Nobody wakes up wanting a fractional CFO

Welcome and thank you for for hosting. Appreciate you having us on.

Sure. okay, so twenty-five year entrepreneur, started in real estate and shifted my way into the energy space and along the way have kind of taken a approach of focusing on asset-based businesses. And so, you know, I think the genesis of that comes from a lineage of family entrepreneurs. But realizing that none of them were able to pass the assets that they built on to the next generation. So my goal is to do that and help other businesses along the way to, you know, basically manage his manage their finances forward instead of looking in the rear view mirror, because by the time you see something in the rear view mirror, it's too

Yeah, so I I've said this before. I I don't think there's very many people who like wake up one day and go, you know what I need today is a fractional CFO. I think it it's more of they have a problem and we're the only ones who can solve it in some form of their market or people they trust and education leads them to say, you know what, sounds like this is someone in that that would be a value in my life. And so I tried a bunch of different ways to kind of get that across. And what I found is that the the heavier kind of retainer time and materials model is sometimes useful to get started. It depends on the situation they're in. But we wanted to be viewed as a partner from the get go and to prove our value because a a lot of folks don't know what a CFO is going to really do for them. And so if we can shorten that period of bringing value and creating trust and you know make it in an offer that people can understand on the internet, which, you know, 90 days seems to be kind of that path that we we attempted that and it's it's really taken up traction. And so most of our engagements actually last years and they move more towards a fixed fee solution, but it's really difficult in the sales process to figure out what that fixed fee needs to be until you dive in and it usually takes about 90 days to figure it out.

Well, it's a, you know, it's i if I'm keeping it broad strokes and not giving anybody specific situation, usually three things happen. one, they first realized that the way that they were approaching the finance function was they were under investing in it with resources and kind of muddling together the j the different job descriptions. So we look at this, you know, quite simply in small business, there's usually a bookkeeper, a a bookkeeping function. there's an accounting controller function, and then there's a strategic decision making function. And many times all of that is jammed into the founder's head, or maybe somebody they trust, a family member, somebody that works with them in operations is given one of these roles, but it's not a dedicated role and they don't necessarily have experience doing it. So that's the first thing we got to sort out is what does that stack of of effort look like and how do we make sure that it's led by somebody that knows what they're doing and where they're heading. The second thing is that most folks, as I mentioned earlier, are looking backwards. So I equate this to getting into a, you know, ride share. If you got into an Uber, let's call it, and the person driving it, for now it's still people, not robots, but the person driving it was looking in the rear view mirror the entire time for the first, you know, couple of blocks in a city, how many blocks until you would act say, Hey, I need to get out of here. This is too dangerous. Right. You need somebody looking forward to know where they're going. So that's the second part, and that's the rolling forecast that we build in and and that cadence starts from day one. And usually by day 60 to kind of day 75 is where it starts to take hold. And then the third piece is the strategic decision making that comes by having that information. And so, you know, a lot of folks are operating off of their gut, making decisions purely off of instinct. And what we found is that data is a much better you know, dashboard to to operate off of.

You're saying prior to working with us? you know, I think that money and specifically the financials of a business, to most founders and owner operators are like this, they're either boring or they're scary. But either way, they don't like dealing with them. And so they procrastinate on putting them away and asking the numbers what are they telling me? And ultimately, the numbers are just a representation of human psychology. Right. They're decisions made in the rearview mirror and it tells you what you value and where your priorities are. So if you're unwilling to look at that, then you maybe don't have the clearest sense of what you truly prioritize. You maybe say different things for different audiences. So that's an that's a huge common, I guess I would say, mistake. and we could get more or less into why I think that is the case with most folks, but we'll leave it there.

Yeah, I mean I I have a a core belief that is is folk formed over the past you know 15 years, including my own exercises, that most people bring a psychology to money that was given to them from their youth, and they either didn't have enough growing up or they had too much. And this was basically what they were told. Obviously, statistically, more people didn't have enough. And it creates a psychological scar tissue. That carries right over into business where they don't think they're good with money because somebody was telling them that when they were growing up. And the reality is, like, you know, you're not neither good nor bad. You just are with money. But it represents really as a tool, how do you use that tool? And so I think that's what I'm trying to unlock for folks is this ability to understand their own personality and how it fits in in their risk profile, and then be able to make decisions and then ask themselves how those decisions play out and should I make different ones going forward?

Well, as an entrepreneur, and and that is one of our angles into the market, is we are the entrepreneurial CFOs for the entrepreneurs, the ones that we are in ourselves. So energy sector, real estate, health tech, SaaS businesses. You know, as a founder and owner of those type of businesses myself, I can speak really clearly to the the the value that it's gonna bring. But the reality is that. Our services work for everybody. We just, you know, you got to focus on the internet. So those are the ones we point at. But we have use cases from manufacturing to pet care, robotics, supply chain. lots and lots of businesses have come across our way, as well as consultants and professional services, which I know is the space you focus in.

Or I'll try to I'll try to, you know, snapshot. So Green New It was the first scaled startup that I participated in. going on about twenty years ago is when it launched. it was an energy efficiency play in the mid-Atlantic of the United States. and it was, you know, a heck of a ride, but in hindsight, it was a flawed business model. Probably from day one, we pivoted several times, but the business model kind of just got harder at scale. And so I think the lesson learned was one, you know, choose your business model wisely. And two, you know, use the numbers to determine how that business model is working out. And in our case, it was a subsidized business model, basically funding energy efficiency projects through the utility. And the biggest hole in it was the cash conversion cycle. So it would take about nine months to get paid for projects. And as a small business without outside capital, that was really difficult.

Well, I'm not sure that stat I think it was we've worked on that many deals. we have not closed that many. We probably closed several dozen. I and I think that's actually a good point because most deals don't actually work out in MA. Either before they close, they they get they fall apart in diligence or they fall apart afterwards. And if we're talking about MA and we're talking about selling one's business enterprise for value, I think before you market it, you must understand it. I don't think you want to go to market and then figure out what you're worth. I think you want to know what you're worth, see if you can shape that value into a better position and then market it. and when you market it, I think, you know, what do people care about most? they obviously clear care about the value that you're providing to the end user. they care about the concentration risk. Is this all within one or two customers? And then they, you know, if I had to pick a third thing that the buyer's gonna care about is is probably actually it's probably the first thing. It's the people, right? Is when you sell a business, at least today, I I know the robots are coming, but the the people are really what makes up that business. Good people make up good businesses. So, you know, thinking about how are you going to transfer that value without sending a shock to the system if you were to leave your organization or you know, step back. because I think a lot of people just assume that they're gonna get to the closing table, hand over the keys, and that all the people are gonna go for the ride with owner number two. That's not usually how it works out.

Well, I'd say we're we are a forward-leaning organization. so we're definitely you know, the type that get in front of a wave as opposed to, you know, stubbornly stay behind it. we utilize AI for you know our own organization a lot to streamline things, create workflows, do research. but I would say we are unwilling to hand the keys over and just assume I see a lot of errors made by the AI that I use, a lot of it for marketing purposes where it's not as painful. But if that was operations, that would be a big problem. I mean if you're in the business of being exact and understanding why you've come up with something, if you hand that over to someone else, you've handed over your agency. So I think my take on it is that we are in the first stage of a multi stage revolution and that ai is not going anywhere and that as a human if you want to be competitive in the generations to come that you're gonna need to augment your skills with technology. It's it's kind of a merge that we're heading through. And everybody's got to navigate that themselves based on knowing what they deliver and how they deliver it and where AI is best. Cause I don't think there are clear experts that know you and you know where AI is where AI is heading. per se, if you're especially if you're small business. Maybe if you're large business, it's a little different. But yeah, I I I think you know, some of our we've been let go in the past year by a couple clients who said, Hey, I I basically have programmed an agent to do everything you guys were doing. And, you know, to them I say, Good luck. Like I don't I don't have any animosity, but I think that there's something missing there. When you take the human out of the loop and you're making strategic decisions around your numbers. And you're just dumping everything in, you know, once a month or whatever it is and and getting some report. It does there's nobody there who says, Hey, look, I've experienced this. I've seen around this corner, I know what's going to happen next because I've seen that pattern. and they, you know, again, it's all about what information is is that receiving. So, you know, I I think I think it has a very useful role in finance. but I also have seen a lot of errors that cause decisions to be made in an incorrect direction.

With hindsight, You know, I think well, let me give you a little context on where that mindset came from. And it it came from being at a little different stage in life where, you know, the kids in my life, my children, and their needs are of a higher priority than the growth rate of my business. And so I've tried to look at the year less in this systematic ninety day cycle that Wall Street might project on a you know, on a business and more of a well, hey, look. From school starting to the holidays, that's a sprint. You know, from you know, just after the holidays to you know, May is a sprint. And then there's really the summer season where things get very quiet. and so it was more of a personal reflection in that post, I believe, but I've also realized that you know, there's there's seasons in everybody's business, and you you're not gonna necessarily know what those are, especially if they don't know what they are. And so a longer sales cycle is something that I in hindsight wish I would have understood and maybe try to be a little less transactional in some of my original relationships. building referral relationships, knowing that, hey, somebody might I might get to know them over, you know, two to three years before I get my first referral from them. and then you know, on on the purpose of my businesses, you know, it's been I write a lot about. the decade of Green New It, but also the decade after, which has been the one that that's kind of just completed, which was a really a planning and a setup decade. And the next one that I'm now on in my business trajectory is about building these assets to own and operate for the rest of my you know days on earth and maybe hand to my children again if they're if they're willing and open to taking those on. And so, you know, I think just having more of this long term view as opposed to a short term one since You know, Wall Street's not coming to buy my business and so quarters don't really matter other than just using some clear marker in the sand to compare time periods.

Well, just like you found me on LinkedIn, I'm I'm a you know user every day of the, I think one of the more powerful business networking tools in the world. our website, sustained CFO. We've got a YouTube presence that's building around my personal brand, Josh Notes fifty five. and you know, I think those are probably the three ways that are are most, but also, you know, if you're in the Maryland, District of Columbia, Virginia area. I tend to, you know, spend my time at networking events and play a lot of charity golf events. That's one way I get out there and and meet new people. And, you know, I love meeting humans on podcasts like this, but also, you know, I think in person is not going away.

All right, thank you. Thank you for having me.