933: CFO Minded Beyond the Numbers: Discovering the Importance of Purpose-Driven Growth with Josh Greenbaum

Robert Plank 0:00 Hey and welcome back to the podcast we're here with Josh Greenbaum from CFO minded.com. He's also the author of numbers scare me and other excuses a business owners guide to Lead like a CFO. And Josh is an advisory CFO, he's an author, and he is all about educating business owners on taking financial control. So that way you can lead with confidence and purpose. Josh, glad to be talking to you. Nice to be here. Thank you. Yeah. And so your this whole idea of like getting your numbers and your accounting and your business in order. It's one of those things where people dread it, people hate it, people avoid it. It's boring and scary at the same time. So how do you fit into that equation? What problem do you solve? And how can you help us today?

Speaker 2 0:46 Well, there's an ultimate irony and everything that you just said, and everything you said is completely true, except that everybody goes into business to make money. And I at least find it funny that they're scared off by numbers. And I played that role of educating an advisor so that they have a healthy grasp on their numbers so that they can make the profit that they want, sell the business eventually accomplish all those goals that they really hoped for when they got into business originally.

Robert Plank 1:12 I like that. And it's like, it makes me think of all those times when I dreaded, you know, doing my taxes or figuring out my profit and loss statement, things like that. I always thought, well, what's on the other end of that making money, freedom, delegating, being able to get more my time back. So there's like sort of that delayed gratification idea of that? Well, if you want to be stuck in the kind of employee mindset, the average person who just sort of struggles and only looks one month ahead, then avoiding the accounting is great. But if you want to be the kind of person where either you're an entrepreneur or business owner, and you're forward thinking, and you're actually planning for the future, and this is the kind of thing that you need to be tapping into. And so Josh, I came up during kind of the information product era, where a lot of it was like, you know, you slap up a website and run a webinar and send some emails and it all it all works out. And then since my my time, so to speak, a lot of these e commerce brands came up. And these, these e commerce entrepreneurs, they're all about like, fast pace, knowing their numbers, their merchant, even on like a daily basis. And so that's been really interesting to see these people that are like super duper numbers and accounting minded, and they can accomplish so much, and they can kind of like, take calculated risks and do all these amazing things. And so, so what do you have, like along those lines, what sort of like stories to share with us? Or what you want to tell us about, like which car or what we should keep in mind?

Speaker 2 2:45 Well, just speaking to that business model, specifically, you know, there's something about knowing your numbers that is so tangential to the things that we think about it, you mentioned taxes, there's the financial statements, and all those, quote unquote, scary things. The other piece of knowing your numbers is knowing conversion of advertising dollars, how much am I going to spend on Facebook and Google ads? What is that going to convert into, to users into revenue? And I think with that demographic, in particular, that's a very dialed in aspect of knowing your numbers, and it has a very specific financial ramification to it. So when I'm talking to any business owner within any industry, it is all about understanding those core elements of how do they look at the business? What drives their business? Where can it be efficient? Where can we cut out fat? And thinking about all those processes, because all aligned with numbers, our business processes and business practices and things like that? And to get very clear on? Do I need to do let's say, in a retail business? Do I need to do fulfillment myself? Should I have a warehouse where I just pay them a percentage of every dollar that comes in, you know, if you have variable times during the year, maybe you want to cut that overhead during the low points and and have that efficiency that so that when it comes to the High Times, you're you're just maximizing how you operate. So there's a lot of components that are very tangential to accounting. And that's what becomes important with a CFO, a CFO will help think about the business lead with thoughts about a business and bring it back to the numbers.

Robert Plank 4:28 And I like that a lot. And it seems like from putting your answer there that it means that knowing your numbers means it opens up the possibilities and the possibilities, including what if I didn't have to be so emotional about my business? What if my business didn't stress me out or you know, make me depressed or something like that, if I knew my numbers, that could remove the emotions, and then that could lead me to some other possibilities such as, as you said, like, better delegating or even like seasonal delegating or kind of like kind of splitting the difference or just trying new things, right? Because I think that maybe some some solopreneurs, or business owners out there feel like they're doing everything. And maybe they need to offload some of that. But it does not have to be all or nothing. And sort of along those lines, Amy mentioned this idea of of a CFO, and I know that you can sometimes talk about fractional CFOs. So just to get us back on kindergarten level, what's the CFO in like a business entrepreneur context? And what's a fractional CFO?

Speaker 2 5:30 Sure. So it's very much one in the same, I would say to to answer your questions in reverse order, a business that has a full time CFO versus a fractional CFO, it's a very similar deliverable. The difference being that the fractional CFO is really allowing a small business owner to tap in to that brain that a big business gets. And so the reason for it and getting to your first question a little bit, is for each business owner entrepreneur, you have different goals. And what becomes important is understanding, do you have the goal to create that, that that business that's doing e commerce or educational platform is a little more set it and forget it kind of business? Cool, maybe we're going to talk about how do you pour gasoline on the fire and scale that up, maybe you have the entrepreneur wearing 1000 hats, who's tired and wants to spend time with the family, let's talk about how to create space in the budget for an operator and let's get you out of the business a little bit. Or maybe someone wants to sell the business. So there's all these different objectives. And without a CFO, if you're just getting a basic bookkeeper who's helping just maybe drive a budget, and next year is gonna be the same as last year, whatever, you're not really addressing those goals of the business and the business owner. So that's the level of expertise that that you get with the CFO, you get that brain at the table, throughout decision making.

Robert Plank 7:02 And I can definitely see the value of having that extra brain because when I go, I talked to my accountant, like once a year, and sometimes when I talk to CPAs, they say things like, you know, you can talk to your CPA throughout the year, and maybe, and they even like that, if you talk to them early on, and you can set things up ahead of time tax wise, instead of just coming to them, you know, two weeks before and doing all these things at the last minute. And so this idea of, of tapping in to a number a person's brain, like, you know, fractional CFO is brain. It's really cool. Because every now and then when you see some of these entrepreneurs release, like these income reports, right? And you kind of just like jump in, and you see like, okay, like, what does money come in for? And what do they spend it on. And it's kind of cool when you see some of these businesses that maybe they're making, like 100, grand, 200 grand a month, and they're only taken out like 5000, or 10,000. And I want maybe like, seven years ago, I came across that idea. And I was like, Oh, you mean you can have a business. And it's like this beast, and you keep money in it. And it kind of runs on its own and as far as your own life, so you just take out a little a little tiny bit to live off of, which was countered to say, say maybe like sort of these cowboys who just said, make all this money and pull it all out and, and you know, go into debt and all this crazy stuff. So, so a lot along those lines, like do you see business owners like making a really common mistake or something you just see all the time that drives you crazy. And you say, you know, if only you thought differently, you could avoid these problems, anything come to mind 100% 100%.

Speaker 2 8:35 There's one core problem that I see all the time. And it's I'm not big enough for a CFO. And that to me is the biggest mistake anyone can make. And the reason is you can tap into somebody, maybe you're going to spend $500 $1,000, maybe you didn't even pick their brain for free. And having that element of a conversation and expertise sets you up for success later. And sure, maybe you can't afford that CFO on an ongoing basis. But if it's worth sitting down to spend an hour or half a day to talk through what needs to be done, what do I need to be thinking about? I think that business owner in particular, a new business owner will gain so much information. The other piece that's very important, which is piggybacking on what you just mentioned, is understanding that there's different quote unquote, accountants out there, and that they all bring a different expertise. CPAs are great with compliance. They're great with tax law, where a CFO is great with strategy and analysis and forward looking ideas. So you have to be mindful of that when you're thinking about who you're talking to and understanding the answers. You're going to get response.

Robert Plank 9:54 I like that, that explanation. It's sort of like you might hire someone to do Draw up blueprints for a house versus you might hire someone to cut the grass or paint the walls or sky, two ends of the spectrum, right one is very much of like a utility compliance, get the job done. And the other is on the other extreme of like, kind of maybe the high level, sort of planning and thinking. And so continuing

Speaker 2 10:19 that analogy, the guy doing the blueprints knows how to cut the grass. But best at it.

Robert Plank 10:26 Yeah, yeah. And so and so you know, many times we need to have the, the numbers dialed in for a number of reasons right to have a business that is not such a roller coaster, or to get our life and get our time back. And so I know from your your bio, that you've consulted many times about exiting a business, which is yet another purpose from getting your numbers dialed in. And so can you talk a little bit about that about? Just do you have any fun stories about someone where they exited the business? Because the numbers were nice and tidy?

Speaker 2 10:56 Yeah, definitely. You know, having your numbers nice and tidy, does a couple things for you. It most importantly, it helps you negotiate, it helps you to walk into those conversations, knowing exactly where your revenue is exactly where your expenses are. And also for all of us solo entrepreneurs, knowing what expenses you've probably inflated to save on taxes, and understanding that through that clarity and dialed in numbers, you know, what is actually driving the business, you are engaged enough to talk to a potential buyer, and communicate that value and communicate why you want that multiple why you deserve that multiple. And, you know, you asked about a story, I think the greatest story that I saw is a business owner, who let go of the idea of a multiple and focus purely on the value. He knew the dollar amount that he wanted, and he didn't care what multiple they were going to put on it that was irrelevant to the conversation. And what he and I got to do business owner and myself representing him was we get to play you know, proverbial Good cop, bad cop. And he wants to number I know he wants the number, but we got to figure out how to make it work. And in so that clarity on numbers communication strategy, from the get go, is what will help setting it all up for success with an exit

Robert Plank 12:27 numbers communication strategy, and I'm getting in my head, this idea of the multiple brains that you've been mentioning, and especially this idea of kind of good cop, bad cop and meeting in the middle and making the numbers work. That's a that's a cool idea. As far as getting some of these problems solved, as far as exiting the business, getting the sale price that I want, or getting all these other things in place. So that way, I you know, that way you can you can get there. And so, um, so yeah, so do you see, I mean, is there like a next step for the average person out there if someone is, you know, watching or listening or a podcast and they say, you know, you're speaking on the choir, this is really great. But how do I even begin to solve the problem, if I have a business, the numbers are a mess, what do I even do like in the next, you know, one or two weeks.

Speaker 2 13:17 So we'll go with a shameless plug of your being read my book, and numbers scare me and other excuses, that will take you no more than half an hour to read. Or I have a wonderful audio book that yours truly helped me put together. So thank you for that. Um, the genesis of the book was to really teach someone how to think about the role of accounting, how to work with the CFO, how to be numbers minded, and I think that in getting a little bit that foundation, it will help set up a better conversation, it will tell you the difference between a bookkeeper, an accounting manager, controller, a CFO, auditor, a CPA, all these people that we conflate together. So I think finding a little education there, and just taking that humble approach to ask questions. You know, I think it's important when I'm talking to new clients to understand their expectation, why did you come to me? What are you not getting? What do you feel like you're missing? So to think about those types of questions, and and where the gaps are in your business, or the gaps are in your understanding or in the reporting, and where you want to level up, I think, going through those thoughts and entering a conversation with multiple CFOs. See, which, which hat fits best. And that's really a great starting point.

Robert Plank 14:43 I like your analogy there of the gaps where and there's also, you know, there's many people that are at different levels of awareness as far as like they don't even know what they don't know. And then there's also the fear of looking silly or stupid. And so that's what That's why you're here for right. That's why someone can listen to a podcast like this or they can read a book like yours to get a little bit educated and get someone have the confidence to Never mind the answers, just know that they're asking the right questions and take those sorts of pre emptive steps. That way, they can be on track to a business that runs itself, maybe not completely, but a little more, or the accounting is a little smoother, maybe not 100%. But But slowly getting there. And they just don't have to be so dang fearful, scared, stressed out depressed, and all those negative emotions, maybe they can be excited about seeing those reports, seeing those numbers. And you mentioned earlier in our conversation about I think, like having goals and having KPIs and things like that. So imagine if it was simplified enough to be reduced to just seeing a number and saying, you know, we want to get this visitor value up or, or, you know, this, this conversion rate up, we're just like targeting a number, instead of just dealing with the overloaded Whirlpool mess of saying I don't even I'm so stressed out about about my taxes every single year, and said, you're looking forward to seeing what's happening there. And so we mentioned your book. And so how does someone find you as far as like, your website and your company and contacting you?

Speaker 2 16:17 Sure. So my website is CFO minded.com. And I have a forum on there that you can reach out to me happy to have an intro call with anybody. Even if it's just your first conversation with the CFO, you just want to get a flavor for what it's all about. Please feel free to reach out. So that's the best way to reach me there. You can get my book there. My book is available at numbers scare me.com. And and yeah, excited to to help those, those ambitious entrepreneurs out there.

Robert Plank 16:47 Well, I'm excited for you, Josh, and also a simultaneous excited for those ambitious entrepreneurs that are about to contact you so CFO minded.com. And then you said numbers scare me.com. All right. Wonderful. And so you know, I like to wrap up the sort of podcast interviews with like, something really profound, like a really, really big helpful lesson. And you know, we all have those we all think about, like, you know, what would I have done differently? If if I had gotten some advice 10 years ago, 20 years ago? So Does anything come to your mind? As far as that goes, Josh, like do you wish there was something someone told you like 20 years ago, that would have just changed everything.

Speaker 2 17:24 Without a doubt, without a doubt, I think it's the number one mistake that all new entrepreneurs make, and especially solo entrepreneurs. This concept of if I want to make if I want to make $120,000 a year, people go back to the simple math of I need to make $10,000 a month, the ultimate flaw within that equation is you left your business with zero. And if a client is late in pain, you have no foundation, no safety net, a healthy margin in a service business is 50%. So if you want to make 120,000, you need to price yourself at 240. That's going to allow for you to buy a computer, get business insurance, all these things that you weren't planning on taking out of your 120. So be mindful that for you to take out of the business which you want requires you to have a healthy top line and a healthy bottom line. That's more than just you.

Robert Plank 18:26 I love that. And that took me so many years to understand that your business is sort of like almost another you right? It's almost another person in your business with unexpected and expected expenses. And you can just keep it all to yourself. And I remember that specifically from your book where that kind of common sense advice of like more or less, if you have this not every month, get your business to double that so that where you have those healthy safety margins. Fantastic. Very nice advice to get us on track and on our way numbers scare me.com and CFO minded.com Josh Greenbaum super great talking to you.

Unknown Speaker 19:04 Thanks for having me. I appreciate it.