December 26, 2024 • 28 mins
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Unlock the secrets of strategic financial guidance for small businesses with Stewart Ervin, the fractional CFO from Bracket Management, who is redefining how businesses can thrive without a full-time CFO. This episode promises to demystify how fractional CFOs empower small enterprises to break through growth barriers, regain financial control, and prepare for pivotal transitions such as mergers or sales. Ervin shares his fascinating journey from taking the reins of a family business to excelling in corporate roles and mastering the art of business turnarounds. Explore the critical distinctions between a fractional CFO and a CPA, focusing on the strategic foresight a CFO brings to accelerate business success.
We navigate the intricacies of financial analysis and operational strategy, particularly for family-run enterprises, with insights into analyzing financial data to uncover operational weaknesses. Ervin sheds light on equipment financing in the photo industry and the challenges family businesses face during transitional phases. We also explore the world of private equity, emphasizing the balance of rigorous discipline with human compassion, ensuring employees are more than just metrics. Discover how structured processes and clear job roles can enhance employee satisfaction and prepare businesses for seamless transitions. Ervin's insights into the role of a fractional CFO underscore the value of long-term engagement to support operational improvements and leadership, making this episode a must-listen for business owners ready to elevate their operations.
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Hosted and produced by Gary Pageau
Edited by Olivia Pageau
Announcer: Erin Manning
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Erin Manning (00:02):
Welcome to the Dead Pixels Society podcast, the
photo imaging industry'sleading news source.
Here's your host, Gary Pageau.
The Dead Pixels Society podcastis brought to you by Mediaclip,
Advertek Printing andIndependent Photo Imagers.
Gary Pageau (00:18):
Hello again and welcome to the Dead Pixels
Society podcast.
I'm your host, Gary Pageau, andtoday we're joined by Stewart
Irvin of Bracket Management,who's a business consultant,
fractional CFO and all-aroundgreat guy coming to us from
Charlotte, North Carolina.
Hi Stewart, how are you today?
Stewart Irvin (00:34):
Hey, Gary, thanks for having me.
Gary Pageau (00:35):
First, can you describe what a fractional CFO
is and how you got into thatbusiness?
Stewart Irvin (00:43):
Yeah, so a fractional CFO is actually
something fairly new to themarketplace and it really fits
in a variety of differentpositions.
One it could be that there is asmall business who has reached
a ceiling and they say you knowwhat, I just don't know how to
break through this ceiling.
I just don't know what to do.
But they can't necessarilyafford a full-time, seasoned,
(01:04):
veteran CFO.
So a fractional CFO would go inand work alongside of that
business owner or that leader tohelp them put the strategies in
place and things they need inorder to break through that
ceiling.
The second area that peoplewould reason why they would hire
a CFO is maybe the businessowner or leader has lost control
of their business and they'relike I am absolutely out of
(01:25):
control, I don't know what to do, I don't know how much money
I'm making, I'm just completelylost.
And they can't afford afull-time CFO.
So they hire a fractional CFOto come in alongside of them,
help them get their financialsin order, help them with their
strategy and focus onoperational execution.
And again, all of this is doneon a part-time basis.
(01:46):
And really the last area that Isee people hire a fractional CFO
is very specific.
Let's say that the company iswanting to sell, or the company
has been sold, or they're in aposition where they want to sell
their business but they reallyjust don't have their financials
and whatnot in a particularmanner or an order that could
really allow you to understandthe value of the business.
(02:08):
And so they'll hire you on aninterim basis to come in for a
very specific project.
Be it I'm merging with anothercompany, I'm being acquired, I
want to be sold, and so bringyou in for a finite period of
time with a very specificstatement of work, and again you
get a seasoned CFO at afraction of the price.
Gary Pageau (02:26):
So does that work on retainer or is it by the hour
?
Is it like I can commit eighthours a week, or?
Is that how that works.
Stewart Irvin (02:33):
It really.
It really is very specific forme.
I like working on retainerbecause it's a little more
easier to manage.
I can I can plan my revenuebetter, but a lot of times I
actually have one client todaywho is in the process of being
acquired.
We really have no clue of thestate of the business, and so
I'm actually charging for thefirst four months charging an
(02:54):
hourly rate because we have noclue as to what the workload is
going to be, and then we've gotto work.
Gary Pageau (02:59):
you know, month five I'll be retained as their
cfo going forward okay so how isthis different from just having
, like a cpa who does your books?
Because, most people outsourcethat right.
They've got a cpa firm who doestheir, do their quarterlies and
they take care of the taxes andwhatever.
How is a fractional cfodifferent than outsourcing your
(03:20):
cpa duties?
Stewart Irvin (03:21):
yeah.
So the fractional CFO actuallyembeds themselves with your
business and they work alongsideof you, right?
That's really also thedifference between a fractional
CFO and a consultant.
So we are a part of the team.
The CPA is obviously they'rehelping you based off of your
results.
The CFO inserts themselves andsay hey, I'm going to help you
(03:41):
drive the business forward.
And so, again, a CPA candefinitely tell you how healthy
your business is and they canlook at all the things of what
has happened, but most of thetime the CPA is not there to
help drive the business forward.
Gary Pageau (03:55):
Right, because they're looking at what's
already happened, not what'sgoing to happen Absolutely.
So how do you get into this?
What's your background?
Stewart Irvin (04:03):
Yeah.
So I've always known from avery early age I wanted to go
into business.
I just really didn't knowexactly what that meant.
So, luckily for me, I startedout in a family business when I
was 16 years old and I reallyheld every position within the
business that really taught methe ins and outs of all the
plays and inputs and outputs ofwhat it looks like to run a
(04:24):
business.
Fast forward.
You know that was in my lateteens, early twenties really
spent trying to identify that.
So I went corporate small, large, all the things and I started
Bracket really back in 2009.
Bracket I had three smallbusinesses.
I had a college buddy of minethat had three small businesses.
None of them were large enoughto really have any overhead and
(04:47):
so we said why don't we pull ourresources together?
We'll start bracket management,and it really was business as a
service, and so we were doingbookkeeping, marketing, hr, all
the things.
Unfortunately, the majority ofmy money came through real
estate investing at that time,and so you know, in that time
frame the real estate markettanked.
So therefore we put bracket ona shelf and I decided to go into
(05:09):
the corporate route.
So I realized in 2010, when Iwas actually in a supply chain
role.
I was the guy that would sendout to the suppliers who could
not support the program, and Ihad to turn them around in order
to support our programs.
And I realized, wait, a minute,I've kind of got a knack for
this 2015,.
(05:30):
I got my first opportunity toturn an entire business around,
and then 2016, and it just kindof continued to show that I was
pretty decent at doing thebusiness turnaround thing and I
wanted to start my own businessback and I thought to myself
I've learned so much aboutbusiness turnaround and business
strategy.
I want to get out in front ofthe turnaround, like I.
(05:51):
It's great to better come andget these guys fixed.
I'd love to make it where.
They didn't have to call aturnaround guy, and so, for me,
I've always wanted to own a ownmultiple businesses.
But you know as good as I dothat takes a lot of capital, and
I've.
I came across the termfractional, a fractional
executive, and I thought, man,that'd be a blast.
(06:11):
I don't have to necessarily buythe companies, but I can help
manage multiple companies, andso I stumbled on the fractional
cfo.
I started kind of investigatingit and learning it and I said.
You know what?
I'm going to brand myself as afractional CFO that has an
operations lean, and I'm goingto try to do everything in my
power to get in front of theleader before the business
(06:32):
turned south, took bracket offthe shelf, rebranded it, adding
a lot of the strategy stuff anddropping more of the business as
a service.
And then here we are.
Gary Pageau (06:41):
What are some of the things that you typically
see in a turnaround situation.
Does the owner or manager orCEO even see it coming, or are
they usually the last person toknow?
Stewart Irvin (06:56):
It's fairly unique, you know it really
differs per leader, but a lot oftimes what you're going to see
is the leader or the owner willreach out to me because they've
hit a growth ceiling.
It's normally what has happened.
They're like I have been atthis revenue level for five
years.
I've tried absolutelyeverything I know to do.
I just have no clue what to do.
(07:16):
That is typically when someonewould call me.
You know you go back to theturnaround days.
It was man.
I was stale for five years.
Now, all of a sudden, mymargins are starting to decrease
and I'm really out of control.
That's kind of a scenario too.
But for the most part, todayI've reached a growth season.
I have no clue what to do.
(07:37):
I need some help, yeah.
Gary Pageau (07:39):
So it's a growth issue, but it really could be an
operations problem that iscausing the growth issue.
Stewart Irvin (07:46):
Yeah.
So we look at really threeareas.
When we come in, the very firstthing I want to check is I want
to understand the financials.
So what I normally do is I saygive me three years of
financials.
I really don't want to have aconversation with you yet.
I'm going to look at yournumbers and I'm going to let
your numbers tell me a story.
And then I'm going to go in tolet your numbers tell me a story
.
And then I'm going to go in.
Let's normally we have adiscovery call and say is it of
(08:07):
interest?
Does this look like it may work?
Yes, okay, give me yourfinancials.
Meeting number two, I'm going totell you what your financials
are telling me about yourbusiness.
And so I translate the numbersto a story and I say is this
really what's going on in yourbusiness?
And nine times out of 10, man,you nailed it.
So now I have a fullunderstanding of where you're at
financially.
Traditionally, that willpinpoint me into some area of
(08:30):
operational weakness.
So then I dive into okay, let'stalk about operations.
Many times these companiesdon't have any metrics.
They really have no clue.
They can just tell you overallI have problems in this area.
So I said okay, if you'redecent financially, then we need
to make sure that you're goingto be good operationally.
Right, because if you're goodfinancially and you're not good
(08:53):
operationally, your financialswill soon suffer.
So we focus on financials, weprop up your operations.
Once all that is good to go,then we focus on strategy
because, again, you can havegood financials, you can execute
greatly, but if you don't startdriving your business, the
other two areas will suffer.
Gary Pageau (09:11):
Because typically financials are a trailing
indicator of your operationalsituation.
Stewart Irvin (09:18):
Absolutely, absolutely.
So yes, I always tell everyonethat's looking in the rearview
mirror we got to get you lookingout of the windshield,
absolutely.
So yes, that's why I alwaystell everyone that's looking in
the rearview mirror.
We got to get you looking outof the windshield, and so again.
But the history will tell youwhere you're headed if you don't
make changes, and so that's whywe start there, and it does
nothing for you to try to startdriving your business forward if
your operations is on shakyground.
Gary Pageau (09:38):
So one of the things that happens typically in
the photo industry with, likephoto labs, people like that,
who are very production focused.
Right, they got into thebusiness, uh, because they uh
want to make stuff.
Right, they wanted to makeprints, they wanted to create
canvas or whatever.
But in a lot of cases, like intoday's financial market, you
(10:01):
know that, of course, buyingequipment and things like that
is that an area you look at withequipment financing, because I
think there's a lot of peoplewho there's a lot of opportunity
, for example, in the industry,to outsource, right, to do
things, make things outside,versus buying equipment.
And then there's also leasingequipment and all kinds of
different things you can do.
So what are some of the thingsyou look at in that situation
(10:24):
where you got, we have aproduction.
Stewart Irvin (10:26):
One of the first things really is the second
thing that we do once we come onand bring on a new client is we
quickly try to get the clientto somewhat start forecasting.
The beauty about what we do iswe can run a hundred different
scenarios.
We can say, hey, if you want tolease this equipment, this is
what it's going to do to you,not only from a P&L standpoint
but overall from a companyhealth, because there's all
(10:48):
these metrics that you can runand say, hey, you're going to be
too leveraged or that you'renot.
You know that'll be perfectlyfine, you're okay to do that.
And a lot of times you run thosescenarios and you can make a
decision Do you have the cashand bandwidth to take that debt
on?
Cash and bandwidth to take thatdebt on, you'd be better off to
lease it.
Well, if you lease it, this iswhat you're going to have to do
from a sales point to try tocover those additional costs.
(11:09):
So you run all those scenariosand traditionally you run and
you move forward with what makesthe most sense to not hurt the
business overall and then alsoto keep a healthy P&L.
Gary Pageau (11:19):
And a lot of the businesses that you work with
you were telling me, you knowthey're small businesses, like
very similar to the type ofbusiness that listened to this
program, and there's also a lotof family businesses, absolutely
.
So what are some of theconsiderations that family
businesses have, where they'remaybe looking at passing it on
to the kids, or even maybethey're not in the family,
they're looking at passing it onto maybe the store manager or
(11:40):
the general manager of theoperation.
The owner wants to retire,because that's a very different
situation than bringing insomeone from the outside to
purchase a business.
You've got someone who hasknowledge and maybe has a lot of
biases.
Stewart Irvin (11:53):
Yeah, and the other thing too is their baby
right, and so you have to handlethings a lot differently.
It's easy to go into let's callit just an agnostic ownership,
and just go in and say, hey,you're going to drive the
business and you're going to dothis, that and the other.
But it's something different,particularly when you're dealing
with a second generation owner.
You know the first generationowner.
They started from nothing.
(12:14):
They normally have puteverything on the line.
A lot of times.
You know they may or may notwant to give it up, and so you
just really have to handle thathandoff much differently and
every single case is different.
You have some owners like I amselling off to the Bahamas,
y'all take it and run with it,we're great, see you later.
(12:41):
But what happens a lot of timesis you have a unbridled
second-generation owner that isgoing to be like like for 30
years I've worked under this guy, I've got all these ideas and
I'm going to do this, this, thisis, and it's my goal to try to
say, oh, whoa, whoa, let's bevery methodical, right and so
that that handoff is verydelicate and you got to make
sure, when you do that handoff,that the second generation guy.
He already feels a lot ofpressure because when he's
(13:01):
worked in in his whole life,this is his dad, mom's business.
I can't screw this up, but thenagain I want to make my own
name, and so it's tricky.
It's tricky, and so what wereally do is just try to put the
framework in place and moveslower than normal to make sure
that we really don't rock theapple cart too bad because
that's where I think you getinto a lot of you know, I I
(13:22):
wouldn't say rational decisions,but certainly emotional
decisions.
Gary Pageau (13:26):
Oh yeah, right, like you said, you got someone
who's been in the business andthey, hey, we've been.
You know we've been doing thisway and I knew if we did it this
way it would be better.
But maybe there was a reasonfor doing it that first way that
this person isn't aware of,that's right.
Stewart Irvin (13:37):
Yeah, there's a lot of emotion.
So, so, really, I try toquickly, within the first few
months, try to establish a setof metrics at a very high level
so we can understand what movesare you going to make and how is
that going to affect ournumbers.
Right, and so try to take allthe emotion out of it because,
again, traditionally there's noKPIs or metrics at all in the
business.
Gary Pageau (13:56):
What are some of the KPIs or metrics that you
think in that situation would belike the top two or three
someone needs to be looking atin a manufacturing type
environment.
Let's say they're making, youknow, canvas frames or something
like that.
What are some of the thingsthat initially they should be
looking at?
Stewart Irvin (14:14):
Yeah.
So one of the first things wetry to establish is somewhat
again of a forecast, and so thefirst thing we want to look at
is understand what's your 90-daybacklog, right?
How is your business coming in?
Are you seeing a decline?
Are you seeing it level out?
What does that look like?
Because you're in that handoff,the last thing you want to do
is to have business drop.
(14:34):
The second metric we reallylook at is on-time delivery or
on-time to service, because,again, you want to continue to
drive and make sure that yourcustomers are 100% being taken
care of.
Really, those are the top twofrom an overall operational
standpoint.
All the other stuff, obviously,is your traditional
understanding of your financialsin regards to what are my
(14:55):
margins looking like, how's mysales and admin expenses, are
they tracking up or down, andwhat's my overall profit level.
But when it comes to executionand handoff, your on-time
delivery and your order entryand your bookings are really
your two greater forward-lookingindicators in regards to how is
my business heading.
Gary Pageau (15:15):
It seems to me like when people are looking to
improve situations, one of thethings they initially look to is
like staff reductions orsomething like that.
What is your perspective onthat as an early step?
Stewart Irvin (15:30):
Yeah, as early as I try not to do that.
Obviously, a lot of times yougo in and it is inefficient,
right.
What you also see a lot oftimes is many times they have
employees who are just in thewrong seat, and so my goal is to
get the company as healthy aspossible and grow.
So, inherently, if you're goingto grow, you're going to you're
going to need staff, right.
So throughout the whole entireagain, if they're if a
(15:53):
turnaround, or even if they'renot turnaround, they may be the
first time they've reallyattended strategic growth I try
to maintain the head count,unless it's just gross, unless I
go in and you just see that man, this guy's just not going to
cut it, period, right.
Then you just make some logicalmoves.
But no, you know I come from abackground private equity and it
(16:13):
was such a cutthroat deal andyou know I had a number.
You know, again, you're dealingwith small family businesses
with emotion.
The last thing you want to dois come in and say you got to
cut those five heads becausethey're just dead weight.
Yeah, in time it will showitself, because you're going to
put all these things in placeand you'll put all these metrics
and you're going to start tosee this individual.
(16:34):
I am paying them for nothing,but again, things just move a
little slower when you'redealing with a small family
business.
Gary Pageau (16:41):
Right, it's interesting you bring up private
equity, because that's beenhappening in our industry for a
while.
I wouldn't say a lot of privateequity has gone into buying up
some of the suppliers andthere's been some apprehension
there about what does privateequity mean when it buys into
business and what are theirobjectives as opposed to
something else.
So that's something you didn'tappreciate when you worked with
(17:01):
that company.
Stewart Irvin (17:02):
That's right that's something you didn't
appreciate when you worked withthat company.
That's right, yeah, yeah, Iused to tell people now I really
enjoyed my time in privateequity.
But what I try to do is I tryto bring the private equity
discipline and intention with aheart.
That is the kicker right.
I did not appreciate in howsome of these PE firms that I
work with they just really lookat people as a number.
(17:29):
Now I have dealt with some PEfirms that I work with.
They just really look at peopleas a number.
Now I have dealt with some PEfirms that say, hey, I literally
exist because I want theemployees to flourish, I want to
make sure that the owner isbeing taken care of in the long
run, and so they are out there.
But particularly my backgroundhas been very cutthroat.
But I have to say that youcannot argue with the fact that
a disciplined approach anddriving a business with intent
it 100% pays off.
(17:50):
It may not go as fast as youlike.
You may ultimately have to windup cutting some people, but for
the most part, if you canalways mix a heart, a heartfelt
approach to what you're doing,typically it's a win-win.
Gary Pageau (18:04):
And from a manager.
At the same point, you'realmost giving the poor
performers an opportunity todeselect the company right,
absolutely Giving them.
If they kind of see what'shappening and that maybe they're
you know, the jig is up.
I'm not going to be able totake my two-hour lunches or do
whatever it is they were doing.
They may start lookingelsewhere and that takes care of
(18:24):
it itself if you don't, youknow.
Stewart Irvin (18:27):
Absolutely.
Yeah, we really have six keythings that we do when we walk
into a business.
The fifth thing that we focuson is developing an employee
plan, because in many cases theemployees show up, they really
have no clue as to A what am Isupposed to do?
B how am I being judged?
Am I being paid fairly?
And I mean I would love a bonus.
(18:47):
And so we come right in and wetry to create job descriptions
for every employee.
We come up with at least threeto five KPIs or performance
indicators as to how well theyare doing their job.
We try to do some industryresearch and say, hey, this is
the range of pay that you shouldbe getting paid.
And do some industry researchand say, hey, this is the range
of pay that you should begetting paid.
And in many cases we have toadjust that up because the
business owner didn't realizethat the market's paying $22 an
(19:10):
hour and you're paying this guy18.
So we'd have to make theiradjustments up.
And then, once all that stuffis in place, we put in a bonus
plan.
But a lot of times the kickeras to whether that employee is
going to stay long-term reallycenters around how you measure
their performance.
And again it could be three tofive different things that you
look at, but for the most partthat will again put an objective
(19:31):
number on.
Is this guy giving me what I'mpaying him to do?
Gary Pageau (19:36):
The other thing that is the benefit of this
having job descriptions, havingprocesses, having, you know,
measurable metrics, kpis,whatnot.
In place is it also positionsthe company for transfer or sale
?
Stewart Irvin (19:50):
Absolutely 100%.
Yeah, it just tidies everythingup.
And then again.
So I've got a client today.
They want to move into theaerospace industry and I come
from aerospace.
I was a sourcing guy and I toldthem.
I said the very first thingthey're going to want to know is
what's this on-time delivery?
What's your scrap rate?
There's a whole series ofnumbers that they're going to
(20:10):
want to know.
A buyer of your business is nodifferent.
They're going to want to knowwhat are these three key areas,
and it is somewhat different foreach industry, but at the
highest level, you got to havesomething in place to say hey,
here's my employees and here'sthe output that they have.
And so, again, it just tidieseverything up.
It makes the transition mucheasier.
Gary Pageau (20:29):
So how long typically do you engage with a
client?
You know you say you like along term thing, but is it a
year?
Is it ongoing, Is it forever?
Is that what people can expectwhen they work with a fractional
CFO?
Stewart Irvin (20:45):
So it really varies.
The fractional CFO is stillsomewhat being defined, right,
and so you've got different guysoffer different levels of
service.
For me, because I am sooperations leaning, I am much
more hands-on and much morelong-term.
I was listening to anotherCFO's talk the other day and he
said his average engagement issix months.
(21:06):
Well, that's crazy, right.
For me it's like man, you know,I can't turn people over every
six months.
One.
I'm an ops guy, right, so Isomewhat embed myself with the
company and so I'm in there forthe long run.
I am as part of their seniorlevel staff, as the COO or even
the CEO.
So for me it's much more of alonger play.
(21:26):
But you have others who, again,if they're on an interim basis,
they're turning people overmuch more often.
You have some that are very justI come in, I do your books, I'm
here eight hours a week.
You can't call me outside ofthis window, you know, and and
that's it.
That's not me.
I'm available 24, seven.
Again, I am as an employee tothat business, and so I think
(21:48):
you had to find a fractional CFOthat works for you.
You may say, hey, I don't wantanybody, I just need somebody to
run my books and tell me whereI'm headed.
That's great, that guy may befor you.
You may say hey, I live in onthe Western part of North
Carolina.
I have two clients on theEastern part of North Carolina,
so the very first week of themonth I'm driving back East and
I spend a week with these guysand they literally say, man, I
(22:09):
just like to see you, I justlike you to come into my, come
into the building, you know, andso that's the level of service
that I provide, but that's notwhat everyone does, so it really
varies, because that level ofservice is still somewhat being
defined.
Gary Pageau (22:24):
So let's flip the script a little bit, and we've
talked a lot about positioningyour business for sale right or
transition to pass on.
What about if you're looking togrow through acquisition?
What are some of the things youwould want in place as a
fractional CFO for a business tobe in that position?
Stewart Irvin (22:44):
Yeah.
So a lot of times that's goingto be.
If you're looking at growththrough acquisition, they're
going to look at you and say,hey, can I buy you because I can
add value to you, because I seeso much waste?
Right?
So you can say, hey, I want tobe sold, I want to be sold now,
but, okay, you might be sold ata discount, because someone sees
, hey, I could go and strip allthis cost out and turn you over
in five years and we'll be goodto go.
(23:04):
The other aspect could be do youhave some intellectual property
, some process that's specificto you?
And they can look in there andsay, hmm, I want that because I
could see how I could add valuethis, this, this.
Then you can be sold therethere.
The other aspect is, you couldjust be very profitable with a
very nice backlogging portfolio,and that bigger guy says, hey,
(23:25):
I just want to acquire youbecause I want to add you, I
want to take on your work, andso it really varies as to where
you're at as a business.
At the end of the day, though,you still have to have very thin
financials.
It's great if you have a trendin regard to you know wherever
you've been in the last two,three years, but at the end of
the day, they're still going tovalue your financials and see
(23:48):
how, to you know, do their duediligence process how accurate
are your financials and is thistrend accurate or not?
Gary Pageau (23:55):
Well, where I was going with that.
Let's say you've turned someonearound.
Let's say you've taken one ofyour clients to a great place.
Now they're looking around.
Stewart Irvin (24:03):
Oh they're looking around to acquire Right.
Oh, gotcha, gotcha.
Gary Pageau (24:09):
So they're saying, hey, now I've got my everything
in a group, right, I'm great.
Now I want to grow that way.
Stewart Irvin (24:18):
Got you Okay, so we'll just flip that, then you
know.
Gary Pageau (24:22):
So what should they be looking for?
Should they be looking forpeople that they can put through
the same process, or peoplealready there?
That's my question.
Stewart Irvin (24:30):
Yeah.
So actually I've got a clientwho's looking to acquire right
now and I told him I said,listen, the last thing you want
to do is acquire someone.
They're not 100% whole at thistime, right, they're still
trying to grow.
So I said, what you want to dois you want to make sure that
you're acquiring someone who isequal to or maybe even slightly
(24:51):
better than you.
If you're not healthy, theworst thing you can do is
acquire anyone.
But let's just say, all thingsaside, you're a good business,
you're healthy, you're ready,you're ready to move.
Then you can look and say, hey,I want to grow my revenue
through acquisition, which meansyou're going to go acquire a
company.
There's similar scope of service.
It could be that you know it'sclose enough that you can absorb
(25:13):
them and not be that much of adisruption, because the last
thing you want to do is bringsomeone on that's going to bring
your company down.
The other aspect of is man,I've got my stuff nailed down,
my processes are great.
I want to go buy that smallercompany that's out of control,
because now I know how to goturn those guys around.
Those really are the two areasthat I see the smaller
businesses going through theacquisition route.
Gary Pageau (25:35):
Because I think there is sort of an idea that
when acquisitions happen theycan be great because they can be
additive, right, similarbusiness.
I can just tweet their processand put my model in there and
that's great.
A lot of retail does that.
But I also see it where peoplethink they can expand and they
get into maybe an adjacentbusiness, but it's just
(25:56):
different enough where it'sdragging everything else down
100%, and it's really not muchdifferent than growing too fast,
right, you got to really makesure do you have the funds and
the capital to?
Stewart Irvin (26:06):
I mean, you could be doubling your business
overnight.
That takes a lot of cash, right, and it could be that again,
it's just they're just enoughoff.
And different that now yourfocus shifts to I've got to.
All my focus is on I've got tomake sure that that merger
happens great, and you losesight of the main business and
all of a sudden you look three,four, five, six months later and
(26:27):
you're way off course, and soit's very tricky to navigate
that.
And so the due diligence partis critical, and really you got
to make sure that your businessis not only capital healthy but
also process healthy, and thenthe owner or whoever's going to
be a part of that merger canmake sure that I can take my
eyes off the ball just for aminute to make sure this process
(26:48):
works out, because it is a hugeundertaking to try to bring
someone in to your fold.
Gary Pageau (26:54):
Awesome.
So where can people go for moreinformation and learn about
Bracket Management?
Some of the tools and offeringsthat you have.
Stewart Irvin (27:01):
Yeah, so they can check the website out, bracket
MGMT, which is justmanagementshortenedcom.
We actually have an assessmenton that site that focuses on
those three areas that we talkedabout, right?
So there's an assessment thattalks about how we financially,
how we focused on theoperationally and what is our.
What is our and what it is is avery objective approach.
(27:22):
So you go through and take theassessment.
Each area has about 30 to 35questions.
You get a score back and acustomized report that says, hey
, these are the three areas youdo good, these are the three
areas that need improvement, andthen you get an overall
business score and then fromthere you can say, hey, I need
to go focus on my financial,strategic or operational
(27:42):
execution.
Gary Pageau (27:43):
Well, listen, Stewart, it's been great meeting
you.
It's great learning more aboutwhat a fractional CFO does and
your background in it.
I think you've been veryhelpful to our listeners and
thank you so much.
Stewart Irvin (27:53):
Awesome.
Thanks for having me.
Erin Manning (27:55):
Thank you for listening to the Dead Pixels
Society podcast.
Read more great stories andsign up for the newsletter at
wwwthedeadpixelssocietycom.
Welcome to the Dead Pixels Society podcast, the
photo imaging industry'sleading news source.
Here's your host, Gary Pageau.
The Dead Pixels Society podcastis brought to you by Mediaclip,
Advertek Printing andIndependent Photo Imagers.
Gary Pageau (00:18):
Hello again and welcome to the Dead Pixels
Society podcast.
I'm your host, Gary Pageau, andtoday we're joined by Stewart
Irvin of Bracket Management,who's a business consultant,
fractional CFO and all-aroundgreat guy coming to us from
Charlotte, North Carolina.
Hi Stewart, how are you today?
Stewart Irvin (00:34):
Hey, Gary, thanks for having me.
Gary Pageau (00:35):
First, can you describe what a fractional CFO
is and how you got into thatbusiness?
Stewart Irvin (00:43):
Yeah, so a fractional CFO is actually
something fairly new to themarketplace and it really fits
in a variety of differentpositions.
One it could be that there is asmall business who has reached
a ceiling and they say you knowwhat, I just don't know how to
break through this ceiling.
I just don't know what to do.
But they can't necessarilyafford a full-time, seasoned,
(01:04):
veteran CFO.
So a fractional CFO would go inand work alongside of that
business owner or that leader tohelp them put the strategies in
place and things they need inorder to break through that
ceiling.
The second area that peoplewould reason why they would hire
a CFO is maybe the businessowner or leader has lost control
of their business and they'relike I am absolutely out of
(01:25):
control, I don't know what to do, I don't know how much money
I'm making, I'm just completelylost.
And they can't afford afull-time CFO.
So they hire a fractional CFOto come in alongside of them,
help them get their financialsin order, help them with their
strategy and focus onoperational execution.
And again, all of this is doneon a part-time basis.
(01:46):
And really the last area that Isee people hire a fractional CFO
is very specific.
Let's say that the company iswanting to sell, or the company
has been sold, or they're in aposition where they want to sell
their business but they reallyjust don't have their financials
and whatnot in a particularmanner or an order that could
really allow you to understandthe value of the business.
(02:08):
And so they'll hire you on aninterim basis to come in for a
very specific project.
Be it I'm merging with anothercompany, I'm being acquired, I
want to be sold, and so bringyou in for a finite period of
time with a very specificstatement of work, and again you
get a seasoned CFO at afraction of the price.
Gary Pageau (02:26):
So does that work on retainer or is it by the hour
?
Is it like I can commit eighthours a week, or?
Is that how that works.
Stewart Irvin (02:33):
It really.
It really is very specific forme.
I like working on retainerbecause it's a little more
easier to manage.
I can I can plan my revenuebetter, but a lot of times I
actually have one client todaywho is in the process of being
acquired.
We really have no clue of thestate of the business, and so
I'm actually charging for thefirst four months charging an
(02:54):
hourly rate because we have noclue as to what the workload is
going to be, and then we've gotto work.
Gary Pageau (02:59):
you know, month five I'll be retained as their
cfo going forward okay so how isthis different from just having
, like a cpa who does your books?
Because, most people outsourcethat right.
They've got a cpa firm who doestheir, do their quarterlies and
they take care of the taxes andwhatever.
How is a fractional cfodifferent than outsourcing your
(03:20):
cpa duties?
Stewart Irvin (03:21):
yeah.
So the fractional CFO actuallyembeds themselves with your
business and they work alongsideof you, right?
That's really also thedifference between a fractional
CFO and a consultant.
So we are a part of the team.
The CPA is obviously they'rehelping you based off of your
results.
The CFO inserts themselves andsay hey, I'm going to help you
(03:41):
drive the business forward.
And so, again, a CPA candefinitely tell you how healthy
your business is and they canlook at all the things of what
has happened, but most of thetime the CPA is not there to
help drive the business forward.
Gary Pageau (03:55):
Right, because they're looking at what's
already happened, not what'sgoing to happen Absolutely.
So how do you get into this?
What's your background?
Stewart Irvin (04:03):
Yeah.
So I've always known from avery early age I wanted to go
into business.
I just really didn't knowexactly what that meant.
So, luckily for me, I startedout in a family business when I
was 16 years old and I reallyheld every position within the
business that really taught methe ins and outs of all the
plays and inputs and outputs ofwhat it looks like to run a
(04:24):
business.
Fast forward.
You know that was in my lateteens, early twenties really
spent trying to identify that.
So I went corporate small, large, all the things and I started
Bracket really back in 2009.
Bracket I had three smallbusinesses.
I had a college buddy of minethat had three small businesses.
None of them were large enoughto really have any overhead and
(04:47):
so we said why don't we pull ourresources together?
We'll start bracket management,and it really was business as a
service, and so we were doingbookkeeping, marketing, hr, all
the things.
Unfortunately, the majority ofmy money came through real
estate investing at that time,and so you know, in that time
frame the real estate markettanked.
So therefore we put bracket ona shelf and I decided to go into
(05:09):
the corporate route.
So I realized in 2010, when Iwas actually in a supply chain
role.
I was the guy that would sendout to the suppliers who could
not support the program, and Ihad to turn them around in order
to support our programs.
And I realized, wait, a minute,I've kind of got a knack for
this 2015,.
(05:30):
I got my first opportunity toturn an entire business around,
and then 2016, and it just kindof continued to show that I was
pretty decent at doing thebusiness turnaround thing and I
wanted to start my own businessback and I thought to myself
I've learned so much aboutbusiness turnaround and business
strategy.
I want to get out in front ofthe turnaround, like I.
(05:51):
It's great to better come andget these guys fixed.
I'd love to make it where.
They didn't have to call aturnaround guy, and so, for me,
I've always wanted to own a ownmultiple businesses.
But you know as good as I dothat takes a lot of capital, and
I've.
I came across the termfractional, a fractional
executive, and I thought, man,that'd be a blast.
(06:11):
I don't have to necessarily buythe companies, but I can help
manage multiple companies, andso I stumbled on the fractional
cfo.
I started kind of investigatingit and learning it and I said.
You know what?
I'm going to brand myself as afractional CFO that has an
operations lean, and I'm goingto try to do everything in my
power to get in front of theleader before the business
(06:32):
turned south, took bracket offthe shelf, rebranded it, adding
a lot of the strategy stuff anddropping more of the business as
a service.
And then here we are.
Gary Pageau (06:41):
What are some of the things that you typically
see in a turnaround situation.
Does the owner or manager orCEO even see it coming, or are
they usually the last person toknow?
Stewart Irvin (06:56):
It's fairly unique, you know it really
differs per leader, but a lot oftimes what you're going to see
is the leader or the owner willreach out to me because they've
hit a growth ceiling.
It's normally what has happened.
They're like I have been atthis revenue level for five
years.
I've tried absolutelyeverything I know to do.
I just have no clue what to do.
(07:16):
That is typically when someonewould call me.
You know you go back to theturnaround days.
It was man.
I was stale for five years.
Now, all of a sudden, mymargins are starting to decrease
and I'm really out of control.
That's kind of a scenario too.
But for the most part, todayI've reached a growth season.
I have no clue what to do.
(07:37):
I need some help, yeah.
Gary Pageau (07:39):
So it's a growth issue, but it really could be an
operations problem that iscausing the growth issue.
Stewart Irvin (07:46):
Yeah.
So we look at really threeareas.
When we come in, the very firstthing I want to check is I want
to understand the financials.
So what I normally do is I saygive me three years of
financials.
I really don't want to have aconversation with you yet.
I'm going to look at yournumbers and I'm going to let
your numbers tell me a story.
And then I'm going to go in tolet your numbers tell me a story
.
And then I'm going to go in.
Let's normally we have adiscovery call and say is it of
(08:07):
interest?
Does this look like it may work?
Yes, okay, give me yourfinancials.
Meeting number two, I'm going totell you what your financials
are telling me about yourbusiness.
And so I translate the numbersto a story and I say is this
really what's going on in yourbusiness?
And nine times out of 10, man,you nailed it.
So now I have a fullunderstanding of where you're at
financially.
Traditionally, that willpinpoint me into some area of
(08:30):
operational weakness.
So then I dive into okay, let'stalk about operations.
Many times these companiesdon't have any metrics.
They really have no clue.
They can just tell you overallI have problems in this area.
So I said okay, if you'redecent financially, then we need
to make sure that you're goingto be good operationally.
Right, because if you're goodfinancially and you're not good
(08:53):
operationally, your financialswill soon suffer.
So we focus on financials, weprop up your operations.
Once all that is good to go,then we focus on strategy
because, again, you can havegood financials, you can execute
greatly, but if you don't startdriving your business, the
other two areas will suffer.
Gary Pageau (09:11):
Because typically financials are a trailing
indicator of your operationalsituation.
Stewart Irvin (09:18):
Absolutely, absolutely.
So yes, I always tell everyonethat's looking in the rearview
mirror we got to get you lookingout of the windshield,
absolutely.
So yes, that's why I alwaystell everyone that's looking in
the rearview mirror.
We got to get you looking outof the windshield, and so again.
But the history will tell youwhere you're headed if you don't
make changes, and so that's whywe start there, and it does
nothing for you to try to startdriving your business forward if
your operations is on shakyground.
Gary Pageau (09:38):
So one of the things that happens typically in
the photo industry with, likephoto labs, people like that,
who are very production focused.
Right, they got into thebusiness, uh, because they uh
want to make stuff.
Right, they wanted to makeprints, they wanted to create
canvas or whatever.
But in a lot of cases, like intoday's financial market, you
(10:01):
know that, of course, buyingequipment and things like that
is that an area you look at withequipment financing, because I
think there's a lot of peoplewho there's a lot of opportunity
, for example, in the industry,to outsource, right, to do
things, make things outside,versus buying equipment.
And then there's also leasingequipment and all kinds of
different things you can do.
So what are some of the thingsyou look at in that situation
(10:24):
where you got, we have aproduction.
Stewart Irvin (10:26):
One of the first things really is the second
thing that we do once we come onand bring on a new client is we
quickly try to get the clientto somewhat start forecasting.
The beauty about what we do iswe can run a hundred different
scenarios.
We can say, hey, if you want tolease this equipment, this is
what it's going to do to you,not only from a P&L standpoint
but overall from a companyhealth, because there's all
(10:48):
these metrics that you can runand say, hey, you're going to be
too leveraged or that you'renot.
You know that'll be perfectlyfine, you're okay to do that.
And a lot of times you run thosescenarios and you can make a
decision Do you have the cashand bandwidth to take that debt
on?
Cash and bandwidth to take thatdebt on, you'd be better off to
lease it.
Well, if you lease it, this iswhat you're going to have to do
from a sales point to try tocover those additional costs.
(11:09):
So you run all those scenariosand traditionally you run and
you move forward with what makesthe most sense to not hurt the
business overall and then alsoto keep a healthy P&L.
Gary Pageau (11:19):
And a lot of the businesses that you work with
you were telling me, you knowthey're small businesses, like
very similar to the type ofbusiness that listened to this
program, and there's also a lotof family businesses, absolutely
.
So what are some of theconsiderations that family
businesses have, where they'remaybe looking at passing it on
to the kids, or even maybethey're not in the family,
they're looking at passing it onto maybe the store manager or
(11:40):
the general manager of theoperation.
The owner wants to retire,because that's a very different
situation than bringing insomeone from the outside to
purchase a business.
You've got someone who hasknowledge and maybe has a lot of
biases.
Stewart Irvin (11:53):
Yeah, and the other thing too is their baby
right, and so you have to handlethings a lot differently.
It's easy to go into let's callit just an agnostic ownership,
and just go in and say, hey,you're going to drive the
business and you're going to dothis, that and the other.
But it's something different,particularly when you're dealing
with a second generation owner.
You know the first generationowner.
They started from nothing.
(12:14):
They normally have puteverything on the line.
A lot of times.
You know they may or may notwant to give it up, and so you
just really have to handle thathandoff much differently and
every single case is different.
You have some owners like I amselling off to the Bahamas,
y'all take it and run with it,we're great, see you later.
(12:41):
But what happens a lot of timesis you have a unbridled
second-generation owner that isgoing to be like like for 30
years I've worked under this guy, I've got all these ideas and
I'm going to do this, this, thisis, and it's my goal to try to
say, oh, whoa, whoa, let's bevery methodical, right and so
that that handoff is verydelicate and you got to make
sure, when you do that handoff,that the second generation guy.
He already feels a lot ofpressure because when he's
(13:01):
worked in in his whole life,this is his dad, mom's business.
I can't screw this up, but thenagain I want to make my own
name, and so it's tricky.
It's tricky, and so what wereally do is just try to put the
framework in place and moveslower than normal to make sure
that we really don't rock theapple cart too bad because
that's where I think you getinto a lot of you know, I I
(13:22):
wouldn't say rational decisions,but certainly emotional
decisions.
Gary Pageau (13:26):
Oh yeah, right, like you said, you got someone
who's been in the business andthey, hey, we've been.
You know we've been doing thisway and I knew if we did it this
way it would be better.
But maybe there was a reasonfor doing it that first way that
this person isn't aware of,that's right.
Stewart Irvin (13:37):
Yeah, there's a lot of emotion.
So, so, really, I try toquickly, within the first few
months, try to establish a setof metrics at a very high level
so we can understand what movesare you going to make and how is
that going to affect ournumbers.
Right, and so try to take allthe emotion out of it because,
again, traditionally there's noKPIs or metrics at all in the
business.
Gary Pageau (13:56):
What are some of the KPIs or metrics that you
think in that situation would belike the top two or three
someone needs to be looking atin a manufacturing type
environment.
Let's say they're making, youknow, canvas frames or something
like that.
What are some of the thingsthat initially they should be
looking at?
Stewart Irvin (14:14):
Yeah.
So one of the first things wetry to establish is somewhat
again of a forecast, and so thefirst thing we want to look at
is understand what's your 90-daybacklog, right?
How is your business coming in?
Are you seeing a decline?
Are you seeing it level out?
What does that look like?
Because you're in that handoff,the last thing you want to do
is to have business drop.
(14:34):
The second metric we reallylook at is on-time delivery or
on-time to service, because,again, you want to continue to
drive and make sure that yourcustomers are 100% being taken
care of.
Really, those are the top twofrom an overall operational
standpoint.
All the other stuff, obviously,is your traditional
understanding of your financialsin regards to what are my
(14:55):
margins looking like, how's mysales and admin expenses, are
they tracking up or down, andwhat's my overall profit level.
But when it comes to executionand handoff, your on-time
delivery and your order entryand your bookings are really
your two greater forward-lookingindicators in regards to how is
my business heading.
Gary Pageau (15:15):
It seems to me like when people are looking to
improve situations, one of thethings they initially look to is
like staff reductions orsomething like that.
What is your perspective onthat as an early step?
Stewart Irvin (15:30):
Yeah, as early as I try not to do that.
Obviously, a lot of times yougo in and it is inefficient,
right.
What you also see a lot oftimes is many times they have
employees who are just in thewrong seat, and so my goal is to
get the company as healthy aspossible and grow.
So, inherently, if you're goingto grow, you're going to you're
going to need staff, right.
So throughout the whole entireagain, if they're if a
(15:53):
turnaround, or even if they'renot turnaround, they may be the
first time they've reallyattended strategic growth I try
to maintain the head count,unless it's just gross, unless I
go in and you just see that man, this guy's just not going to
cut it, period, right.
Then you just make some logicalmoves.
But no, you know I come from abackground private equity and it
(16:13):
was such a cutthroat deal andyou know I had a number.
You know, again, you're dealingwith small family businesses
with emotion.
The last thing you want to dois come in and say you got to
cut those five heads becausethey're just dead weight.
Yeah, in time it will showitself, because you're going to
put all these things in placeand you'll put all these metrics
and you're going to start tosee this individual.
(16:34):
I am paying them for nothing,but again, things just move a
little slower when you'redealing with a small family
business.
Gary Pageau (16:41):
Right, it's interesting you bring up private
equity, because that's beenhappening in our industry for a
while.
I wouldn't say a lot of privateequity has gone into buying up
some of the suppliers andthere's been some apprehension
there about what does privateequity mean when it buys into
business and what are theirobjectives as opposed to
something else.
So that's something you didn'tappreciate when you worked with
(17:01):
that company.
Stewart Irvin (17:02):
That's right that's something you didn't
appreciate when you worked withthat company.
That's right, yeah, yeah, Iused to tell people now I really
enjoyed my time in privateequity.
But what I try to do is I tryto bring the private equity
discipline and intention with aheart.
That is the kicker right.
I did not appreciate in howsome of these PE firms that I
work with they just really lookat people as a number.
(17:29):
Now I have dealt with some PEfirms that I work with.
They just really look at peopleas a number.
Now I have dealt with some PEfirms that say, hey, I literally
exist because I want theemployees to flourish, I want to
make sure that the owner isbeing taken care of in the long
run, and so they are out there.
But particularly my backgroundhas been very cutthroat.
But I have to say that youcannot argue with the fact that
a disciplined approach anddriving a business with intent
it 100% pays off.
(17:50):
It may not go as fast as youlike.
You may ultimately have to windup cutting some people, but for
the most part, if you canalways mix a heart, a heartfelt
approach to what you're doing,typically it's a win-win.
Gary Pageau (18:04):
And from a manager.
At the same point, you'realmost giving the poor
performers an opportunity todeselect the company right,
absolutely Giving them.
If they kind of see what'shappening and that maybe they're
you know, the jig is up.
I'm not going to be able totake my two-hour lunches or do
whatever it is they were doing.
They may start lookingelsewhere and that takes care of
(18:24):
it itself if you don't, youknow.
Stewart Irvin (18:27):
Absolutely.
Yeah, we really have six keythings that we do when we walk
into a business.
The fifth thing that we focuson is developing an employee
plan, because in many cases theemployees show up, they really
have no clue as to A what am Isupposed to do?
B how am I being judged?
Am I being paid fairly?
And I mean I would love a bonus.
(18:47):
And so we come right in and wetry to create job descriptions
for every employee.
We come up with at least threeto five KPIs or performance
indicators as to how well theyare doing their job.
We try to do some industryresearch and say, hey, this is
the range of pay that you shouldbe getting paid.
And do some industry researchand say, hey, this is the range
of pay that you should begetting paid.
And in many cases we have toadjust that up because the
business owner didn't realizethat the market's paying $22 an
(19:10):
hour and you're paying this guy18.
So we'd have to make theiradjustments up.
And then, once all that stuffis in place, we put in a bonus
plan.
But a lot of times the kickeras to whether that employee is
going to stay long-term reallycenters around how you measure
their performance.
And again it could be three tofive different things that you
look at, but for the most partthat will again put an objective
(19:31):
number on.
Is this guy giving me what I'mpaying him to do?
Gary Pageau (19:36):
The other thing that is the benefit of this
having job descriptions, havingprocesses, having, you know,
measurable metrics, kpis,whatnot.
In place is it also positionsthe company for transfer or sale
?
Stewart Irvin (19:50):
Absolutely 100%.
Yeah, it just tidies everythingup.
And then again.
So I've got a client today.
They want to move into theaerospace industry and I come
from aerospace.
I was a sourcing guy and I toldthem.
I said the very first thingthey're going to want to know is
what's this on-time delivery?
What's your scrap rate?
There's a whole series ofnumbers that they're going to
(20:10):
want to know.
A buyer of your business is nodifferent.
They're going to want to knowwhat are these three key areas,
and it is somewhat different foreach industry, but at the
highest level, you got to havesomething in place to say hey,
here's my employees and here'sthe output that they have.
And so, again, it just tidieseverything up.
It makes the transition mucheasier.
Gary Pageau (20:29):
So how long typically do you engage with a
client?
You know you say you like along term thing, but is it a
year?
Is it ongoing, Is it forever?
Is that what people can expectwhen they work with a fractional
CFO?
Stewart Irvin (20:45):
So it really varies.
The fractional CFO is stillsomewhat being defined, right,
and so you've got different guysoffer different levels of
service.
For me, because I am sooperations leaning, I am much
more hands-on and much morelong-term.
I was listening to anotherCFO's talk the other day and he
said his average engagement issix months.
(21:06):
Well, that's crazy, right.
For me it's like man, you know,I can't turn people over every
six months.
One.
I'm an ops guy, right, so Isomewhat embed myself with the
company and so I'm in there forthe long run.
I am as part of their seniorlevel staff, as the COO or even
the CEO.
So for me it's much more of alonger play.
(21:26):
But you have others who, again,if they're on an interim basis,
they're turning people overmuch more often.
You have some that are very justI come in, I do your books, I'm
here eight hours a week.
You can't call me outside ofthis window, you know, and and
that's it.
That's not me.
I'm available 24, seven.
Again, I am as an employee tothat business, and so I think
(21:48):
you had to find a fractional CFOthat works for you.
You may say, hey, I don't wantanybody, I just need somebody to
run my books and tell me whereI'm headed.
That's great, that guy may befor you.
You may say hey, I live in onthe Western part of North
Carolina.
I have two clients on theEastern part of North Carolina,
so the very first week of themonth I'm driving back East and
I spend a week with these guysand they literally say, man, I
(22:09):
just like to see you, I justlike you to come into my, come
into the building, you know, andso that's the level of service
that I provide, but that's notwhat everyone does, so it really
varies, because that level ofservice is still somewhat being
defined.
Gary Pageau (22:24):
So let's flip the script a little bit, and we've
talked a lot about positioningyour business for sale right or
transition to pass on.
What about if you're looking togrow through acquisition?
What are some of the things youwould want in place as a
fractional CFO for a business tobe in that position?
Stewart Irvin (22:44):
Yeah.
So a lot of times that's goingto be.
If you're looking at growththrough acquisition, they're
going to look at you and say,hey, can I buy you because I can
add value to you, because I seeso much waste?
Right?
So you can say, hey, I want tobe sold, I want to be sold now,
but, okay, you might be sold ata discount, because someone sees
, hey, I could go and strip allthis cost out and turn you over
in five years and we'll be goodto go.
(23:04):
The other aspect could be do youhave some intellectual property
, some process that's specificto you?
And they can look in there andsay, hmm, I want that because I
could see how I could add valuethis, this, this.
Then you can be sold therethere.
The other aspect is, you couldjust be very profitable with a
very nice backlogging portfolio,and that bigger guy says, hey,
(23:25):
I just want to acquire youbecause I want to add you, I
want to take on your work, andso it really varies as to where
you're at as a business.
At the end of the day, though,you still have to have very thin
financials.
It's great if you have a trendin regard to you know wherever
you've been in the last two,three years, but at the end of
the day, they're still going tovalue your financials and see
(23:48):
how, to you know, do their duediligence process how accurate
are your financials and is thistrend accurate or not?
Gary Pageau (23:55):
Well, where I was going with that.
Let's say you've turned someonearound.
Let's say you've taken one ofyour clients to a great place.
Now they're looking around.
Stewart Irvin (24:03):
Oh they're looking around to acquire Right.
Oh, gotcha, gotcha.
Gary Pageau (24:09):
So they're saying, hey, now I've got my everything
in a group, right, I'm great.
Now I want to grow that way.
Stewart Irvin (24:18):
Got you Okay, so we'll just flip that, then you
know.
Gary Pageau (24:22):
So what should they be looking for?
Should they be looking forpeople that they can put through
the same process, or peoplealready there?
That's my question.
Stewart Irvin (24:30):
Yeah.
So actually I've got a clientwho's looking to acquire right
now and I told him I said,listen, the last thing you want
to do is acquire someone.
They're not 100% whole at thistime, right, they're still
trying to grow.
So I said, what you want to dois you want to make sure that
you're acquiring someone who isequal to or maybe even slightly
(24:51):
better than you.
If you're not healthy, theworst thing you can do is
acquire anyone.
But let's just say, all thingsaside, you're a good business,
you're healthy, you're ready,you're ready to move.
Then you can look and say, hey,I want to grow my revenue
through acquisition, which meansyou're going to go acquire a
company.
There's similar scope of service.
It could be that you know it'sclose enough that you can absorb
(25:13):
them and not be that much of adisruption, because the last
thing you want to do is bringsomeone on that's going to bring
your company down.
The other aspect of is man,I've got my stuff nailed down,
my processes are great.
I want to go buy that smallercompany that's out of control,
because now I know how to goturn those guys around.
Those really are the two areasthat I see the smaller
businesses going through theacquisition route.
Gary Pageau (25:35):
Because I think there is sort of an idea that
when acquisitions happen theycan be great because they can be
additive, right, similarbusiness.
I can just tweet their processand put my model in there and
that's great.
A lot of retail does that.
But I also see it where peoplethink they can expand and they
get into maybe an adjacentbusiness, but it's just
(25:56):
different enough where it'sdragging everything else down
100%, and it's really not muchdifferent than growing too fast,
right, you got to really makesure do you have the funds and
the capital to?
Stewart Irvin (26:06):
I mean, you could be doubling your business
overnight.
That takes a lot of cash, right, and it could be that again,
it's just they're just enoughoff.
And different that now yourfocus shifts to I've got to.
All my focus is on I've got tomake sure that that merger
happens great, and you losesight of the main business and
all of a sudden you look three,four, five, six months later and
(26:27):
you're way off course, and soit's very tricky to navigate
that.
And so the due diligence partis critical, and really you got
to make sure that your businessis not only capital healthy but
also process healthy, and thenthe owner or whoever's going to
be a part of that merger canmake sure that I can take my
eyes off the ball just for aminute to make sure this process
(26:48):
works out, because it is a hugeundertaking to try to bring
someone in to your fold.
Gary Pageau (26:54):
Awesome.
So where can people go for moreinformation and learn about
Bracket Management?
Some of the tools and offeringsthat you have.
Stewart Irvin (27:01):
Yeah, so they can check the website out, bracket
MGMT, which is justmanagementshortenedcom.
We actually have an assessmenton that site that focuses on
those three areas that we talkedabout, right?
So there's an assessment thattalks about how we financially,
how we focused on theoperationally and what is our.
What is our and what it is is avery objective approach.
(27:22):
So you go through and take theassessment.
Each area has about 30 to 35questions.
You get a score back and acustomized report that says, hey
, these are the three areas youdo good, these are the three
areas that need improvement, andthen you get an overall
business score and then fromthere you can say, hey, I need
to go focus on my financial,strategic or operational
(27:42):
execution.
Gary Pageau (27:43):
Well, listen, Stewart, it's been great meeting
you.
It's great learning more aboutwhat a fractional CFO does and
your background in it.
I think you've been veryhelpful to our listeners and
thank you so much.
Stewart Irvin (27:53):
Awesome.
Thanks for having me.
Erin Manning (27:55):
Thank you for listening to the Dead Pixels
Society podcast.
Read more great stories andsign up for the newsletter at
wwwthedeadpixelssocietycom.
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