's just really important tohave that outside person being able to
tell you, because when you're in it, it'sreally hard. It's really hard to see.
Well, that was a reallyhelpful conversation. I got a lot out of it personally,
(27:14):
so I'm going to boil it downto three actionable items here.
Number one is you need to make yourdecisions based on metrics and numbers and
not emotion or ego.
Number two is you need tohire a specialized bookkeeper who knows your industry
today. Don't wait anylonger. Get one today.
And number three is know your grossprofit and remember to include things in
(27:36):
there you may not thinkabout. Did I miss anything?
I think one thing that we should justclarify too is that CFOs, fractional CFOs,
they also could be a CPAcertified public accountant.
So a lot of times certifiedpublic accountants are working in certain industries
doing tax work, then they mighttransition into the CFO roles.
So don't think that you don'thave a good CFO if they also
(27:59):
happen to be A CPA. It's.
Not disqualifying.
Or anything.
Correct.
Yep. Okay.
Yeah, and it's really becomingmore popular in that your CPA knows your business
fairly well already. So if yourCPA comes to you and says, Hey,
I'm doing this outsource CFO or fractionalCFO opportunity to help you with cash
flow and know your numbers,that's totally fine.
Going back to as long as they're familiarwith your industry and what kind of
(28:20):
drives everything with the industry,there's no issue with that at all.
Okay, great. Awesome. Well, thatwas a really great conversation.
I really appreciate youguys being here. Megan,
how do people find out more about you?
Sure. You can find meon top tier plumber.com.
We're also on Facebook and Instagram.
And then for me, you can go to theblue collar advisors.com, go there.
There's free pricing calculator.You can schedule call me, email me,
(28:42):
whatever works best for you guys.
Bro, I love that. Thank you foryour time and thanks for being here.
I really appreciate it.
Thanks, Adam.
And thank you for listening.
I hope you heard something today thatwill make your business healthier and help
you make better decisions, off numbers,and not emotion. I'm your host,
Adam Sylvester. As always.I'm at adam sylvester.com.
Your team and your clients deserveyour very best, so go give it to 'em.
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