October 30, 2024 • 28 mins
Hannah Smolinski, founder of Clara CFO Group, shares insights on scaling small businesses through smart financial strategies. She discusses the benefits of fractional CFO services, overcoming hiring challenges, and adapting to industry changes.
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Chad Saley (00:07):
Hello, I'm Chad Saley and welcome to the next
episode of Canopy's practicesuccess podcast.
I am super excited to be sittingdown today with Hannah
Smolenski, the CEO and founderof Clara CFO group.
And today we'll be discussingdifferent ways, uh, that Hannah
has helped small businesses growtheir firms, grow their business
(00:31):
and how some of those same tipsmight be applicable to
accounting firms.
As well as a variety of othertopics.
So, uh, thanks for joining ustoday, Hannah.
Hannah Smolinski (00:40):
Thank you for having me.
I'm excited to be here today.
Chad Saley (00:43):
Um, maybe to just start things off, uh, just tell
us a little bit more aboutyourself and about, uh, Clara
CFO group.
Hannah Smolinski (00:51):
Sure.
So I am a CPA, but I don't dotaxes.
That's where I always start.
Um, I always try to tell people,yes, you can be a CPA and do
other things.
Um, Even though people still askme tax questions all the time,
I'm sure other CPAs relate.
Um, but I started a fractionalCFO company in 2017.
(01:11):
And since then we've beenserving small businesses with
just CFO services.
So unlike lots of businessesthat are trying to, you know, do
the whole gamut of everythingfrom bookkeeping to tax to CFO,
we do not do that.
We just focus on the CFOservices alone.
So, um, other than that, I'mlocated just North of Seattle
(01:31):
and, um, just enjoy, you know,playing tennis and spending time
with my daughter and, um, justkind of try to have a full life
outside of running a smallbusiness, which is.
Difficult sometimes, but I tryto do my best.
Chad Saley (01:45):
No.
And I know just that, I mean, soaccounting as a whole is, is
very much a service industryand.
Is one of the, one of the thingsI think that most impressed me
about you was your focus ontrying to just help and
essentially helping others withfree advice on how to run their
(02:06):
businesses.
And what I'm referring to isyour, is your YouTube channel
and, uh, everything that youkind of have done there has been
about just like answeringpeople's questions.
Maybe, I mean, tell me just alittle bit about how the YouTube
channel came about and kind ofwhat your goal was when you
first started posting thosevideos.
Uh, compared to kind of whatit's become today.
Hannah Smolinski (02:27):
Sure.
Yeah, it's been um, youtube hasbeen a really wild ride, but I
love talking about it and IThink like the way it started
versus what it's become is likeway different.
So I I Originally started thechannel maybe back in like 2018
just because I had You mightremember that people at one
point in time were postingFacebook lives.
(02:48):
That was a thing.
Like, everybody was like, yougotta post Facebook lives.
Um, so that was a way to takesome of that content and put it
somewhere else.
So it had longevity.
Um, so we, uh, just thought,hey, we'll post it on YouTube.
Nothing ever came from that.
I think one time I did a videowhere I did a walk through of a
payroll provider.
And, um, then I looked at thatvideo like two years later and I
(03:11):
realized that it had some viewson it, like at the end of 2019,
beginning of 2020, that videohad maybe like 7, 000 views and
a few people had signed up forthis provider through my
affiliate link at the time.
And so it just kind of made mesort of think like, Oh, this is
like.
Interesting that I got someviews on this, that felt like a
lot to me.
And, um, I was thinking, well,this is kind of a cool way to
(03:33):
like, get some information out.
Like maybe it's not necessarilybringing clients in, but it
could also like potentially be arevenue stream or something, or
maybe I could, you know, putsome other content out on, um,
on, uh, the channel.
And I think at that point intime, at the beginning of 2020,
I just decided like, okay, I'mgoing to try to use YouTube to,
(03:54):
um, Grow the business in somekind of way.
So I just started, I made like acouple of videos that were just
maybe about like profitabilityor something like that.
Um, but then we all know whathappened in March of 2020.
And very quickly I had clientsasking me about this.
Program.
What is this?
And I was thinking to myselfwhen I really started to
(04:15):
understand the program, whichwas very quickly as I was
reading out of the content, Irealized how important it was
for people to know about it veryquickly and how I also knew.
That tons of small businessowners, because I'd been working
with small business owners atthat point in time, usually did
not have a financialprofessional on their team that
was going to advise them onthings.
(04:36):
And so at the time and the news,all of these kind of big
businesses found loopholes toget access to PPP money.
And it was making me like upsetthat, you know, the businesses
that it was designed for, we'renot getting the money and all my
clients were needing answers.
So I did a quick webinar.
And then invited anybody I knew,put it up on YouTube, and then
(05:01):
that got shared so many times,and then there were questions
that came out of it.
And then before I knew it, I wasmaking another video to answer
the questions on the first videoor correct something that we
thought was correct, but it'snot, it wasn't correct.
So we put out another video.
And so.
That time was really crazy.
I say we, but really it was justme.
Um, it was, uh, just like, okay,let's respond to this question
(05:27):
and make another video, respondto the question and make a
video.
Um, so that's kind of how likethe channel really got started.
When I first put that first PPPvideo up, I think I had like 50
subscribers on the channel andthen very quickly.
It jumped to like a thousand andthen it was 5, 000.
And then, um, it happened prettyquickly on those first couple of
(05:47):
months of just.
Really answering people'squestions.
I wasn't getting any benefitfrom answering people's
questions besides the fact thatI was like, I feel, I felt like
I was doing a public service atthe time and there was a lot of
bad information also on theinternet at the time.
So I felt like I was fightingthat as well.
Chad Saley (06:05):
How, um, so maybe now when you think about, okay,
the videos that you want to putout, are they coming from?
Just the questions that you'rehearing from your clients or
what kind of will spur you tosay, Hey, this is something
that's big enough that Iactually ought to do a video and
put some information out on.
Hannah Smolinski (06:23):
Yeah.
I mean, content has been, um,uh, changing because, you know,
when the PPP and the idealprograms and ERTC, all of that
kind of started to go away wherepeople weren't able to get
those, um, access to thosethings anymore.
I looked around and I said like,okay, well.
Now, I have an audience on theYouTube channel of small
business owners.
What else do they need to know?
(06:44):
Because I don't have any morecontent ideas to talk about
programs that are essentiallydead.
So you got to do something else.
Right?
So, um, I, a lot of the contentideas were coming from.
Conversations that I was havingwith clients over and over and
over again, because we were, youknow, having advisory calls with
our clients all the time.
(07:04):
You know, we found ourselvesconstantly talking about like,
what's the minimum amount ofprofit we're looking for in our
business?
Or how do we do cashflowforecasting?
Or, um, you know, let's talkabout like how to build a budget
or, um, you know, how do you usethis little thing in QuickBooks?
That is kind of annoyingsometimes, you know, um, there
was a lot of Things that wefound ourselves doing as CFOs
(07:27):
that, or just like consultingwith small business owners that,
um, some of that translatedinto, well, this could be a
video.
Um, and then sometimes it waslike really basics where it was,
it was.
Thinking about things thatpeople might need to know, like
how to read an income statement,how to read a balance sheet.
Um, and then also looking atpeople's comments and questions
(07:49):
and trying to come up withcontent ideas from that as well.
So it's kind of come from lotsof different places.
Chad Saley (07:55):
So jumping into like some of those actual tips and,
and some of those things thatyou've, that you learn and then
you share what, um, What aresome common themes you've been
hearing recently?
Like what are the commonquestions that you're getting
from small businesses thatthey're trying to figure out
about their own internalfinances and how they're running
(08:16):
their businesses?
Hannah Smolinski (08:18):
Yeah.
I mean, I think, um, for, forour clients right now, because
we work with mostly B2B servicecompanies, so we work with
agencies, um, consultingcompanies, either professional
consulting or, um, Educationconsulting, DEI, things like
that.
Um, what we're seeing in themarket right now is, um, a
(08:42):
couple of things.
So we're seeing like cash istight for a lot of people.
Um, especially any of the, theconsultants that might be
somewhat deemed as like luxuryis being pulled back or
marketing has had like a hardtime in the past couple of years
with a recession.
Um, But we're also seeing trendsof just labor costs continuing
(09:02):
to rise.
Um, that's like a common thingright now where we see, um,
employees wanting raises, andwe're not seeing as much of the
ability to raise prices as muchas we need to on some of that.
So we're starting to see likethat margin, um, Margin
challenges between what we canreally charge for our services
(09:24):
and what people are wanting toget paid.
So that's like one of the thingswe're seeing as a trend.
And then we're having lots ofconversations with our clients
right now about pipeline and howto get consistent business
development in.
Because.
We're looking at it like wayahead of time before revenue
comes in, what, what are theydoing?
Like, what are their actions?
(09:45):
What do they need?
How do they need to be spendingtheir time?
And so we're having thosestrategic conversations with
them as well.
Chad Saley (09:52):
And I think those are both two things that
obviously, you know, theaccounting industry is, is
facing as well.
Like they're having those sameissues with finding new
employees.
And hiring and retention.
And then that same issue withbusiness pipeline and business
development.
As you look at, um, kind ofsmall businesses and maybe kind
of turning that and looking atactual like accounting firms,
(10:15):
what advice would you give anaccounting firm that is having a
hard time hiring?
Is there, are there tips or arethere things that you've come
across that you think would behelpful or beneficial?
Hannah Smolinski (10:24):
Yeah.
I mean, we're going throughhiring right now.
And, um, I've been thinkingabout this a lot because We've
seen it as probably one of ourbiggest business challenges is.
Bringing in quality peoplebecause I, especially for a
fractional CFO work, because thepeople we put in front of our
clients is so important.
(10:45):
We can't use an outsourced, youknow, somebody who, um, you
know, is living overseas, likeit doesn't really work even from
a time zone perspective, youknow, and, um, so there's lots
of different things that we needto think about when we think
about who we're bringing infront of, And, um, I think
hiring for us, we've reallystarted to think about how we
(11:08):
can, um, how we can attractpeople to us by our like
marketing efforts, but, um, notnecessarily our marketing
efforts to our clients, but howcan we have marketing efforts to
people who are, um, who are, wemight want to have as employees.
(11:31):
Yeah, so we've actually kind ofthought about, like, we're
splitting the role between,like, um, our COO, for example,
is going to be more, um, focusedon, you know, Like instead of
her, you know, meeting withpotential clients or anything,
her kind of ongoing businessdevelopment, quote unquote, is
to meet with potentialcandidates, people in our
(11:53):
accounting network that mightpotentially be interested in
working with us, not just now,but maybe like two or three
years from now.
So, I mean, we both come frompublic accounting.
That's where we originally met.
And, um, you know, we have lotsof good contacts from that.
And a lot of those people arereally interested in like this
Potential work now to do this,like, as they've, you know, kind
(12:14):
of been burnt out on corporate.
So, um, kind of doing a littlebit more of a proactive approach
to recruiting where we're sortof identifying people that we'd
like to work with and, um, kindof doing it that way.
Now we're a very small firm, sowe don't need to be hiring, you
know, a 20 person incomingclass, you know, um, but, you
(12:37):
know, it's also about likemaking the firm.
Um, attractive to work at, youknow, I think accounting has a
really, um, you know, badreputation from, you know, jobs
in general, people don't want tobe working as much as we were
required to work when we wereworking in public accounting.
And, um, now, you know, evenpeople who.
(13:00):
Have had corporate jobs, youknow, they're looking at what is
this going to provide me overallas like a better life to come in
and work at a different company.
And that's what we're trying to,um, kind of put as the forefront
is like, your life will be morefulfilled working with us versus
maybe like a different type ofcompany.
(13:21):
So it's a bold claim.
Chad Saley (13:23):
Yeah, but I think that's true.
No, absolutely.
But like it's, but it's soimportant just because.
I think all, you know, almostall potential employees, like
when you're looking at a placeto work, you're not just looking
at, you know, the, the job titleand the salary anymore.
And, and, you know, along withthe actual work, but you're
(13:44):
looking at, okay, well, what isthe work life balance and what
is the culture like within thatcompany and what is the
environment?
How are my coworkers?
Is this, and again, like yousay, people don't want to work
50, 60.
70, 80 hours anymore.
And so, and they have a littlebit more room to choose that,
(14:06):
you know, there's especially inaccounting, it seems like
there's so many job openingsthat people are going to take
their time.
And they're going to look aroundand find something that they
feel is the right fit.
And I think it's reallyimportant that you, when you're
looking in within your owncompany, like, okay, well, how
do we then make ourselvesattractive?
And it's not just, you know,stocking the fridge with treats
(14:28):
and, you know, you've got tolook at, okay, well, what are
our actual core values and whatdo we believe in and what does
that employee going to dealwith?
Um, and it's nice to see thatmore and more companies are
starting to address that andstarting to realize, okay, we
need to actually look at.
At core values are just asimportant sometimes as a salary.
Hannah Smolinski (14:48):
And, and I think also the work to, um, I
mean, we're, we're a CFOcompany, so, um, the work is
actually very fulfilling, um,that we do because we're
impacting small businesses.
Like so directly we can be weare their trusted advisors.
(15:09):
So it's a very fulfilling rolerole for people where if they're
coming from, I mean, we havepeople who've left like, you
know, big corporations that theyfelt like a cog in a wheel.
And then they get to go into anenvironment where they get to be
seen as, you know, a verytrusted individual whose opinion
really matters.
And people are really You know,understanding their, their value
(15:34):
that they're bringing to thetable.
And there's a fulfilling part ofthat.
When a client's like sits acrossfrom me, it was like, Oh my
gosh, I'm so glad you're on myteam.
Like, I'm so glad you're herewith us.
You know, like that is that, Imean, you, that's something you
wake up and go to work every dayfor, you know, when you're like,
I'm really making a differencehere.
And that.
I mean, that's super attractiveto people.
Chad Saley (15:55):
Yeah, absolutely.
Jumping into kind of that, thatfractional CFO world, how have
you seen kind of that just as a,um, as kind of part of
accounting and the accountingprofession, how has that grown
in recent years?
Are you seeing more and morekind of.
accountants and CPAs trying tofocus on the fractional CFO work
(16:19):
or is it still relatively new?
Hannah Smolinski (16:23):
I'd say when I first started, um, I had to
explain what a fractional CFOwas to almost anybody that I
talked to, um, because it wasn'treally, I mean, people were
doing it for sure, but it wasn'tas much of a mainstream concept.
Um, I would say that now we'rein a situation where a lot of
(16:44):
business owners have heard abouta fractional CFO and so it
doesn't take as quite as mucheducation.
Um, however, I do think that theaccounting industry is kind of
putting it on a pedestal of likethe answer.
You know, this is the answer.
Everybody needs to provide thisservice.
Um, but truthfully, I don'tthink that everybody's very well
(17:05):
suited to provide the service.
So if you're trying to takesomebody who maybe, like,
doesn't have the expertise ordoesn't have the background or
doesn't even have the confidenceto, like, Provide the service
and then they're trying to sellit.
It's not going to be a verysuccessful service, um, and
delivery.
And then I think you also have alot of people who are trying to
(17:26):
automate a CFO service, whichI'm not saying it can't be done,
but, um, I think the value of aCFO is so much.
time that really like goes intounderstanding a business and
being able to be a thoughtfuladvisor.
Um, so I, I think you devalue itif you try to automate it too
(17:47):
much.
Um, so I think there's a littlebit of that.
Um, so there's a lot of newplayers, I think I'd say in the
market, um, you know, we'relosing more to like people.
You know, going somewhere whereI think you get a lower cost
where we didn't have that quiteas much before.
Now we were lower cost before,so maybe that's like part of it,
but, um, you know, there's,there's lower cost providers out
(18:08):
there.
Um, but you know, I thinkthere's definitely a lot of wide
ranges of what you're gettingwhen you get a quote unquote CFO
service these days.
And, um, I don't think that theconsumer is very educated on.
(18:29):
What they're getting oftentimes.
So they might have been told bya business coach, go out and
like, get yourself a fractionalCFO.
And then they go and they hireone, maybe based on price.
And then they're not reallygetting a full, like true CFO
service that is going to beproviding them with like that
ongoing support they reallyneed.
Maybe it's like solving aproblem, but it's not, maybe not
(18:51):
solving their whole problem.
Cause I think consumers aregenerally not educated enough
about.
What exactly they need when itcomes to accounting and advisory
on the financial side.
So,
Chad Saley (19:03):
yeah, where, where would you say is the, is the
breaking point between abusiness hiring a fractional CFO
versus that?
Okay.
It's time for us to actuallyhire just like a full time CFO.
Or do you think they don't, youdon't ever need a full time CFO.
You can do everything withfractional.
Hannah Smolinski (19:23):
Oh, I mean, I think that not all businesses
can operate on a fractional CFO.
I think, I think there, you doget to a place where it would
make, it would probably make alot more cost.
Um, sense to have a full timeCFO on payroll rather than
having a fractional.
Um, I mean, I don't know, astarting CFO salary might be
(19:43):
somewhere around like two 50,you know, plus benefits and
bonuses.
Maybe you're around like three50 all in on cost 350, 000.
That's like kind of, you know,maybe a starting salary.
Um, You know, I think if you aretrying to pay a CFO on your team
as a consultant fairly well,you've got to make a markup on
(20:04):
that, you know, that, uh,salary.
So you're not going to be ableto basically sell your CFO's
services for anything less than,you know, 350.
So you do have like probably acost, cost balance there.
I mean, Um, I'm sure some peoplewould be fine still having an
outsource CFO, you know, for thefact that like they don't have
(20:27):
to take on the benefit of a W 2or the burden of a W 2 wage.
But, um, I'd say, you know,there's a cost consideration
there.
And I think we would have toadvise a CFO.
And when that transition needsto happen for a client, if
they're using, you know, enoughof the time, I think there's
also a consideration of like howmuch time that client could
potentially need, you know, arethere daily meetings that a CFO
(20:49):
needs to be involved in?
Does that make more sense?
Do you want somebody to be therephysically on site to be, you
know, actually have that, um,Space.
Are you doing fundraising wheremaybe you need like a really,
really heavy involvement from aCFO?
Um, you know, those might all beconsiderations that you might
want to have somebody who'sactually like an employee.
Um, but I think most of thetime, most small business
(21:11):
owners, um, even up until mediumcan operate pretty well with a
fractional option.
Especially if they have like agood accounting structure
underneath them, you know, youhave controller, you have, you
know, everything that, uh, allthe other accounting functions
are being handled really well,the fractional CFO can work
pretty well.
Chad Saley (21:31):
So kind of looking at your own business.
And I think a lot of, there's alot of accounting firms that
either try to be everything toeverybody and they offer all,
they offer tax and they do allthis.
And if somebody says, Oh, youwant CFO service?
Yeah, we can do that.
And they kind of just offerthis, this whole big laundry
list of, Of options, and thatmight work well for some
businesses, maybe talk a littlebit about, uh, your decision,
(21:54):
like we're only doing fractionalCFO and kind of maybe how that's
benefited your personal businessand allowed you to kind of help
build what you offer and whatyou do.
Hannah Smolinski (22:06):
Well, I think part of it is capacity of, you
know, when you're small, um, youcan only focus really on one
thing at a time and you can tryto focus on multiple things at a
time, but I think it willpotentially diminish the quality
of one or the other.
Um, when you're, you know, smalland you're growing.
So, um, for me, it was reallymore, um.
(22:28):
When it was just me working andI was providing all the
services, I just frankly said, Idon't like doing bookkeeping, so
I'm not going to do it.
You know, it started from thatpoint and really it came from, I
don't like it because it's alsonot my strength.
It doesn't make sense for me tobe, you know, toiling away doing
somebody's Books, when I can behaving a really high value
(22:49):
conversation with a client thatthey value, you know, they're,
they'll easily pay, you know, 2,000 for that conversation versus
like a bookkeeper that nobodywants to pay more than like 50
an hour for.
I mean, it's just, you know, itdoesn't make sense for me to be
spending my time doing that.
So it.
Was, you know, Hey, I'm not evenyour best bookkeeper because I'm
(23:09):
not super detail oriented.
I'm much more strategic.
Um, that's one piece.
And then I, so I was leaninginto how can I provide a CFO
service without having to do thebookkeeping?
And then I realized I could.
So, you know, you do have somequality issues sometimes that
you come into, but that's alsoanother place that you can
advise a client to say like,Hey, Hey, You know, you actually
(23:31):
do need to improve youraccounting structure and you
need to, um, maybe change thisbookkeeper.
It's really not where thisperson is not doing a good job
for you.
You just didn't know because youdidn't know what to look for.
So, you know, you can kind ofcome in and be able to do that.
And we've, as we've continued togrow, um, we've decided to, we,
we toyed around with maybebringing on bookkeeping for the
(23:54):
quality control piece.
Um, and to like expand revenue,right?
If you can like bring insomething and you can add on
some bookkeeping, we've alwaysbeen, um, sell at CFO services.
And then if we wanted to addsomething, it would be like, you
know, add bookkeeping orsomething.
But we've actually decided to,um, not.
Um, continue even growingbookkeeping services that way.
(24:18):
Um, mostly just from like afocus split.
Cause we realized like, Hey, weneed to have really great
internal processes.
If we're going to do thebookkeeping and we were thinking
like we could buy anotherbusiness, who's really good at
bookkeeping, that's a thought.
Or we could just find reallygreat strategic partners.
And since we're not at a placethat buying a business.
(24:39):
Would really make sense from avolume perspective.
Then, um, we were thinking,like, the, the option right now
is, um.
Find really great strategicpartners, which we're doing.
And that's going to be how wehandle the bookkeeping.
Do we trust that they can do areally good job?
And then our quality of booksgoing in is going to be good.
(25:00):
So our CFOs aren't spending timecleaning up accounting.
Chad Saley (25:04):
Yeah.
Well, just, uh, to, to wrapthings up, um, as you kind of
look at the different advicethat you've been giving to
businesses, and we talked Issueswith hiring issues with business
development.
What do you think is next?
What do you think is kind ofcoming up?
That's going to be the next bigissue to hit small businesses.
(25:26):
From this accounting financialside.
Hannah Smolinski (25:30):
That's a good question.
What's next?
Um, I think what we're seeing isjust, um, and it's different
across different industries,but, um, I don't know if I can
standardize it to one thing, butI do see we're having some
(25:51):
businesses that they're notadapting as fast as they need
to, to potential, um, Changes ineither their own industry.
Um, so we'll usually like theirown industry.
So then they're suffering onbusiness development sales side,
(26:12):
or they're not able to leverage,you know, other efficiencies and
technologies so that they canreduce their costs.
And so they're wanting to liketake a business that maybe was
very viable five years ago.
And continue operating itexactly how they were operating
it five years ago.
(26:33):
And I think that, um, you know,that is kind of one of the big,
bigger challenges that we'rehaving, like in, into the future
is like, well, how do we, howdoes business change kind of in
this post COVID, uh, AIleveraged, um, you know, new
environment that we have.
Um, and I think we're all, we'reall kind of trying to figure
(26:54):
that out right now.
So I know I am.
Chad Saley (26:58):
Yeah, for sure.
The ability to, the ability tochange and to adapt to changes
is certainly something I thinkmore businesses, uh, they need.
And this willingness that youjust can't keep doing things the
same way you've always done thembecause the business world is
changing too fast.
And so the more adaptable youare, I think the more successful
(27:19):
you'll be.
Hannah Smolinski (27:21):
Yeah.
And that can look like, even ifit's just like new markets, um,
I mean, we have some, someclients that they've always been
serving one market, but maybe,maybe it's, maybe it's, that's
just not the customer for youanymore, you know, but you're
always, you're, you're used to acertain thing.
So you continue doing it andthen you're wondering why it's
not working.
So it's, it's always fun.
Chad Saley (27:45):
Yeah.
Things are always, alwayschanging.
There's always something new.
There's always something,something else to be, to be
working on.
Well, Hannah, thank you so much.
I appreciate your time.
This has been a greatconversation.
And, uh, thank you everyone fortuning in.
You can check out Hannah'svideos on her YouTube channel,
(28:05):
the Clara CFO group.
And, uh, thanks again, Hannah.
We appreciate you being on.
Hannah Smolinski (28:12):
Thank you, Chad.
It's been fun.
Hello, I'm Chad Saley and welcome to the next
episode of Canopy's practicesuccess podcast.
I am super excited to be sittingdown today with Hannah
Smolenski, the CEO and founderof Clara CFO group.
And today we'll be discussingdifferent ways, uh, that Hannah
has helped small businesses growtheir firms, grow their business
(00:31):
and how some of those same tipsmight be applicable to
accounting firms.
As well as a variety of othertopics.
So, uh, thanks for joining ustoday, Hannah.
Hannah Smolinski (00:40):
Thank you for having me.
I'm excited to be here today.
Chad Saley (00:43):
Um, maybe to just start things off, uh, just tell
us a little bit more aboutyourself and about, uh, Clara
CFO group.
Hannah Smolinski (00:51):
Sure.
So I am a CPA, but I don't dotaxes.
That's where I always start.
Um, I always try to tell people,yes, you can be a CPA and do
other things.
Um, Even though people still askme tax questions all the time,
I'm sure other CPAs relate.
Um, but I started a fractionalCFO company in 2017.
(01:11):
And since then we've beenserving small businesses with
just CFO services.
So unlike lots of businessesthat are trying to, you know, do
the whole gamut of everythingfrom bookkeeping to tax to CFO,
we do not do that.
We just focus on the CFOservices alone.
So, um, other than that, I'mlocated just North of Seattle
(01:31):
and, um, just enjoy, you know,playing tennis and spending time
with my daughter and, um, justkind of try to have a full life
outside of running a smallbusiness, which is.
Difficult sometimes, but I tryto do my best.
Chad Saley (01:45):
No.
And I know just that, I mean, soaccounting as a whole is, is
very much a service industryand.
Is one of the, one of the thingsI think that most impressed me
about you was your focus ontrying to just help and
essentially helping others withfree advice on how to run their
(02:06):
businesses.
And what I'm referring to isyour, is your YouTube channel
and, uh, everything that youkind of have done there has been
about just like answeringpeople's questions.
Maybe, I mean, tell me just alittle bit about how the YouTube
channel came about and kind ofwhat your goal was when you
first started posting thosevideos.
Uh, compared to kind of whatit's become today.
Hannah Smolinski (02:27):
Sure.
Yeah, it's been um, youtube hasbeen a really wild ride, but I
love talking about it and IThink like the way it started
versus what it's become is likeway different.
So I I Originally started thechannel maybe back in like 2018
just because I had You mightremember that people at one
point in time were postingFacebook lives.
(02:48):
That was a thing.
Like, everybody was like, yougotta post Facebook lives.
Um, so that was a way to takesome of that content and put it
somewhere else.
So it had longevity.
Um, so we, uh, just thought,hey, we'll post it on YouTube.
Nothing ever came from that.
I think one time I did a videowhere I did a walk through of a
payroll provider.
And, um, then I looked at thatvideo like two years later and I
(03:11):
realized that it had some viewson it, like at the end of 2019,
beginning of 2020, that videohad maybe like 7, 000 views and
a few people had signed up forthis provider through my
affiliate link at the time.
And so it just kind of made mesort of think like, Oh, this is
like.
Interesting that I got someviews on this, that felt like a
lot to me.
And, um, I was thinking, well,this is kind of a cool way to
(03:33):
like, get some information out.
Like maybe it's not necessarilybringing clients in, but it
could also like potentially be arevenue stream or something, or
maybe I could, you know, putsome other content out on, um,
on, uh, the channel.
And I think at that point intime, at the beginning of 2020,
I just decided like, okay, I'mgoing to try to use YouTube to,
(03:54):
um, Grow the business in somekind of way.
So I just started, I made like acouple of videos that were just
maybe about like profitabilityor something like that.
Um, but then we all know whathappened in March of 2020.
And very quickly I had clientsasking me about this.
Program.
What is this?
And I was thinking to myselfwhen I really started to
(04:15):
understand the program, whichwas very quickly as I was
reading out of the content, Irealized how important it was
for people to know about it veryquickly and how I also knew.
That tons of small businessowners, because I'd been working
with small business owners atthat point in time, usually did
not have a financialprofessional on their team that
was going to advise them onthings.
(04:36):
And so at the time and the news,all of these kind of big
businesses found loopholes toget access to PPP money.
And it was making me like upsetthat, you know, the businesses
that it was designed for, we'renot getting the money and all my
clients were needing answers.
So I did a quick webinar.
And then invited anybody I knew,put it up on YouTube, and then
(05:01):
that got shared so many times,and then there were questions
that came out of it.
And then before I knew it, I wasmaking another video to answer
the questions on the first videoor correct something that we
thought was correct, but it'snot, it wasn't correct.
So we put out another video.
And so.
That time was really crazy.
I say we, but really it was justme.
Um, it was, uh, just like, okay,let's respond to this question
(05:27):
and make another video, respondto the question and make a
video.
Um, so that's kind of how likethe channel really got started.
When I first put that first PPPvideo up, I think I had like 50
subscribers on the channel andthen very quickly.
It jumped to like a thousand andthen it was 5, 000.
And then, um, it happened prettyquickly on those first couple of
(05:47):
months of just.
Really answering people'squestions.
I wasn't getting any benefitfrom answering people's
questions besides the fact thatI was like, I feel, I felt like
I was doing a public service atthe time and there was a lot of
bad information also on theinternet at the time.
So I felt like I was fightingthat as well.
Chad Saley (06:05):
How, um, so maybe now when you think about, okay,
the videos that you want to putout, are they coming from?
Just the questions that you'rehearing from your clients or
what kind of will spur you tosay, Hey, this is something
that's big enough that Iactually ought to do a video and
put some information out on.
Hannah Smolinski (06:23):
Yeah.
I mean, content has been, um,uh, changing because, you know,
when the PPP and the idealprograms and ERTC, all of that
kind of started to go away wherepeople weren't able to get
those, um, access to thosethings anymore.
I looked around and I said like,okay, well.
Now, I have an audience on theYouTube channel of small
business owners.
What else do they need to know?
(06:44):
Because I don't have any morecontent ideas to talk about
programs that are essentiallydead.
So you got to do something else.
Right?
So, um, I, a lot of the contentideas were coming from.
Conversations that I was havingwith clients over and over and
over again, because we were, youknow, having advisory calls with
our clients all the time.
(07:04):
You know, we found ourselvesconstantly talking about like,
what's the minimum amount ofprofit we're looking for in our
business?
Or how do we do cashflowforecasting?
Or, um, you know, let's talkabout like how to build a budget
or, um, you know, how do you usethis little thing in QuickBooks?
That is kind of annoyingsometimes, you know, um, there
was a lot of Things that wefound ourselves doing as CFOs
(07:27):
that, or just like consultingwith small business owners that,
um, some of that translatedinto, well, this could be a
video.
Um, and then sometimes it waslike really basics where it was,
it was.
Thinking about things thatpeople might need to know, like
how to read an income statement,how to read a balance sheet.
Um, and then also looking atpeople's comments and questions
(07:49):
and trying to come up withcontent ideas from that as well.
So it's kind of come from lotsof different places.
Chad Saley (07:55):
So jumping into like some of those actual tips and,
and some of those things thatyou've, that you learn and then
you share what, um, What aresome common themes you've been
hearing recently?
Like what are the commonquestions that you're getting
from small businesses thatthey're trying to figure out
about their own internalfinances and how they're running
(08:16):
their businesses?
Hannah Smolinski (08:18):
Yeah.
I mean, I think, um, for, forour clients right now, because
we work with mostly B2B servicecompanies, so we work with
agencies, um, consultingcompanies, either professional
consulting or, um, Educationconsulting, DEI, things like
that.
Um, what we're seeing in themarket right now is, um, a
(08:42):
couple of things.
So we're seeing like cash istight for a lot of people.
Um, especially any of the, theconsultants that might be
somewhat deemed as like luxuryis being pulled back or
marketing has had like a hardtime in the past couple of years
with a recession.
Um, But we're also seeing trendsof just labor costs continuing
(09:02):
to rise.
Um, that's like a common thingright now where we see, um,
employees wanting raises, andwe're not seeing as much of the
ability to raise prices as muchas we need to on some of that.
So we're starting to see likethat margin, um, Margin
challenges between what we canreally charge for our services
(09:24):
and what people are wanting toget paid.
So that's like one of the thingswe're seeing as a trend.
And then we're having lots ofconversations with our clients
right now about pipeline and howto get consistent business
development in.
Because.
We're looking at it like wayahead of time before revenue
comes in, what, what are theydoing?
Like, what are their actions?
(09:45):
What do they need?
How do they need to be spendingtheir time?
And so we're having thosestrategic conversations with
them as well.
Chad Saley (09:52):
And I think those are both two things that
obviously, you know, theaccounting industry is, is
facing as well.
Like they're having those sameissues with finding new
employees.
And hiring and retention.
And then that same issue withbusiness pipeline and business
development.
As you look at, um, kind ofsmall businesses and maybe kind
of turning that and looking atactual like accounting firms,
(10:15):
what advice would you give anaccounting firm that is having a
hard time hiring?
Is there, are there tips or arethere things that you've come
across that you think would behelpful or beneficial?
Hannah Smolinski (10:24):
Yeah.
I mean, we're going throughhiring right now.
And, um, I've been thinkingabout this a lot because We've
seen it as probably one of ourbiggest business challenges is.
Bringing in quality peoplebecause I, especially for a
fractional CFO work, because thepeople we put in front of our
clients is so important.
(10:45):
We can't use an outsourced, youknow, somebody who, um, you
know, is living overseas, likeit doesn't really work even from
a time zone perspective, youknow, and, um, so there's lots
of different things that we needto think about when we think
about who we're bringing infront of, And, um, I think
hiring for us, we've reallystarted to think about how we
(11:08):
can, um, how we can attractpeople to us by our like
marketing efforts, but, um, notnecessarily our marketing
efforts to our clients, but howcan we have marketing efforts to
people who are, um, who are, wemight want to have as employees.
(11:31):
Yeah, so we've actually kind ofthought about, like, we're
splitting the role between,like, um, our COO, for example,
is going to be more, um, focusedon, you know, Like instead of
her, you know, meeting withpotential clients or anything,
her kind of ongoing businessdevelopment, quote unquote, is
to meet with potentialcandidates, people in our
(11:53):
accounting network that mightpotentially be interested in
working with us, not just now,but maybe like two or three
years from now.
So, I mean, we both come frompublic accounting.
That's where we originally met.
And, um, you know, we have lotsof good contacts from that.
And a lot of those people arereally interested in like this
Potential work now to do this,like, as they've, you know, kind
(12:14):
of been burnt out on corporate.
So, um, kind of doing a littlebit more of a proactive approach
to recruiting where we're sortof identifying people that we'd
like to work with and, um, kindof doing it that way.
Now we're a very small firm, sowe don't need to be hiring, you
know, a 20 person incomingclass, you know, um, but, you
(12:37):
know, it's also about likemaking the firm.
Um, attractive to work at, youknow, I think accounting has a
really, um, you know, badreputation from, you know, jobs
in general, people don't want tobe working as much as we were
required to work when we wereworking in public accounting.
And, um, now, you know, evenpeople who.
(13:00):
Have had corporate jobs, youknow, they're looking at what is
this going to provide me overallas like a better life to come in
and work at a different company.
And that's what we're trying to,um, kind of put as the forefront
is like, your life will be morefulfilled working with us versus
maybe like a different type ofcompany.
(13:21):
So it's a bold claim.
Chad Saley (13:23):
Yeah, but I think that's true.
No, absolutely.
But like it's, but it's soimportant just because.
I think all, you know, almostall potential employees, like
when you're looking at a placeto work, you're not just looking
at, you know, the, the job titleand the salary anymore.
And, and, you know, along withthe actual work, but you're
(13:44):
looking at, okay, well, what isthe work life balance and what
is the culture like within thatcompany and what is the
environment?
How are my coworkers?
Is this, and again, like yousay, people don't want to work
50, 60.
70, 80 hours anymore.
And so, and they have a littlebit more room to choose that,
(14:06):
you know, there's especially inaccounting, it seems like
there's so many job openingsthat people are going to take
their time.
And they're going to look aroundand find something that they
feel is the right fit.
And I think it's reallyimportant that you, when you're
looking in within your owncompany, like, okay, well, how
do we then make ourselvesattractive?
And it's not just, you know,stocking the fridge with treats
(14:28):
and, you know, you've got tolook at, okay, well, what are
our actual core values and whatdo we believe in and what does
that employee going to dealwith?
Um, and it's nice to see thatmore and more companies are
starting to address that andstarting to realize, okay, we
need to actually look at.
At core values are just asimportant sometimes as a salary.
Hannah Smolinski (14:48):
And, and I think also the work to, um, I
mean, we're, we're a CFOcompany, so, um, the work is
actually very fulfilling, um,that we do because we're
impacting small businesses.
Like so directly we can be weare their trusted advisors.
(15:09):
So it's a very fulfilling rolerole for people where if they're
coming from, I mean, we havepeople who've left like, you
know, big corporations that theyfelt like a cog in a wheel.
And then they get to go into anenvironment where they get to be
seen as, you know, a verytrusted individual whose opinion
really matters.
And people are really You know,understanding their, their value
(15:34):
that they're bringing to thetable.
And there's a fulfilling part ofthat.
When a client's like sits acrossfrom me, it was like, Oh my
gosh, I'm so glad you're on myteam.
Like, I'm so glad you're herewith us.
You know, like that is that, Imean, you, that's something you
wake up and go to work every dayfor, you know, when you're like,
I'm really making a differencehere.
And that.
I mean, that's super attractiveto people.
Chad Saley (15:55):
Yeah, absolutely.
Jumping into kind of that, thatfractional CFO world, how have
you seen kind of that just as a,um, as kind of part of
accounting and the accountingprofession, how has that grown
in recent years?
Are you seeing more and morekind of.
accountants and CPAs trying tofocus on the fractional CFO work
(16:19):
or is it still relatively new?
Hannah Smolinski (16:23):
I'd say when I first started, um, I had to
explain what a fractional CFOwas to almost anybody that I
talked to, um, because it wasn'treally, I mean, people were
doing it for sure, but it wasn'tas much of a mainstream concept.
Um, I would say that now we'rein a situation where a lot of
(16:44):
business owners have heard abouta fractional CFO and so it
doesn't take as quite as mucheducation.
Um, however, I do think that theaccounting industry is kind of
putting it on a pedestal of likethe answer.
You know, this is the answer.
Everybody needs to provide thisservice.
Um, but truthfully, I don'tthink that everybody's very well
(17:05):
suited to provide the service.
So if you're trying to takesomebody who maybe, like,
doesn't have the expertise ordoesn't have the background or
doesn't even have the confidenceto, like, Provide the service
and then they're trying to sellit.
It's not going to be a verysuccessful service, um, and
delivery.
And then I think you also have alot of people who are trying to
(17:26):
automate a CFO service, whichI'm not saying it can't be done,
but, um, I think the value of aCFO is so much.
time that really like goes intounderstanding a business and
being able to be a thoughtfuladvisor.
Um, so I, I think you devalue itif you try to automate it too
(17:47):
much.
Um, so I think there's a littlebit of that.
Um, so there's a lot of newplayers, I think I'd say in the
market, um, you know, we'relosing more to like people.
You know, going somewhere whereI think you get a lower cost
where we didn't have that quiteas much before.
Now we were lower cost before,so maybe that's like part of it,
but, um, you know, there's,there's lower cost providers out
(18:08):
there.
Um, but you know, I thinkthere's definitely a lot of wide
ranges of what you're gettingwhen you get a quote unquote CFO
service these days.
And, um, I don't think that theconsumer is very educated on.
(18:29):
What they're getting oftentimes.
So they might have been told bya business coach, go out and
like, get yourself a fractionalCFO.
And then they go and they hireone, maybe based on price.
And then they're not reallygetting a full, like true CFO
service that is going to beproviding them with like that
ongoing support they reallyneed.
Maybe it's like solving aproblem, but it's not, maybe not
(18:51):
solving their whole problem.
Cause I think consumers aregenerally not educated enough
about.
What exactly they need when itcomes to accounting and advisory
on the financial side.
So,
Chad Saley (19:03):
yeah, where, where would you say is the, is the
breaking point between abusiness hiring a fractional CFO
versus that?
Okay.
It's time for us to actuallyhire just like a full time CFO.
Or do you think they don't, youdon't ever need a full time CFO.
You can do everything withfractional.
Hannah Smolinski (19:23):
Oh, I mean, I think that not all businesses
can operate on a fractional CFO.
I think, I think there, you doget to a place where it would
make, it would probably make alot more cost.
Um, sense to have a full timeCFO on payroll rather than
having a fractional.
Um, I mean, I don't know, astarting CFO salary might be
(19:43):
somewhere around like two 50,you know, plus benefits and
bonuses.
Maybe you're around like three50 all in on cost 350, 000.
That's like kind of, you know,maybe a starting salary.
Um, You know, I think if you aretrying to pay a CFO on your team
as a consultant fairly well,you've got to make a markup on
(20:04):
that, you know, that, uh,salary.
So you're not going to be ableto basically sell your CFO's
services for anything less than,you know, 350.
So you do have like probably acost, cost balance there.
I mean, Um, I'm sure some peoplewould be fine still having an
outsource CFO, you know, for thefact that like they don't have
(20:27):
to take on the benefit of a W 2or the burden of a W 2 wage.
But, um, I'd say, you know,there's a cost consideration
there.
And I think we would have toadvise a CFO.
And when that transition needsto happen for a client, if
they're using, you know, enoughof the time, I think there's
also a consideration of like howmuch time that client could
potentially need, you know, arethere daily meetings that a CFO
(20:49):
needs to be involved in?
Does that make more sense?
Do you want somebody to be therephysically on site to be, you
know, actually have that, um,Space.
Are you doing fundraising wheremaybe you need like a really,
really heavy involvement from aCFO?
Um, you know, those might all beconsiderations that you might
want to have somebody who'sactually like an employee.
Um, but I think most of thetime, most small business
(21:11):
owners, um, even up until mediumcan operate pretty well with a
fractional option.
Especially if they have like agood accounting structure
underneath them, you know, youhave controller, you have, you
know, everything that, uh, allthe other accounting functions
are being handled really well,the fractional CFO can work
pretty well.
Chad Saley (21:31):
So kind of looking at your own business.
And I think a lot of, there's alot of accounting firms that
either try to be everything toeverybody and they offer all,
they offer tax and they do allthis.
And if somebody says, Oh, youwant CFO service?
Yeah, we can do that.
And they kind of just offerthis, this whole big laundry
list of, Of options, and thatmight work well for some
businesses, maybe talk a littlebit about, uh, your decision,
(21:54):
like we're only doing fractionalCFO and kind of maybe how that's
benefited your personal businessand allowed you to kind of help
build what you offer and whatyou do.
Hannah Smolinski (22:06):
Well, I think part of it is capacity of, you
know, when you're small, um, youcan only focus really on one
thing at a time and you can tryto focus on multiple things at a
time, but I think it willpotentially diminish the quality
of one or the other.
Um, when you're, you know, smalland you're growing.
So, um, for me, it was reallymore, um.
(22:28):
When it was just me working andI was providing all the
services, I just frankly said, Idon't like doing bookkeeping, so
I'm not going to do it.
You know, it started from thatpoint and really it came from, I
don't like it because it's alsonot my strength.
It doesn't make sense for me tobe, you know, toiling away doing
somebody's Books, when I can behaving a really high value
(22:49):
conversation with a client thatthey value, you know, they're,
they'll easily pay, you know, 2,000 for that conversation versus
like a bookkeeper that nobodywants to pay more than like 50
an hour for.
I mean, it's just, you know, itdoesn't make sense for me to be
spending my time doing that.
So it.
Was, you know, Hey, I'm not evenyour best bookkeeper because I'm
(23:09):
not super detail oriented.
I'm much more strategic.
Um, that's one piece.
And then I, so I was leaninginto how can I provide a CFO
service without having to do thebookkeeping?
And then I realized I could.
So, you know, you do have somequality issues sometimes that
you come into, but that's alsoanother place that you can
advise a client to say like,Hey, Hey, You know, you actually
(23:31):
do need to improve youraccounting structure and you
need to, um, maybe change thisbookkeeper.
It's really not where thisperson is not doing a good job
for you.
You just didn't know because youdidn't know what to look for.
So, you know, you can kind ofcome in and be able to do that.
And we've, as we've continued togrow, um, we've decided to, we,
we toyed around with maybebringing on bookkeeping for the
(23:54):
quality control piece.
Um, and to like expand revenue,right?
If you can like bring insomething and you can add on
some bookkeeping, we've alwaysbeen, um, sell at CFO services.
And then if we wanted to addsomething, it would be like, you
know, add bookkeeping orsomething.
But we've actually decided to,um, not.
Um, continue even growingbookkeeping services that way.
(24:18):
Um, mostly just from like afocus split.
Cause we realized like, Hey, weneed to have really great
internal processes.
If we're going to do thebookkeeping and we were thinking
like we could buy anotherbusiness, who's really good at
bookkeeping, that's a thought.
Or we could just find reallygreat strategic partners.
And since we're not at a placethat buying a business.
(24:39):
Would really make sense from avolume perspective.
Then, um, we were thinking,like, the, the option right now
is, um.
Find really great strategicpartners, which we're doing.
And that's going to be how wehandle the bookkeeping.
Do we trust that they can do areally good job?
And then our quality of booksgoing in is going to be good.
(25:00):
So our CFOs aren't spending timecleaning up accounting.
Chad Saley (25:04):
Yeah.
Well, just, uh, to, to wrapthings up, um, as you kind of
look at the different advicethat you've been giving to
businesses, and we talked Issueswith hiring issues with business
development.
What do you think is next?
What do you think is kind ofcoming up?
That's going to be the next bigissue to hit small businesses.
(25:26):
From this accounting financialside.
Hannah Smolinski (25:30):
That's a good question.
What's next?
Um, I think what we're seeing isjust, um, and it's different
across different industries,but, um, I don't know if I can
standardize it to one thing, butI do see we're having some
(25:51):
businesses that they're notadapting as fast as they need
to, to potential, um, Changes ineither their own industry.
Um, so we'll usually like theirown industry.
So then they're suffering onbusiness development sales side,
(26:12):
or they're not able to leverage,you know, other efficiencies and
technologies so that they canreduce their costs.
And so they're wanting to liketake a business that maybe was
very viable five years ago.
And continue operating itexactly how they were operating
it five years ago.
(26:33):
And I think that, um, you know,that is kind of one of the big,
bigger challenges that we'rehaving, like in, into the future
is like, well, how do we, howdoes business change kind of in
this post COVID, uh, AIleveraged, um, you know, new
environment that we have.
Um, and I think we're all, we'reall kind of trying to figure
(26:54):
that out right now.
So I know I am.
Chad Saley (26:58):
Yeah, for sure.
The ability to, the ability tochange and to adapt to changes
is certainly something I thinkmore businesses, uh, they need.
And this willingness that youjust can't keep doing things the
same way you've always done thembecause the business world is
changing too fast.
And so the more adaptable youare, I think the more successful
(27:19):
you'll be.
Hannah Smolinski (27:21):
Yeah.
And that can look like, even ifit's just like new markets, um,
I mean, we have some, someclients that they've always been
serving one market, but maybe,maybe it's, maybe it's, that's
just not the customer for youanymore, you know, but you're
always, you're, you're used to acertain thing.
So you continue doing it andthen you're wondering why it's
not working.
So it's, it's always fun.
Chad Saley (27:45):
Yeah.
Things are always, alwayschanging.
There's always something new.
There's always something,something else to be, to be
working on.
Well, Hannah, thank you so much.
I appreciate your time.
This has been a greatconversation.
And, uh, thank you everyone fortuning in.
You can check out Hannah'svideos on her YouTube channel,
(28:05):
the Clara CFO group.
And, uh, thanks again, Hannah.
We appreciate you being on.
Hannah Smolinski (28:12):
Thank you, Chad.
It's been fun.
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