1559: Fractional CFO for Seven and Eight Figure Businesses with Rob te Braake

Robert Plank 0:00 We're here with Rob from finance insight matters.com he's a fractional CFO. He performs accounting for seven and eight figure online businesses. And Mr. Rob walked away from elite banking and built clean tech ventures in China, only to discover that most founders are flying blind with their numbers, and Rob he helps these seven and eight figure entrepreneurs turn messy financials into real growth engines. So we're going to talk about it. How to get excited about your numbers again, how to get your business in tip top shape, how to ask for help, how to have strategy, all these things that maybe we forget about if we're pursuing the day to day. So we're here on the marketer of the day podcast with Robert plank. We're sponsored by D FY podcast.com we handle the podcast back end so you can focus on the conversation. And we're going to have this conversation today with Rob about getting away from flying blind and taking your numbers seriously, the finance hierarchy of needs and so much more. So Mr. Rob, glad to have you. How are you?

Rob te Braake 1:04 I'm good. Thank you so much for having me, and thanks for the intro.

Robert Plank 1:07 You're very welcome. Do you think there might be anything I left out of that intro? What currently has you passionate and so excited?

Rob te Braake 1:13 The one thing you left out is we're not only doing accounting, we're doing fractional CFO, FBA and accounting, we're doing the whole finance chain. And what? What gets me excited? It's AI. It's the fundamental transformation that we're going through in this case, and that's going to have a massive impact on our business, on your business, and on everybody. It's quite attempting sometimes to be in the bubble of the frontier, but I think it's still hard to underestimate, or, sorry, hard to overestimate the impact that's going to have. So that definitely has me excited and scared

Robert Plank 1:55 same 100% here as well, because AI like it's easy to forget that it's not alive, right? You treat it like a magic box, and then it can make mistakes, especially when it comes to numbers. It seems like it's better now, but I to wrap my head around I think, like, Okay, if there was, like, a manual task that would take me, like, 10,000 hours, and it could be done in 10 minutes or one minute. Like, that's how I think of AI, like, if I could flip through every record, or kind of like, you know, look at the big scope of things. But what's your approach to that? Because it's so easy for AI just to be like a magic, right, black box. So how do you stay sane? And how do you put it to use? And, you know, make money with it.

Rob te Braake 2:38 So we like to use it internally, a lot for the pure data side, crunching the numbers, running the metrics, cleaning up data, everything that's repeatable and factual that we use AI for, but then the translation to Okay, but what does that mean for our client? What does that mean that the gross margin went up? Is that good thing? Is it a bad thing? What's the story behind it, and what does it mean for the actions that the client has to take? That's where we're doubling down on, because that's the human side that AI, at least in the short term, cannot do nowhere as good as a human can.

Robert Plank 3:15 Okay, well, fair enough. And so as far as how, like you say, you do the fractional CFO and do the accounting and so, like, what's the typical like, type of business you help us there, like, a certain size, certain industry, you prefer

Rob te Braake 3:29 we anybody without cash money we could work with. But typically we are best suited for seven and eight figure online businesses. So a 5 million market dollar revenue marketing agency, a $10 million econ business, that's our sweet spot, and ideally there's a little bit of complication. So it's multi country, multi channel, something that makes it a bit more spicy, a bit more interesting, because a $10 million e commerce business with one channel or one product. It's very simple. You don't need us for that. You can do that with all the standard tools. I mean, I'm happy to sell it, but we just don't add a lot of value there. If it's a little bit more complicated, that's when it gets interesting. That's when the human side comes in, and that's where we are really good.

Robert Plank 4:19 Well, great. And I like that you're phrasing, right? You say things like interesting and spicy, and it's like, it sometimes it's so easy to want to avoid conflict, resistance, difficulty, struggle. But then, if you're an entrepreneur, it's like, no, I want that. Right? If there's this complex problem of someone selling e commerce in multiple countries, multiple channels, that's great. That means that that's an unsolved problem, right, that some other competitor hasn't got there first, or there's value, or we can really, like, unclog a business and, like, kind of, you know, get get them to survive when they might have failed, or get them to new heights. And so when you kind of jump into the. Spicy problems, so to speak. Is every client different or like? Do you see any like commonalities these days, where there's a lot of mistakes being made on repeat?

Rob te Braake 5:12 There's no shortage of mistakes being made. But the typical mistake that we're seeing, and we just onboard the client last week, that is a very classic case for that. People are very easy to make things complicated. This is an agency. They have four entities in three different countries, but it's actually they're doing one service, and it's all American clients. So they add a lot of complexity, which is great for us. I mean, I like it makes it more fun for us, but it adds a lot of complexity. Adds cost for them, it removes the transparency for them, and that's just a waste. So the first thing we're going to do with them is clean out all the complexity, try to make it simple again, still tax optimized, but as simple as possible, so that they don't have to get dropped, they have to be drowning in three different PNLs, and no idea what the actual total is, etc. So the common mistake is really just making things more complicated than strictly needed.

Robert Plank 6:14 I like it, and I think we've all dealt with that. We've dealt with like working with some weird CRM or some weird system. And it seems like the problem with that is, then you end up with someone in the organization has job security, don't they? There's someone only one person knows that. Oh well, I have to, like, copy these three columns and merge these, these p and L's all together, like one person kind of knows the magic, and they don't document, they don't write it down because they don't want to be replaceable. That's good for the individual, but not the larger whole. So we need to get get that cleaned up and pursue simplicity in all sorts of ways. And so as far as like, the like, your own journey, right? It's always great to hear about when someone has their own ups and downs, their own roller coaster, because you've learned things that can be reassuring to us. So, like, what's your own path been like? Have you really struggled? Have you had any of these difficulties?

Rob te Braake 7:09 Oh, yeah, I learned that the hard way. So in my China days, I lived in China for eight years, had a company there with a partner trying to build clean tech ventures there, and we were really, really sophisticated in tax optimizing everything. So we had more entities than we had people in the team. That's definitely an hindsight, a red flag that you want to avoid. So we were so good at optimizing for tax, but we forgot to make a profit, so we ran a pretty complex operation, had a lot of cost, didn't make any money, so we wasted all the time and energy in trying to optimize for taxes. That was quite the struggle, because we spent, I spent seven years in that business trying to get it off the ground. And after seven years, the conclusion was, survives. I can pay the rent, but that hawkish, the growth that we were aiming for, that never materialized. So that's been quite the grind. And if the one lesson I've learned from that, and I would still hope that nobody does it the way I did it, is if you're running a business and it's not working as good as you want, you double down or you get the hell out like modeling through for many, many years. It's a waste of time. It's a waste of effort, and the opportunity cost of your time is insane, because rather than muddling through on a business that's not really picking up. You could instead be spending time on another business that would take off. You're going to get a much higher return on that.

Robert Plank 8:47 I like the way that you put that, where it's it's you're saying, Go to one extreme or the other, right? Either, either quit the business or are, you know, double down on, on, on what you should be doing. And you're also saying it's not giving up, because it's like, well, you have to do something with your life. So if you're if you shut down business a and you start up business B, you're not just saying, like, I'm out forever. You're just applying your attention and your time where it should be applied and so, so yeah, it's great to, kind of, it's always great to talk to an accountant, a numbers person, because I don't know what it is about it, is about it, but there's, like, there's a mindset, right, where, like, when they're like, numbers focus, and they're about, like, making the system work. It's, it's refreshing, and like, it helps me to focus. And I know that you have some of these terms and technology you teach, right? Like, there's a finance heart hierarchy of needs, for example, is that your term?

Rob te Braake 9:40 That is our term. I don't think I could claim we invented it, but it's definitely one of the key things that we're trying to teach. Because people come to us and like, oh, I want high level CFO advisory, and I want all these fancy things. But when we started inside matters, I started as a one man, fractional CFO business. And every time you get a new client, the first thing you do is show me the numbers. Show me the reports. Where are we like? What's the business like? Because there's obviously a reason they reach out to us. Nine out of 10 cases, they can't give me reliable numbers, so they're willing to pay for a CFO, but there's no information that the CFO can actually use, so that's an absolute waste. So the financial hierarchy of need is a bit like Maslow's hierarchy of needs. It's you could want to go to the highest level, but you need to make sure that the lowest levels are in place first. And in finance, that's accounting. It's boring. I'm not an accountant myself. I find it very, very tedious and boring, but it is so important that it's done right, because if that's the source of truth for everything in the in your organization, you're going to decide your salaries and your own dividends based on the financials. So that has to be good. If your accounting is good, then you can build all the fancy stuff on top of it, then you can actually use it for planning, for reporting, for whatever you want to use it for. But if the foundation is weak, like a building, anything you build on top of that is utterly unreliable and dangerous. So that's why the coin I use the phrase is accounting is too important to leave to accountants because it is so important done right in a way that actually matches your business. That has to that should be a non negotiable.

Robert Plank 11:34 That's powerful, that's important. And you use this term clean, so you're saying it's important to have the clean numbers that you have. That way, you have a real source of truth, that because then, if it's a bad foundation, then everything else will crumble. So have those real numbers, especially when seeking out someone like your organization, looking for this CFO and speaking of like hiring or adding to the team, I know that, like a big part of entrepreneurism is getting other people involved, right, not doing it yourself. And I know like that runs counter to my nature, and I fight it all the time, because I know, like, in order to grow, I need to, for whatever reason, that limiting belief, it's in my head, I have to, like, override that, and I've been a lot better in last few years, like hiring, but whenever I but I think I kind of double check myself, right? And especially when it comes to like, money and hiring, like accountant or CFO, there's like, I imagine there's a fear with some people of like, well, if it's in bad shape, they're they're afraid of someone looking at it, right? It's like, if I'm so unhealthy, I'm afraid to go to the doctor, right? I have a cavity, I'm afraid to go to the dentist. What will they say? So do you see this kind of fear? Are people ever like hesitant or or shy or worried sometimes when they approach you?

Rob te Braake 12:50 Yes, because essentially, I like all the examples you give. We used to call it they're going naked in front of us, because we see everything that's under the hood, every ugly nook and cranny. So yeah, there is an amount of shame for that. But as an entrepreneur, hopefully you realize this is a problem. You can either look away and let it get worse, or you can just confront it, get it over with. And I can promise you, no matter how bad your business looks like under the under the hood. We've seen worse. We've seen $30 million e commerce businesses running on Excel sheets, and we've seen owners that have absolutely no idea what they're doing, with chaos, with mismanagement. We've seen it all. So don't worry, we've seen it all, just like your GP, they've seen it all. There's it's hard to imagine you have a problem or a situation that actually shocks them, so better just get it over with, because then you can focus on on the cure and on the next growth phase rather than hiding from the problems,

Robert Plank 14:02 that's great. So treat it like the doctor. They do this all day, every day. They seem like it's it's the first time for you, but it's a 2000s time for them, right? A doctor might see they might see like a hammer up someone's butt or something, like they've seen way worse. And so similar thinking with the numbers and the CFO and and it seems like a pattern of our conversation today is like reducing things down to, like, a binary decision, right? Like you mentioned earlier, double down, or quit the business. Or are, you know, the the numbers are clean or not, or hire the CFO, or don't hire the CFO. Like, get it, get it drilled down to, like, just, am I doing this, or am I not doing it? And if it's too confusing, like, how do I, how do I kind of rate the decisions, or how do I reduce the variables, which, just like that, that simple yes or no kind of answer. And a big leap that some people make is exiting their business, isn't it? And it's like that. I. And I have to admit, like, I don't come from a business background. I'm more a computer programmer. So when I, when I started coming across these kind of serial entrepreneurs, they grow a business, sell it, or buy it and build it and sell it, it was like, What a cool way to live, right? And especially if there's someone like you who can fix up the numbers, it's kind of like fixing up an old house, right? You have a fixer upper and you say, Hey, I It's old. It's falling apart. I fix it up and I could sell it, or it's in such good shape, like I would love living here, and what a good place to be. But I know like that, getting your business into sellable condition is like a multi year process. And need to think ahead, and I can only imagine the ways that that can go wrong. So as a as a financial numbers guy, what do you have to say about exiting a business, or maybe just your thoughts on it, your hot take on this sort of thing?

Rob te Braake 15:56 So there's two parts. One is, if you want to sell the business, you have to have clean books. We've been on multiple deals, both buy side and sell side. And on one of the cases, we were on the buy side, so our client wanted to buy another business, and the seller had this nice story about how good the business was, how sticky the customers were, absolute, beautiful story and why the business was worth so insanely much, but when we started digging into the numbers, we realized that he was manipulating the client retention rates. So I'll spare you the details, but it means that the lifetime value of a customer was not three years, but about one year. So the whole story that he was telling us was immediately that we didn't trust it anymore. So we started digging deeper and deeper and deeper. And the more you start digging, the more you will find, because almost every company has some things that you can find. So if you're on the sell side, you want to prevent that, because the number one thing that kills a deal. It's breaking trust. You on the sell side, you're selling a story. This business is a great business because we've done this, we can get to there, and you're building that story, and you want a buyer that believes that story. Because if you're having a buyer that just comes in and says, I want the lowest price for this business. You're going to end up with a low price. If you have somebody that says, hey, yeah, you you said three years ago, you're going to build this business like this. And you have actually done that, and you have the track record to show that all the plans you made were realistic. And now this is the next plan for the next three years, you have a lot more credibility to actually make that story trustworthy. So if you start a couple years in advance with this longer term plan and deliver on that, a potential buyer can see that and they will say, Hey, this is actually valid. We're not going to just look at what you've done in the past, but we're going to pay you based on what this business is likely to become in the future. And that means sometimes a multi million dollar difference just by planning earlier.

Robert Plank 18:13 Very nice, so it pays off just because, like, it's yes, the difference, it can be such a great deal. But then if the numbers are clean, or if the trust is broken, then it all falls apart, and all that time and people is wasted, versus if things are done right with proper planning, then it can be many millions of dollars. And it's like you you fast forward, or you play games with time, right? Because there's suspicions that you have if you hung on to it, it might like slow it's like when they say, if you win the lottery, right? You can get the lump sum, or you can get the payments dished out over 50 years. It's like, well, if I could hang on to this business, or I could sell it now and retire, or build something else and sell that. It's like, such a cool game to play. It's like on a whole it's like not even a whole other level. It's like 10 levels away from the game that a lot of people play, and it seems that it requires some discipline and some uncomfortableness and awkwardness of just like dealing with the and so many people like hate, hate numbers, right? And even the ones that that loved math in school, they say, well, now we're getting into money. That's a whole other nightmare. So it's like, well, the it's more of a hard problem, but with a huge reward at the other side, if you can just get your finances in order and ask for help and just kind of do with some of these stuff right, get the right systems and processes in place. So you and I have jumped around all kinds of just fascinating topics, right? You're talking about cleaning up a business and having kind of that entrepreneurial mindset, focusing on the right, the right optimization factor, right? Not help, like, not focusing on the taxes, focusing on the the profit as like, you're the driver. It grows so many different topics. But hey, you're the star of the show here, Mr. Rob, so in the conversation we're having, do you think there might be something really important for. That I should be asking you about. I just don't know what to ask you.

Rob te Braake 20:05 I think the most important thing is not necessarily a question, but it's like my personal pet peeve. I'm a big believer of stoicism. Focus on what you can control. There's a lot of things outside there that will impact your business, that will inside, will impact an exit that will impact your life that you don't have any control over, but there's a lot of things that you do, so try to focus on that and that. It means also controlling the data quality and your books. That means controlling how you deal with that, and keep it simple that's definitely the things under your control. And simple is not always sexy, but it is very, very effective.

Robert Plank 20:45 Very nice. And that's a huge advice, right? It's, It's understated how important that is, of focus on what you can control, because they say, like, you can only really hold like, five items in your head at once, right? A phone number is only a certain length. Your car is sitting at a stoplight, you notice, like, the car behind you, the stoplight, maybe your road sign, but like, that's it. You can't, you can't hold 30 different things in your head. And it's like, if you don't have this aware, the stoicism awareness, talking about of focus, like, if you can control it, then do something about it. If you can't control it, let it go. And it's like, if you have all this, this chaos, there's no self awareness, and then when you kind of figure out what's within your zone, then the possibilities increase, because you say, hey, you know, I have more choices than I thought, and there's more than I could accomplish. I just needed to, like, simplify, like we've been saying, and kind of reorganize, reconfigure, and especially with these unsexy topics that we're talking about, like your finances and getting your numbers in order and just writing the ship if your business has been unnecessarily too much of a struggle. So So, man, what a fascinating conversation we've been having. And if someone says, Okay, I needed Rob and his team yesterday. I'm the seven and eight figure business. I need a CFO, fractional CFO, or I need the accountants to go and figure out, like, what there is. Is there anything that you wish that a prospective client knew ahead of time, like we already mentioned having the clean numbers, but just to, like, prepare someone to contact you, what do you wish they would know?

Rob te Braake 22:22 Honestly, there's nothing that I wish they'd know. It's more about the attitude. Are they very open to learn and improve. Nothing is worse for us than somebody who is very defensive or trying to hide all the stuff that's on the carpet. Go open into the conversation, the more transparent you are with what the mess is, what the situation is, what your plans are, what your strategy is, the easier it is for us or for anybody else in our space to actually help you achieve your goals.

Robert Plank 22:53 Okay, fair enough. So get naked, as we've been saying in front of the doctor, right? Yes, be honest and transparent and get the problem solved. Because if you're fighting your own CFO and accountant with this, then you're just you're hurting yourself, right? You're here to get just some improvement. And so if someone wants that improvement, what's the website? Where should someone go?

Rob te Braake 23:14 You can either go to Finance inside matters.com or if you're just looking to schedule a call with me directly, go to connect rob.com

Robert Plank 23:22 Okay, so connect rob.com if they want to schedule right now and then. Finance insight matters is the website where they provide financial results for seven and eight figure online businesses so you can stop limiting your growth with smarter financial strategy. That's finance insight matters.com. CFO services, financial planning and analysis service and accounting services, they can help you out, right? If you're a agency e commerce or digital business, then there's someone that you can talk to. And it doesn't hurt to just have this conversation, right? And if some of these things would befuddled you a little bit that Rob was talking about, and you say, oh my gosh, I'm one of those businesses that still, man, runs things on the Excel spreadsheet, or I don't even know the money coming in or out, or I do want to exit one day, but I'm afraid of what Rob told me about when I when the guy said the customer retention was three years, but it was one year. Like, I don't want to make that mistake on accident. I want to have a successful outcome. All these things, they can simplify. They can clear it up for you by having that strategy call. So go to Finance insight matters.com there's a button right there above the top of the fold says, book your strategy call. And he said an even easier way is connect rob.com, and finance insight matters.com. Is the place to go. And you know, Mr. Rob, you've just spent so much wisdom to us so far. I want to ask for one final favor, a tiny little sound bite is, is if you have a fun or interesting quote. Or lesson that has served you. What comes to mind?

Rob te Braake 25:07 the lesson is really the one that I learned. Keep it simple. It is so easy to complicate it. Keep it simple. Stupid.

Robert Plank 25:14 I love it. Keep it simple. That's great advice for us all, and so much so when it comes to your numbers and your money. So finance insight matters.com as we've said, there are fractional CFO, FP and a and accounting for seven and eight figure online businesses, finance built for growth, delivered with quality. That's finance insight matters.com and thank you so much, Mr. Rob for showing up, educating and entertaining us. I appreciate you so much.

Rob te Braake 25:43 Thank you for having me. This was fun.