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7 Things Every Aspiring Outsourced CFO Needs to Ask Themselves

What is an Outsourced CFO? Somebody just asked earlier, I don’t want to do bookkeeping, so what is an Outsourced CFO? I think one of the big challenges I’ve discovered in going through this process is that people don’t know what an outsourced CFO is. Clients don’t know what it is, and accountants don’t know what it is. So I went through and have defined it in this chapter in a way that we can all have some context for what it is that we’re talking about. And the first thing I want everybody to think about is this concept of form over substance. 

If you’re doing a basic engagement where all you’re doing is reconciliations of the month end close, you’re not doing any higher level reporting, you’re not doing any AP or AR, you’re not doing any controller level services like accrual accounting or a consolidation or anything like that, you’re just doing monthly accounting, closing out the books…then I want you to call yourself a CFO. I think if you’re doing monthly accounting services, you should call yourself a CFO, even if you’re doing basic services. I’m going to talk about why that is. So I’m going to tell you to use the word CFO. How many people have the name bookkeeping in the name of their company? Strip that out because already off the gate there’s a concept of what you are and what value you’re bringing to the table., I want that word bookkeeping out. Change it

The kickoff call is important to me because if you just send a list to the clients, they’re not going to respond. And I tried that. Then you’re like, “Oh, well they haven’t sent me this” and “The onboarding takes forever”. So what I do is explain to them, this is how it’s going to go. You’re going to sign on, we’re going to schedule a kickoff call. It’s best to have any of the players that are going to be working with us on this call. Generally, I’ll do a Google, like a meetup call or zoom or whatever video conferencing that you tend to use. I do that for a couple reasons. For video because I like to share my screen. I use the checklist, which we also have in the material for you and I’ll show you a little bit about what those items are.

I like to do the video conferencing because for one they can see the checklist and they can actually visualize what it is I’m asking for. But it’s also important that they see who I am. And I tell them, I just want you to see who I am. I’m actually a real person,  hopefully you get to know me and we get to know each other. You also know any of my other teammates that might be working with you. And vice versa. I think it gives them a little bit more assurance and just creating that relationship. So the kickoff call, the purpose of it is to really review the scope of work, to gain access to anything,  talk about any sort of communication expectations and any other really important deadlines.

Most of the complexity, most of your time is going to end up here, but it should not be the first priority. So I think it’s a big thinking mistake that people have that they have something that takes a lot of time. So therefore it’s the first thing they work on, right? It’s the thing they allow the most into their lives, right? They let the customers text them, email them, they let the customers email them directly. They work on it first thing when they get in in the morning. They don’t set the boundaries. If you get one thing out of this week, is just to tweak your time allocation a little bit and just to tweak your priorities to the right priorities. Let that compound over time and watch what happens because it doesn’t take but a small improvement. How many people in here know about the concept of compound interest? You guys heard the concept of compound interest. I’ll let you on a little secret here. Compound interest is not just applied to money.

Compounding applies to knowledge. It applies to thinking. It applies to skills, it applies to many things. If your interest isn’t compounding and you’re going into debt, you’re never going to end up anywhere. So, if you’ve got the wrong priorities, you’ve got the wrong time allocation, you’re not going to get on the momentum.

Here’s the thing about the CFO business that’s different than financial coaching. It’s also different than tax and tax planning. These are big deals and these people will stick around for a long time and if you get one client at $2,000 a month, that’s $24,000 a year. If we get that person to stay around for five years, that’s $125,000, it’s a six figure deal. So when we do get a client and we get them onboard and we get them to stay, there’s a lot of value that’s created over the long term, but we don’t need that many individual clients on a weekly and a monthly basis for appointments and for meetings. So it is a problem and it might be the most complex thing for some of you in this room, but in all my research, it is not the most difficult thing to do for one of these companies.

If you get a financial coaching client for $4,500 that’s one time. If you get a monthly recurring accounting client for $12,000 recurring for how many years, it’s just different. In fact, I would say that I’ll give you another psychological component to this. 

People that cannot delay gratification vs. people that can delay gratification. Because with financial coaching, yes, you can get up fast or higher, but it can also drop in an instant and you have to be on it like crazy. Recurring accounting clients, it takes a little bit longer to get up, but it’s an asset you can sell and it’s almost impenetrable. When I talk to people and all my research that the business doesn’t like, especially if you don’t have like one big client that’s like $14,000 a month. If you can get a good distribution on clients where there’s no one client that’s more than 10% of sales, that business ain’t going away. It ain’t going to go away.

Once it gets to a certain size, it’s very hard to take that business down. With a Financial Coaching business, if you get depressed for three months, it’s gone. So it’s just different. I would absolutely not say for anybody in this room that one is easier than the other. Neither of them were easy. They’ll come with different types of challenges and you have to be honest with yourself about which one you want to do, what type of challenges you want to face because they’re going to be totally different. I mean, Financial Coaching is going to take a lot more sales and marketing. Recurring Accounting is going to take a lot more service. Delivery, onboarding, hiring and training, both of which can be incredible, but they’re different. 

Hw many clients do you want onboard a month? This is important for you to go through this. Now divide that by 20% because you’ll probably close 30-35%, I think 20% is reasonable. If you’re closing more than 30-35%, your pricing is too low.  So divided by 20%. How many strategy sessions, how many appointments do you need a month? If your number is I can onboard four clients a month, that means you need about 20 appointments a month, right?Or maybe it’s 25 or maybe it’s 30.

How many years left till you retire? If you assume the same growth rate between now and the time that you were retired on average. How big is your company going to be? Who’s got a number for me? How big would your company be if you grew at that rate? Let’s see, Judy, I’m going to guess. Judy’s probably 23, 24. Whatever the age is, right? I don’t need to need to know everybody’s age, but if you take your age, Judy’s age of 24 then to the age of 70 she put her number down as 860,000 like I said, even if you take 860,000 or you take half of that 400,000 whatever the number is… If it’s 300,000 I think I can grow my business by 300,000 a year times, whatever that is. Let’s make the math easy. At 30 years, that’s 9 million. You don’t think anybody has ever build a $9 million company?

We did $10M in sales last year. And you know, I joke with people, I joke with my sales guys, I say guys, sometimes people come into the program and they’re telling you they can do things and you’re thinking this person’s psychotic, right? They think they’re going to be so successful. But to be honest, the most successful people that have come through the program pretty much are psychotic.

Yeah. It’s true. You have to be psychotic to believe that you could do something that you haven’t done. But the only way to get it is to believe that you could do it before you have it. Otherwise you don’t even try. So you have to believe it in your mind before it happens. That’s the way it works. If I would have told people that at my age and my situation, that we would have done that this year, they would have said, that guy’s an idiot. That guy’s stupid. He’s arrogant, or whatever the case may be. But you just ignore those people and put your head down and get to work.

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AccountingTax.com by Andrew Argue is now Corvee