Marketing In An Investment...Not An Expense

Today we hear from a fractional CFO & learn about the importance of proper financing for a business. From understanding your profit to planning for expansions... James & Craig go deep into this topic as it occurs more often than you may think.

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Episode Transcript

Unknown (00:05):
Well, hi again. Welcome back to the marketing
perspective. Today should be avery eye opening show, as our
topic is talking aboutfractional CFOs. I'm sorry,
fractional what a fractionalCFO? We're going to learn what
that means. Like I actually, inour company, we actually have a
fractional HR person, KathleenHancock, who's a rock star, by

(00:29):
the way, and who holds meaccountable on numerous
occasions. James just stoppedtalking. How is this relative to
marketing? You may you may beasking, right? James, how's this
relative to marketing? Well, I'mgoing to tell you a quick story.
This one has to do with internalculture. There was this company

(00:49):
not not too long ago, all sparenames to protect the not so
innocent, and they were not.They kind of fell asleep at the
wheel of their finances. I'mimagining this is what happened
behind closed doors, and theyliterally just stopped paying.
Stopped paying their employees.W twos. You for the record, you
can't do that legally. You alsoemployees don't really like that

(01:13):
when that happens, and not justone, like all of them. So I
started getting phone calls. I'mjust the marketing guy you know
from outside, and literally,people call me. What do I do
about this? I don't know. Out ofmy purview. It's I can help you
market you do you need a jobwell? And I'm laughing now, but

(01:36):
it wasn't funny at the time,because people lawsuits were
starting. This guy got poundedon PR issues. He lost his team.
It's kind of hard. I don't wantto save the industry. I'm being
very careful. It's hard to dothe job when you don't have
staff that services the job thatyou're doing. It's almost
impossible, and it pretty muchwas impossible. So you can

(01:59):
imagine the hit he took. Well,had he had somebody paying
attention to his finances thatprobably could have been spared.
That is a much more commonproblem in a small business than
you think. So it's definitelysomething to think about. One
more quick story. Again, I haveto navigate carefully and not
say it incorrectly. I've seenfinancial disasters occur behind

(02:24):
closed doors two differentcompanies in the not so distant
past. One of them was a greatcompany, thriving, doing
unbelievably well. We more thannot to brag about my company,
but we quadruple them small mompop to pretty big company in a
two year window. So they wentfrom a couple of employees to

(02:45):
like 40 employees working out ofthe basement to three physical
locations, you know, equipment.So you can imagine, they became
a formidable company in lessthan two years, but they still
acted like a mom pop, and theydidn't have somebody looking at
their finances from a highlevel. They had a really good
bookkeeper, and somebody, prettymuch an accountant, not a CPA,

(03:10):
you know, did their accounting,but she was the one that was
monitoring that. And that wasway over her head, and it blew
up pretty badly. And thecompany, in spite of all of our
efforts and the PR triaging thatwe did, because when money,
money got stolen out of thecompany, you can imagine the
pitfall that happens bar andcomputer pay Paul is magnified

(03:31):
by 1000 and it was horrible. Itwas it was a great company with
good owners and a good businessmodel watching it blow up, you
know, totally out of my control,because I'm just the marketing
guy, right? And another companyto not go into less detail. They
said they were debt free. Theyhad signed up to do the

(03:52):
marketing, and we had a budget.Everything we do is budgeted,
and they signed off on thebudget. Oh yeah, we're going to
do this. And they didn't havethe money. Not only did they not
have the money for that, it wasa big contract. They didn't have
the money to do the job thatthey do. So it was bar is again,
borrowed from Peter to pay Paul.And they had a good business
structure. The from outside in,they were a good company, but

(04:16):
they were a financial disaster.And I found out really quickly.
I mean, we parted ways withinthree or four months, you know,
literally very first month moneywasn't coming in. And I was
like, What is going on here? ButI've seen it before. You know,
it's kind of like you have thatbig appetite, or what do they
call it? Champagne, taste, beer,bottle, pocket kind of thing.

(04:38):
CFOs can help with that theycan, and a lot of people now go
back, Well, James, that'sawesome. I'm a small company, or
even mid sized companies,sometimes don't have the cash
flow. They just can't build itin to their numbers to hire a
CFO and staff. That's whatfractional CFOs can do. It's a
lot less expensive, and you getthe same expertise sometimes.

(05:00):
Even better, monitoring what youneed monitored to not have these
disasters happen. So I don'tknow if that makes sense, and I
would love it if you'relistening today, I would love it
if you have a different type ofdisaster that you've seen and or
witnessed or gone throughyourself, please reach out to
us. We would happily put you intouch with the right people or
person to be able to help youeither navigate or have another

(05:22):
conversation or never have thathappen in your life again. And
the person I'm bringing outtoday is becoming a friend and a
colleague. His name is CraigCook, and he is the founder of
equities strategic partners.It's a fairly new experience for
him. He came from anothercompany that he had the

(05:43):
wherewithal to realize I coulddo this better, and he is, and
he's making a lot of headway,and I'm excited to have mom
today, he will be much moreadept at explaining the
importance of the CFO role in acompany than I am, because when
we wrap up at the end of our I'mgoing to talk a little bit about
marketing, is because I wouldn'tbe me if I didn't. And usually

(06:05):
CFOs and CPAs can be the kiss ofdeath of any great marketing
strategy or campaign. So beforewe I go on and on and start
talking about politics, sex orwhatever, let's bring out Craig.
Cook. Craig, welcome to theshow. Appreciate
it, James, I appreciate being onand hello everyone. Look forward

(06:25):
to the discussion today.
Yeah, I was kind of excitedabout this one because it's
something that's totally out ofmy wheelhouse, like 100% you
know. So I'm going to ask aquestion probably, and just stop
talking. Do I have? Am I theposter child? Probably, and

(06:47):
we'll talk offline after themeeting. So before we dive into
like the meat of being a CFO andwhat all that entails, just
let's tell us a little bit aboutyou, how you even wound up
getting where you are today?Sure.
So I have been in the accountingindustry, if you will, for my

(07:08):
entire career. Graduated fromcollege immediately, kind of
fell into starting my ownbusiness. My first time around
as an entrepreneur. Had abookkeeping service within nine
months of starting I was fulltime, had had an office that one
of my clients provided me, phoneline, copier, back in the day,

(07:32):
fax machine, if anybody knowswhat those are. And did that
like I said, for 12 years, fulltime, 18 total. And around 911
things kind of went haywire, aseverybody may remember, or some
may remember, and so I went intoindustry and worked for some

(07:54):
major public companies here intown, in Nashville, and learned
a lot, really, you know, was akick in the pants that I needed
to get out and enhance myskills. And climbed up the
ladder through there andeventually landed in a
consulting gig that was veryattractive to me. Was really

(08:17):
what I was looking for. Thatchange of pace, the different
scenery all of that, not tomention some exposure to some
additional industries that Ididn't have experience in and
did that. And then January ofthis year started equities, and
had been going full guns blazingever since, specializing in

(08:43):
pretty much anything on thefinance or accounting side for a
business, except taxes. I willlet you tax CPAs. Take care of
that, and I will get all thefinancials ready for you so you
can zip right through them.
So if
a person doesn't have let's saythey have a bookkeeper. They
don't have a CPA. I wouldimagine you're advising them to,

(09:07):
hey, I know somebody, or go findsomeone, right?
But yeah, yeah, highly, highlyrecommend the tax CPAs,
especially with today's tax codeand all of that. It takes an
expert in that area. You know,can make any connections that
anybody's looking for on thatside, but, but that is not my
wheelhouse, and I know that, andI want to stay in my lane,

(09:31):
right? That's how I feel aboutmy world. You know, when I
expanded to Nashville from NewYork, so I had a CPA, I had an
attorney, and I had abookkeeper, and I said, Tell me
the tax ramifications, because Ithink I'll save money if I
change corporate to Tennessee,and should I change eins? Oh,

(09:54):
definitely not, you know. And,but then the CPA said, Yeah, but
I'll defer to the attorney. Meabout I said, my the attorney. I
said, Okay, so I went to talk tohim, and he's like, I don't know
why you're talking to me. Hegoes, it's really the CPA and
and I was ping pong back andforth for months, and I never
really got a straight answer asto what structure I should do.

(10:16):
So now here I am in Nashville,and tornado came through. COVID
started like it was a slow rampup anyway, but when I finally
got around to oh my gosh, what'smy tax structure? My I used a,
what do they call them anenrolled agent who was a
bookkeeper, but on steroids,right? And she guided us towards

(10:36):
changing the EIN. But you canonly imagine what happened in
New York, which was still up andrunning and payroll and all that
kind of so it was almost, almostfour years of a nightmare of
paperwork and changes. No, I'mnot there, I'm here and still

(10:58):
being taxed New York taxes whenyou know there was no more W
twos in New York, only 1099,there's most of the revenue was
services, not billable goods,and it was a disaster, and it
finally is resolved. It took alot of work and a lot of phone
calls, and I learned something.And I don't know if you navigate

(11:21):
this, this is where I'm going.IRS, if you're listening, let me
know if it's but the governmentworks like this person in this
chair does this specific job.The person literally right next
to them does this specific job.Well, good lords. Those two jobs
interface with one another, andif they just turned to each
other and had a conversation.They would solve the problem,

(11:44):
but no, let's have another formand another XYZ dash to do this,
and it goes back and forth andback and forth. Well, I learned
that, and I started saying,well, listen, can I just talk to
so and so? Well, sure, then allof a sudden I'm getting the
promise. So do you navigate thatas well? Or no?

(12:05):
Yeah, absolutely. A lot of timesthat has come up quite often.
And what I always recommend theclient usually doesn't like it,
but it's the most efficient andquickest way, usually, to
accomplish it, and that's to getthe business owner, the CFO
controller, whoever you want to,whatever you want to call them,

(12:26):
your tax person and your yourbusiness attorney, all around
the table and discuss it all,hash everything out there and
get it all settled within a twoor three hour period, versus, in
your case, You know, gettingping pong back and forth between
your your tax CPA and yourattorney, and then you calling

(12:48):
the IRS or them calling the Imean, you know, if all of this
could be hashed out and laid outin person, it's usually more
efficient. You do have, youknow, two or three hours of
hourly billing people allsitting around the table,
billing you hourly, but it'susually a quicker process, and
everybody knows where everybodystands at the end of the day,

(13:09):
versus Oh, well, let's shoot 15emails back and forth and six
months later, oh, oh, yeah, Iforgot. We dropped the ball.
Let's, let's get that goingagain. So
thank you. So let's, let'sdefine a fractional CFO. What
does that really mean? And whatis your role with anybody that

(13:30):
brings you in Sure,
essentially, a fractional CFOis, is? It's not as as sexy of a
term. It really is just a parttime CFO. It's just a little
sexier term than saying I'm parttime because a business that is

(13:50):
10 million in revenue evendoesn't have the budget nor the
bandwidth to bring on a highlyqualified CFO. Nor do they have
the bandwidth to give them 40hours of work to keep them busy
and do things you know they'regoing to overlap into some of

(14:11):
the areas. Sometimes that may begood and fine. Sometimes it's
just a waste of their time, orthey're putting them in
situations that they're notequipped for, more on the
operation side, or the HR side,or whatever so. But you know, it
the person the role fills thesame gaps that AT and T CFO

(14:34):
does, just on a much smallerscale. You know, they're still
handling the overall accountingand finance issues within a
company. They are, you know,assisting the CPA with any tax
questions that may arise. Theyare working with banks. They are
working with lenders. They'reworking with investors. They're

(14:56):
working with, you know, a. Buddythat is involved and has a stake
within the financial statementsof that company, obviously the
business owner as well, andmaking sure that those financial
statements are accurate timely.And then what I like to mainly

(15:17):
describe the CFO role,especially in a smaller company,
is on that strategic side, what,what do I need to do to be more
profitable? What do I need todo? What is, what is the right
timing for me to open a newstore, or to expand into a new
market, or to hire three newsalespeople? The the CFO is more

(15:38):
really surrounding that, thatforward looking structure, the
modeling, the forecasting, cashflow, forecasting, things like
that, are the main roles of aCFO, again, working with banks,
getting financing, looking fornew investors, you know, between

(15:59):
them and The and the businessowner, and it can be, as you
know, many of those things, oras few of those things as the
business dictates, as thebusiness owner dictates, but
it's, it's strictly on a on abasis that that is comfortable,
cash flow wise for the company,but also to fill those needs.

(16:21):
And those are, those are needsthat every company, it doesn't
matter what size you are,whether you're 100,000 or 100
billion in revenue, everyoneneeds the that person in there
doing those roles, filling thosetasks. You know, obviously an AT
and T and Amazon, they've got,you know, CFOs and assistant

(16:43):
CFOs and every every level inbetween that's not needed for
your usual small businessentrepreneur.
In the beginning of this show, II kind of brought up a couple of
horror stories that I've seenand witnessed, and if you caught

(17:04):
those, can you speak into eitherone of them and talk of how a
CFO could have helped navigatethat better and probably spared
them the pain and suffering thatthey went through. Sure,
you know specifically the theexample you gave of the company
that just stopped paying theiremployees. Most CFOs that have

(17:25):
been a CFO, they usually havesome HR background or some HR
responsibilities in previouspositions,
oversight.
You know not all, but some do.But regardless, they know that,
you know you can't just stoppaying your employees. You can't
just stop paying your payrolltax. All of these things have to

(17:48):
keep going, and to have someonein that seat that's worth their
salt that can go to the businessowner and say, Look, you just
can't do this. You know, theseare, these are serious issues,
and just because your cash flowisn't there, you can't just all
of a sudden up and decide tostop paying people and expect
them to still do their job, oneof the most important things

(18:14):
that a CFO does, and I learnedthis in my career, being brought
in in a situation, and then theCFO not really keeping an eye on
cash flow with a with asubstantial size company, and
they were let go. And because Iwas brought in kind of on their

(18:35):
coattails, I was let go as well.So, but the biggest thing that
they they missed was keeping aneye on cash flow and having a
daily, weekly cash flow forecastof this is where we stand. These
are the expenses that we knoware going to go out. Your costs
are pretty, pretty locked in ona regular basis. You know what

(18:57):
your payroll is each each week,every other week, every month.
You know what your rent is. Youknow what your utilities
basically are. You know whatyour cost of goods are, and
depending on the type ofbusiness you run. So you know
you really, you really have yourcosts locked up. You just got to
make sure that your inflows aregoing to be able to match that,

(19:18):
and if they then you got tostart looking at cutting and
things like that. But that's aCFO worth their salt. That's
really where they're going tostep in and and help the most,
especially for a smaller sizebusiness, because they're
running on such potentiallysmall margins. But they're also
not dealing with hundreds ofbillions of dollars of revenue.

(19:39):
They're dealing with a few 1000here, a few 1000 there, and
that's, you know, catching upyour AR, making sure your AR is
being paid timely. Could be theyou know, the difference between
keeping the doors open andkeeping the doors closed, or
having to tap on credit that youknow, hope. You have the the

(20:01):
ability to tap so
good collection agencies help.Yeah.
I mean, I'm looking at lookingat mine, and we have more
outstanding than we've had, likein previous, past few years,
like you could just tell thestate of the economy, what's
going on when you know it'scommon? So I have another

(20:24):
scenario I didn't talk aboutyet, and this is probably I see
it most often in my world,because you're talking about
cash flow. Well, marketingattests to cash flow, like a lot
of people. Well, you may look atadvertising market. It's an
expense, and you put it in thatcolumn. But my world, I look at

(20:45):
it as an investment, because ifit's not creating cash flow, if
it's not create because it's thelifeblood of, you know, filling
the sales funnel and bringingmoney through the door of any
company. So whatever effortyou're doing, and this is this
goes for every every singleperson listening. It doesn't
matter if you're B to B or B toC. It doesn't make a difference.

(21:05):
There's some effort that has tobring business to you. So
whatever money you spend, orwhatever effort, it's got to be
tracked, and you have to seethat your numbers are going up.
Marketing is a pivotal part ofsuccess, of cash flow. It just
belongs there. So I from mychair, I see, I look at our
effort as so critical to thesuccess of a business, or growth

(21:29):
of a business on a regularbasis, because that's one of the
things that we specialize in, isgrowth. But if the money isn't
there, something is wrong. Andthen, and I would openly say, if
you're doing something today andyou're not seeing your numbers
go up, why are you continuing todo exactly the same thing? I
would say the same thing to myown clients. I was like, Look,

(21:50):
here's the data. This isn'tworking. We need to change gears
and do something different. Andthey're astounded as how blunt
and transparent I'll be, becauseit's about a result, right? And
you probably see that evencloser than I do, because you're
behind the veil,
yeah, the the cash flow of acompany is its lifeblood. You

(22:12):
know, you ask any business ownerwhat keeps you up at night, cash
or lack thereof is going to beyour number one answer 99% of
the time. And if it's not today,then it will be tomorrow, if
there's another issue keepingthem up. But yeah, the ability

(22:34):
to I've got a prospect that I'mlooking at right now, and he
keeps, I keep saying, hey, whenyou when you ready to take the
next steps, we're ready to getstarted. And his comment back to
me is, you know, right now,we're in such growth mode that
that any new expense I've gothas to eventually be a positive

(22:56):
cash flow for me. In otherwords, even, and not just a one
to one, but like a five to one.He wants a five to one return on
revenue for any expense thathe's bringing in, which mainly
is his, you know, a newsalesperson or whatever. So,
because they're in such growthmode now, eventually that's
going to slow down, and he'sgoing to have to be in some

(23:17):
sustained mode and get financialstatements, you know, in there,
accurate, so on and so forth,but, but that, you know, and
that's, and I totally respectthat and understand that. And
you know I'm standing by at histiming and everything, but, you

(23:38):
know, he's, but, like I said,that's, that's what he's looking
at. And and tons of businessowners are out there doing the
exact same thing, just really,they're being so successful that
they don't have time. Now, my mystatement, back to companies
like that, business owners likethat, is, I respect that. I get

(23:58):
it. I know you're you're overlybusy, but a lot of a lot of the
times when I'm trying to get asale, get a get a contract
closed, I'm not even reallytalking about the financial
savings that you're going toget. You know, obviously I'm a
cost. I consider myself a value,but I really consider myself a

(24:22):
time value, because it's it'sthe amount of time that you your
wife, Aunt Margaret, whoever'sdoing your books that are maybe
not as qualified, maybe not asas diligent, Maybe not as
focused, definitely not as fastdoing the day to day

(24:43):
transactions, knowing what tolook for in a monthly review, a
quarterly review, a year overyear, review analytics, how to
do those things, you know, andagain, nothing against the staff
that you've got. But you knowyou normally in the business.
And the size of businesses I'mworking with, they got started
and they scrambled to put somesort, some semblance of an

(25:07):
accounting system together, andusually with the spouse or
themselves, you know, so abusiness owner that's sitting at
home for 234, hours each night,entering all the bills, entering
the invoices, sending outthings, processing payroll. You
know, be nice to get 1520, hoursa week back by not having to do

(25:30):
that. And then, and then in thelong run, obviously, the
financial value is going to showbecause you you're getting
accurate financials, you'regetting timely financials.
Financial Statements are great,but they're backwards looking.
It's what has happened. Youcan't look forward until those
are clean. And those can't beclean and useful unless they're

(25:51):
done timely. So getting thosetimely and very important, I
would
you said something, and it kindof got me stuck on it. I parked
there for a minute in my head,you said that you equate it to
your value to time. You savethem time. Well, I mean, that's

(26:12):
only step one, in my opinion,for a CFO. I mean, a bookkeeper
saves a person, a businessowner, time. You know, because
the chances are a business ownercan figure out how to do their
own books, you know, but you'reit's an expertise that you're
bringing. It's a the value addis the education and the

(26:33):
experience that probablysurpasses that entrepreneur. You
know, most people start up acompany. They're really good at
what they do because they camefrom corporate or something and
that world, I mean, that's mybackground. I came from big, you
know, Madison Avenue, and hatedand wanted to do my own thing

(26:53):
after 911 and so that's mystory, and that's how I became
an entrepreneur. So a lot ofpeople have the same kind of
story. They're really good atwhat they do, but they are not
good at all the other things,including the finances. So it's,
it's a in my opinion, it's a lotmore that you're bringing to the
table. It's something that theyknowledge that they don't know,
and expertise that they don'tknow. You're looking at

(27:14):
something from 1000 feet andgiving advice, even financial
advice, on the business, on howto help it to grow, how to, how
to not get into cash, punchproblems, you know, it's a
critical role. And I can see thedifference in companies when
that person is not present,yeah, I I almost all the time. I
mean, you know, because market,we get under the hood. We get to

(27:36):
know everything. I know wherethe bodies are buried, you know,
we do the PR, the clients thatwe serve, so we know it all.
That's why those NDAs are sostrict. And if I, if I catch
myself ever on one of the showsand I'm talking about a story, I
have to be very careful. Youprobably do too, I imagine, you
know from the financialstandpoint, yeah, so I just

(27:58):
wanted to give that back. And I,if you're listening today, I
know how he, Craig is a humbleman. I know he is. I just know
that chair is much moreimportant than how you described
it. I was like, Well, thatsounds like a bookkeeper,
yeah. And that's, and that'strue. You're very true. And
that's, that's, I may have soldmyself a little bit short on

(28:20):
that side, but everything startswith that foundation of
bookkeeping. You know, I canreview financial statements all
day, but if the information isnot in there, I'm only reviewing
10% of the data. Those meannothing, and I've wasted my time
viewing so, so you've got to getthat foundation in and, like I
said, in and incorrectly and intimely. And it's, it's just,

(28:44):
it's, it's so important. Thenumber of times I've walked into
a client and pull up in the thebooks and I see 1200
transactions that need to becategorized going back nine
months. You know, I'm excitedbecause I know I've got a lot of
work to do, but I just, I'mlike, How in the world have you

(29:05):
functioned at all? And I knowthey look at their daily online
they log in online bank and seewhat's in there, and they're
like, Okay, I can make payrollthis week and and move on and
try and get more customers andmore business and and, and I get
it. This is, you know, this ismy second stint as an
entrepreneur. I know you getbusy doing the sales, you get

(29:28):
busy doing the meetings, thenetworking, and then you lose
focus on on the management andstrategy side of the business.
And it's, it's hard torelinquish the day to day and
and take that time to lookforward. And that's where CFO
can really help pull a lot ofthat data out and present it to

(29:48):
you. And you can look at it,review it, and make decisions in
a two or three hour period,versus, you know, you doing it
yourself, trying to figure outwhat's a what's a gross margin,
again, what is, you know? And.And all of these things can be,
can be done for you in a muchquicker and more succinct
presentation that you can thensay, okay, you know, I want to

(30:11):
do X, Y, Z, your your consultantcan say, well, you can do x and
y, and then we got to wait sixmonths for z, provided things
continue on the way they arethat that makes decision making
logical and documented versusfrom the gut. Some people like
to do it from the gut but, butif you've got the gut feeling,

(30:32):
let's put some numbers behind itand prove it out too
well. With that said, let's talkabout budgeting a little bit and
the importance of budgeting. Icould tell you from my side of
the table, I more times than notif I had $1 for every company
I've met and I say, what's yourmarketing budget? They may have

(30:53):
a number in their head. Theydon't have an actual budget. So
what that tells me, withoutknowing anything else is they
probably go over budget attimes, and then they're
overspending, and they say,marketing doesn't work. It
works, but there's a process,and there's a formula, and
there's there's a lot to it whenit's done right, and budgets is

(31:15):
how you say the books, you knowyou have to put the numbers in.
So my world, if I don't have abudget, I literally cannot put a
pen to paper. So you see itprobably much deeper than just
marketing. So
talk about it. I
see it deeper, but I see it morefrom a from a complete package.
Obviously, I'm looking at everyline item on the on the P, L and

(31:35):
balance sheet. So being, beingin there, and you know, I when I
always, always caveat when Isay, you know, budgeting to
realistic budgeting. Everybody'sgot a budget in their head.
Business owners, they love theirbusiness. They think they're
great, like most of the timeare. I did. I did a million last

(31:57):
year. I'm doing 10 this year. Ijust know things are going to
explode, right? Okay, well,let's, let's take a step back
and realistically look and seewhat makes you think you're
going to go 10 times revenueyear over year. Normally, that
does not happen. So realisticbudgeting is very important, and
it goes hand in hand with thecash flow forecasting that I

(32:18):
mentioned earlier, and beingable to look at your financial
statements and compare it towhat you did budget and see you
know, why did you if you've gota realistic, logical, strong
budget and your number, youractual numbers, are either
meeting it or not, that givesyou a whole lot more information

(32:39):
to dig in and say, Okay, why amI not meeting these numbers that
we put together in this budget?Could be the economy could be
that your your service line, hasdecreased by five services, your
product line, you you're overbudget now because you've added
all these new products that youdidn't think you were going to

(33:00):
add, and having thenexplanations for those
variances. You know, that's whatthe big companies do. They dive
in and everything is tied to thebudget, and they dive in month
after month, and everything isexplained. Okay, you budgeted
this, the numbers this why, andthe person responsible for that

(33:24):
line has to give explanations.So it should be no different in
any $2 million revenue budgetthan it is for a public company.
It's just as important, if notmore, so because you're dealing
with someone's livelihood,you're, you know, you're not
just dealing with a month and apublic corporation that could

(33:45):
release some more stock and get,you know, billions in capital
influx into the business to beable to fix that issue. Can't do
that with Mom and Pop. So beingable to know that budget, know
it's right, know it's accurate,or at least logical, and then
comparing your actual numbers toit can open up so much

(34:09):
information and so much guidanceand direction for future months,
future years, you know. And theneventually you're getting into
you start talking about, okay,you know, what am I doing this
for? I'm I'm having thatquestion, What am I doing this
for? I'm six and a half monthsin almost seven Why am I doing
this? You know, so, having tofigure out, you know, where you

(34:33):
want to be in three years, infive years, in 10 years, when
are you ready to exit? What doesthat look like? You know having
those financial statements aneducated, sophisticated investor
knows when you've been doingwell in your accounting and when
you've not been doing well inyour accounting may not affect
whether they want to buy you outor not, but it sure will affect

(34:56):
the value that you're going toget for your company. If you've
not been keeping good books,they see something like that,
and they they know the business.They know the the capabilities
of it. They're looking theirchops because they know they're
getting it on, you know,potentially pennies on the
dollar versus having to paymaybe they're paying a two or

(35:17):
three multiple when, ifeverything was good, tight,
tidy, excellent financialstatements, excellent history,
excellent forecasting. You know,you could then go to a 10, 1214,
multiple when you're exiting,when you've got things the way
they should be, versus andyou're losing out, you know, on

(35:38):
several, several degrees ofmulti multiplicity there, and
that's just because you didn'ttake care of the basic daily
transactions and financialstatements. I just
got a little stressed.
And I know I'm talking a lotabout the exact accounting side.

(35:58):
Obviously, that's where I camefrom for longest, but all of it
ties together. Like I said,You've got to have that
foundation of the day to day.You've got to have those
transactions reviewed. You'vegot to have a clean balance
sheet. You can't let stuff gettied up on the balance sheet,
because that just means you gotto clean it up later. And that's

(36:19):
a big number, usually that hasto get cleaned up when it's
found and fixed, but all of thathas to be right before you can
even start looking forward, andthat's where the CFO comes in.
But again, all that data andinformation has to be right and
timely. I had a client one timethat that we were trying to do

(36:42):
some, some succession planningfor him and things. And the last
time they got good financialstatements was like March. This
was in October, and thenNovember. And, you know, I just
couldn't get their theirbookkeeper to get caught up and
get things timely. And we werebrought in there by another

(37:08):
party of theirs that was lookingto help them with their
succession planning. Well, Ican't give them the numbers that
they're wanting and data andforecasting, because nothing is
recent doesn't be no good toforecast from a march. P L, when
I'm in office, right? So it'sall tied together. It's all time
together.

(37:29):
Yeah, it's a snowball. And sowhat do you do in that
situation? Is that when youstart making recommendations
that they may need a differentbookkeeper, or, you know, the
roll up your sleeves, like, howdo you take care of that? Yeah,
usually,
I haven't had to recommend a newbookkeeper very often, because
they kind of once I bring thingsto light from the review of the

(37:53):
financial statements and so on,and trying to put a cash flow
forecast together, and trying todo some modeling, some forward
looking P and L forecasting, Icome back with questions of,
Hey, I saw this, and, you know,it was this, and now this has
changed, or whatever. Andthey're like, yeah, that's my
bookkeeper. They're not, youknow, and they they probably

(38:14):
already have an understandingthat they may not be as on top
of it as they like, as theywould like. And then they start
investing more money in afractional CFO. And they're
like, Okay, I gotta cut bait atthis point. And then then
they're saying, you know, theykind of, they kind of figure it
out on their own with a littleprompting from from whoever's

(38:36):
doing the review, whether it'sthe bank, whether it's their
wealth advisor, whether it's me,so but yes, that does happen
occasionally, and then, youknow, just again, getting
someone who's, who's, and it maybe the wife, and that's the
hardest, hardest situation, orthe business owner himself, for

(38:58):
that matter, it, But it's just,it's just getting them to
understand, look these things.It's all tied together. And in
order to do this thing at theend of this line, we've got to
get everything right at thefront and not having those
numbers in there. It doesnobody.

(39:19):
You are you were talkingearlier, and you made, you made
what you do very human and likeagain, outside looking in. When
I was, you were talking aboutthat business owner and what
happens day to day, and the thetrials of being a small business
owner. And, you know, it's, it'ssimple, but it's so hard. And

(39:41):
these people, you know,everybody loses sleep for
different reasons, right? But Iwas thinking like, I related to,
well, when is it the right timefor a business to be ready for a
fractional CFO, like, how dothey like a light bulb's got to
go off that I'm over my head. Ireally need somebody with more

(40:01):
expertise that can look at thisdifferently. One is, is there,
like, a, I mean, you may say allthe time, everybody, like, I say
that about market, everybodyneeds marketing. Of course, you
do well,
like I said, every, everycompany needs the bookkeeper,
someone to review and someone todo the forward looking. The life

(40:24):
cycle, usually is, there'sthey're looking at, hey, I've
got substantial growth. Youknow, I have four or five, six
times my revenue year over year,or two or three years over time.
And I don't know, I'm kind of,I'm growing to a point where I
don't know how to manage thecompany. That's a perfect

(40:48):
example of, yeah, you're, you'reat that point, or a little bit
past, when you need to bringsomeone in with a little bit
more financial acumen, if youwill, about it, to work with
you, to give you some guidanceon that expansion. Like I said,
you're looking to move into adifferent market. You're looking

(41:09):
into finance, to franchising.You're looking into,
you know, opening new stores,
any any time that and could bethe opposite. You know, you're
like, I'm at six stores, butthese three aren't profitable.
You know, I need some numbers totell me for sure. Yeah, I need
to close these three, or thesetwo, or consolidate, or

(41:31):
something. Pricing analysis. Youjust don't feel like your
profitability is where it shouldbe. That's when you can bring
someone in at that point. And alot of these things you don't
have when you bring someone in,you're not signing a lifetime
contract with this person. A lotof times, on the fractional CFO
side, sometimes it is anongoing, you know, especially if

(41:53):
they're in rapid growth mode andthey need someone just
constantly. There. A lot oftimes it's just a project. You
know, come in for two or threeweeks, for eight to 10 hours a
week, and knock some project outlike a pricing analysis of all
your services. You know, whatare my costs? What are my true
costs, and am I charging enough?Am I paying enough? Are my

(42:17):
people utilized enough? All ofthose things are things that
CFOs Do you know, for any othermajor corporation or their team
does so you're looking at,you're looking at things like
that. It's, you know, like Isaid and you joked, yes,

(42:37):
everybody needs one at all timesfrom the $250,000 revenue a year
company. You know, no, theydon't need a CFO in there for 20
hours a week. But could they usesomeone to come in for three
hours a month and really givethem some forward looking
statements and put together acash flow forecast and and

(42:58):
really show them, hey, you'redoing great. You're going to
have 80 grand in six months.Look, if things continue on the
way they are, what do we want todo with that? Is that
retirement? Is that hiring twoemployees and just sticking that
in savings and paying them fromthat so that you're not really
affecting your cash flow, yourcurrent cash flow? Is it, you

(43:22):
know, I'm ready to start a newline, and I need this for
inventory, whatever the case maybe, you won't know that by just
looking at your online balanceevery morning, you'll never
figure that out. So having thatcash flow forecast is very
important. Again, the budgetingpart is very important. And then
all the things that come beforethat, again, the reviews and the

(43:48):
day to days. But bringing that,that fractional CFO is, is
usually the trigger, is somegrowth event or some something
that the owners got a niche toexpand, to exit things like
that. So, okay, that.

(44:10):
So basically the answer was yes,it could be, I love that you
said that could be a few hours amonth like that really opens my
eyes to the smaller company.They can still get the advice,
they can still get the eyeslooking at it from a different
perspective, and it's not asexpensive. Yeah,
no, and that's, and there goesback to that definition of

(44:30):
fractional. You're part time.You're really there when you're
needed. And in my case, and inother companies cases, it's not
a, you know, you can, you cantotally ramp it up and ramp it
down. If you need them for twohours this month and you need
them for 20 hours next monthbecause you've got a special
project or you've got a thingyou really want them to do a
deep dive analysis on, and thenthe next month after that,

(44:53):
they're back to two hours. So,you know, it really just, it's
not, you're not locking into alifelong contract. You're not.
Walking into in some cases youare, in other cases, you aren't
depending on if they're aretainer basis, but you can
quickly negotiate that with themand just say, look, I only need
three hours a month. If I needmore, I'll let you know.

(45:16):
Some may want to do that. Somemay not want to do that.
I, for one, would love thoseengagements. So
Right? I get that now it makesmuch more sense, even knowing
you, I didn't know that, sothat's great. When would you say
a CFO? So let me preface this,when you get behind the veil,

(45:38):
you're talking about money, andyou mentioned earlier. Sometimes
it's the wife or, you know, oneis family run companies like
your chair changes your shingle.Is more about therapy, you know,
can I go through it too? When doyou when does the CFO step in?
In what instances would youlisten? I have blind in the sand

(46:01):
here. Or when? Do you know whenyou should just sit back and
maybe, hey, here's this thing,and just see what they say about
it.
How do you balance that it isonce you are in family, run
businesses, you're dealing withspouses, you're dealing with
siblings, you're dealing withgrandchildren. You know, it,

(46:22):
it's, it's always very touchy,and you have to be careful. But
usually the business owneralready kind of has their mind
made up a lot of times. In myexperience, anyway, they've,
they've, you know, unless you'rejust bringing some new
revelation to them, of, hey, Ithink your grandson might be
stealing some money, and this iswhy I definitely got to have it

(46:46):
all laid out and very backed upand very documented before
you're bringing anything likethat in. But if you're, if
you're going in and you'resaying, you know, asking some
just generalized questions. Youknow, what is their background?
What? Why did you put them inthat position? What is, you
know, they probably already havean idea. Yeah, that's not

(47:10):
working out. Or they have somequestions already in their mind.
And you're not really bringingnew revelations to them. You're
just, you're solidifying theiropinion already. Now, does that
mean they're going to make thenecessary change? No. And may
tell you, you know, look, I knowI probably need to cut them, cut

(47:31):
them loose, but you know, theirfamily, I can't at this time, or
whatever this case may be. Soyeah, you have to be cautious.
You have to be very politicalabout it. And sometimes it's,
it's non family. They're justlong time partners, you know,
they've been in businesstogether for 40 years, or

(47:52):
whatever the case may be.
Those are, those are almostworse than family members
sometimes,
right? Yeah, it can be, I guess,especially if it's a long time.
All right, I planted a seedearly on my last big burning
question. So, like I saidbefore, many occasions, you find
the CPA or CPO or CFO is thekiss of death of the best

(48:16):
marketing plan in the world. AndI'm, you know, it's funny,
because, like, I don't knowabout other agencies, but we're
very fiscally responsible. Like,there's a mathematical formula
we stay within. We areconservative in in how we have
them investing in theirmarketing, is we use two to 6%
of gross anticipated as thewindow. No Wrong answer. You

(48:37):
know, just no. 2% is going to bea little bit more conservative.
Six will be more aggressive, andI won't let them go over 6% I
will literally stop it. Oh, Ireally want to. That's awesome.
My last agency let me spend 10Uh huh.
And why am I here? Yeah,
it's I figured out the formula.I figured out the math. So so we

(48:58):
are very respectful, but I haveseen CFOs and CPAs step in and
all of a sudden they stop theirad spend. I'm like, What are you
doing? You know, if my sales somy burning question, and you may
break my heart, I'm not reallysure. What advice do you have
for business listening today onhow to be fiscally responsible

(49:20):
when it comes to marketing theirbusiness.
I think it goes back to what wetalked about earlier, is
budgeting
and knowing the data.
You know you've the data isthere. All the information's
there either, either that needsto be input, or that is input
and just needs to beinterpreted. But you know, you

(49:42):
can really determine based onwhere you stand on cash today,
where you forecast it out to bein three to six months and and
what you're trying toaccomplish, and working with
with the rep. Marketing personlike yourself, that gives you

(50:03):
those buffer zones of what yourspend is going to be, what your
potential reach is going to be,what your potential return is
going to be. You know, ROI isone of the big calculations that
CFOs are going to do on any newcost. Is, what's this bringing
back to me, I kind of mentionedit earlier with the prospect I'm

(50:23):
working with, and he wants thatfour to five times ROI for
whatever he's spending onwhoever he's bringing in. Kind
of hard for a CFO to have thatkind of ROI, but
depending on what kind ofstrategy
you can bring in. But back toyour question that that is, you

(50:44):
know, dealing with that data.And, you know, being a business
owner myself, I understand thethe importance of every aspect
of a business. Sometimes a CFOgets so focused on the
financials, and that's now, youknow, a 2% cost that I was not
anticipating or hadn't budgetedfor, that that may kind of hit

(51:08):
them broadside and be somethingthat they're not for. But again,
it's just analyzing the datathat's there. What's your
budget? You know, working withthe business owner and is this
something worthwhile? I wouldsay I'm not your typical

(51:29):
accountant. I like I like themarketing side. I like the sales
side. I have to do that with myown business. I'm not only the
the the owner and thecontractor, but I'm also the
salesperson and the one outthere, the business development
person. I've kind of got all thehats on so I understand and

(51:53):
appreciate that need for abusiness and and I'm weighing it
myself, you know, trying tofigure out, what should I do,
marketing, if I do What kind isit, and things like that. So,
but again, I'm talking more of abusiness owner than a CFO. From
the CFO standpoint, it all goesback to the data.

(52:14):
Well, I do know somebody thatmight be able to navigate that
and just kind of put it outthere. Just have a conversation.
Let's I love doing that forpeople, you know, when you're
talking about the ROI and thatperson that wants five times the
biggest challenge inadvertising, not marketing,
advertising, is the brandcomponent that gets put into

(52:35):
every single strategy. Sothere's got to be something. If
you've been a listener for anylength of time, you know, I talk
about this a lot, that brandcomponent says who you are, what
sets you apart from yourcompetition, what is unique,
What's your why in your and thatbrand statement has to be there
when it's not whatever lead gen,I call it, direct response that

(52:59):
You're trying to generate willnot be as effective without the
brand component to it. I havefound that even when it's a
little sprinkle of branding, itcould be paid social media or
something very cost effectiveand not done in mass, but just
that the name gets out there,the direct response is so much
more powerful, like I've seen,I've seen, I've taken on clients

(53:25):
where all they were doing waslead generation, and we just
added, we took a little bitaway, added a little bit of
branding, same direct responsetool, and that direct response
went from like a 5% return to a30% return, and that's An
average number. So how do youget the the business owner that
I want to see five times returnon every single dollar I spend?

(53:48):
Brand dollars? It's not as easyto track the ROI. It is
difficult, but it has to bethere. It's It's not like I just
want the company to spend moremoney. I really don't. But
without that, I know that Isaid, let, let me do this for a
period of time, and you'll seethe numbers increase. And once I
get a company to that point,they allow it. But like people

(54:10):
in your chair are like, brandwhat? What's the return on this?
Well, it's built in. Thestrategy as a whole is what
brings the result? It's not athing, you know. It's not an
item. We're going to do this onething, and it's going to rule
the world, and we'll makebillions. No, it, there's their
steps. So how do you navigatethat, and how do you equate it

(54:33):
in a budget, you know? And tellthem the clients got to turn
around and say, Oh, sure, well,the CFO said,
but we're not going to return onthis directly, but it works,
yeah, oh gosh, that's a toughone. Um, yeah, you know for me,
I really my why. I don't know ifthis is what you're exactly

(54:58):
looking for, but my why is. Is Ilove the entrepreneur spirit,
and I really, truly want to helpentrepreneurs make the most out
of their business. And I knowthat. I don't know it for a
fact. You know the old adage,you know, most small businesses

(55:18):
failed in the first five years.I've got to believe that there's
a pretty significant percentage.I won't say it's the majority,
but a pretty significantpercentage of those fail because
they they fail in theaccounting. They don't know what
their costs are. They don't knowhow much they should be
charging. They are out therethinking they're making a lot of

(55:39):
money, when at the end of theday, that every time they leave
the parking lot to do something,it's at a loss. You know the old
Dave Ramsey adage, it doesn'tmatter if you lose a penny or a
nickel or whatever. You multiand you sell a million items,
you're still losing a nickel peritem. You're still going to have
a loss at the end of the day. Itdoesn't doesn't matter. Volume

(55:59):
doesn't matter. So, you know,for me, it's really wanting to
help them understand and makethe best decisions they can,
financially and and getting inon that ground floor. That's why
I don't I don't mind workingwith startups. I don't mind
working with pre revenue becauseall of that accounting has to be

(56:21):
set up and accounted forproperly to once they are in
that revenue mode, they've gotit. Things have got to get
categorized correctly, or you'regoing to be, you know, it's a
lot cheaper to get it set up onthe front end than to bring me
in, you know, three years laterand fix the issue and fix the
big problem. So it's really mydesire is to help entrepreneurs,

(56:46):
small businesses, just knock itout of the park from day one and
not worry about the accountingagain. The old adage, work on
your business, not in yourbusiness. Grow it. Do it? Do
what you do best for thatbusiness and sitting up, doing

(57:10):
paying bills, doing payroll,creating invoices each night, is
not, is not what you do best forthe business, right? So,
yeah, that, no, that wasn't theanswer, but I would highly
recommend you enter intopolitics. Oh, okay, so good for
you. I'll let you off the hook.Craig, was there anything that I

(57:34):
did not touch on? Because ourtime is like we are beyond I
just enjoy talking to you. No, I
enjoyed this. This is great.
You know, I think
the one thing I didn't reallytouch on, I touched on a little
bit but, but having someonethere to assist you with any

(57:55):
type of financing that you'relooking for that is such a time
suck for a business owner. Youknow, having having someone
handle the communication foryou, having someone take care of
all the documentation for you,and just bring you to the table
when it's ready. As a businessowner, and not having to deal

(58:16):
with that on a daily basis couldreally substantially cut that
time, you know, from a four tosix month process to four to six
week process, depending on ifthe bank is cooperating in the
speed side of it. But, but just,you know, with the way the the

(58:38):
economy is right now and the waythat banks are not lending right
now, they're very selective.Having someone in your corner
that kind of knows where thebanks are coming from, who's
lending, who's not, is a is ahuge help, and that's where a
CFO can really step in and helpand guide that process to

(59:01):
completion in a lot quicker timeframe.
That's good. Yeah, I think ifyou're really listening today,
everything, Craig just said it'sin between the lines of
everything we talked about. Soit's all there, Craig, we're
gonna need lunch soon. You andI, sounds good. I think we can
help one another. Okay, so let'sbe a little shameless. Please

(59:25):
tell everybody how to reach youdirectly. What's the best way to
contact you if they have thedesire to do so sure.
My email is Craig at equities,S, P, E, Q, U, I, T, A, S,
sp.com,
email address is equities, x, p,s, p.com,

(59:47):
there's a Contact Me form there.There's a if you're looking for
a quote, there's a form there tofill out as well. If you go to
enough networking in Nashville,you will probably. Probably run
across me at some point. I'vebeen told I'm out there a lot,
and probably more so by my wifethan anybody else. But I enjoy

(01:00:10):
it. I enjoy it. It's it's one ofthe favorite parts of having
this business is being able tomeet people and make connections
for people, clients, othernetworking connections, so on.
Just I love meeting people andlearning what they do, and if
there's anything I can do tohelp them so that that sounds

(01:00:32):
self serving, but it's not. Itruly do like connecting the
right people together, so
that's probably why we getalong. We're very similar in
that way. So thank you very muchfor being on today, Craig. I
think it was very eye opening,and hope people benefit from it
and learn from it. And whetherthey're using you or making

(01:00:53):
sure, if they're in another partof the country, that's it. You
didn't say that, but ifsomebody's in another state, can
you work remotely and just asefficiently.
Absolutely, I currently havefour clients that are not in the
Nashville area, and everythingis done remotely. So yeah, with
with the Thank You COVID, withall of the capabilities of

(01:01:16):
working remotely, this job iscan be done pretty much anywhere
in the world. So any, any clientthat's out there that's needing
this type of assistance is, iscan totally be done remotely.
You know, obviously they wantsomeone there, occasionally, we
can make that happen as well.

(01:01:37):
Thank you for that. So thank youfor listening today, everybody,
as you know it is educational,informational. We're topic
driven. We try to have fun it.We're here for you, not for us.
The idea is you learn from it.If you're a business owner,
hopefully you take this topic bytopic and help to benefit your
business. If you have thewherewithal to reach out to

(01:01:59):
Craig, he's somebody I wouldhighly recommend to you. I think
there is a need for his service,and he and I are going to be
talking offline about a lot ofthings, I have a feeling. So
thank you again today, if pleaseremember to reach out to us, if
you have a question and youdidn't get an answer on this
topic, just email we put on ourpodcast. There's multiple ways

(01:02:21):
to reach out. If you're tryingto get the question to Craig, he
gave you his informationdirectly. If you want to do it
through us, we're happy to sharethat question with him and we'll
get you the answer back, orwe'll put you in touch if you'd
like. But do that and open thedoor to if you like the show,
please share it. Please get itout there. We as business
owners, we have to help oneanother. We have to help each

(01:02:42):
other grow. And if we all havethe same mindset as
entrepreneurs, we'll allbenefit. We're the lifeblood of
this country. As much as peoplethink that it's big corporate
America, it's not.
Do you know that we, on the lastshow I
just did, we talked aboutfranchises, and franchises
accounts for over $800 billionin revenue a year, like that,

(01:03:03):
and that's franchises. Some ofthese franchisees are
entrepreneurs just like you. Socan you imagine if we all put
our heads together and allthought positively and help one
another, instead of trying tobite, scratch and race our way
to the bottom? Let's start doingthat as a people, and we'll
forget what's going on in theworld out there, and the
economy, and we can make our owneconomy and do a lot better. So

(01:03:27):
thank you for listening today. Ilook forward to next time talk
to y'all soon. You.