Scaling With People

Scaling Remote Business Success: Jody Grunden on Virtual CFO Innovation, Pricing Strategies, and Entrepreneurial Resilience

Gwenevere Crary

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Unlock the secrets to scaling your business successfully with insights from Jody Grunden, a trailblazer in the accounting industry. Discover how he pioneered the Virtual CFO Services concept and transformed his traditional accounting firm into a remote powerhouse, eventually leading to its acquisition by a larger firm. Listen as Jody candidly shares the lessons he learned about setting the right pricing strategies that align with value, which not only fueled considerable growth but also attracted top-tier talent. 

Jody takes us on a fascinating journey through the challenges and successes of transitioning to a fully remote operation. From initial skepticism among employees to gaining industry recognition, his story underscores the power of adaptability and resilience. We explore how embracing remote work opened doors to new growth opportunities, and how scalable processes and delegation played crucial roles in this transformation. Jody also highlights the importance of mentorship by involving junior team members in client interactions, empowering them to develop leadership skills and build strong client relationships.

Finally, tap into the entrepreneurial mindset with guidance on profit-focused accounting metrics and the art of trusting your instincts. Learn about the key financial metrics that drive informed decision-making and ensure business stability. Jody shares a thought-provoking story about a missed opportunity, reminding us all of the importance of taking decisive action and trusting our gut in business ventures. Let this conversation inspire you to seize opportunities, embrace change, and confidently scale your business to new heights.

Speaker 1:

Welcome everyone to today's Scaling with People podcast. I'm Gwenevere Curry, your host and founder and CEO of Guide to HR, and today we're going to talk about some lesson learns from an amazing founder, but also some key strategic insight into what you need to be thinking about from your financial perspective of growing your business. So today I have Jody Grundon with me and Jody welcome.

Speaker 2:

Yeah, thanks, g Gwyneth. Thanks for having me on the show.

Speaker 1:

So tell us a little bit about who you are.

Speaker 2:

Who am I? Good question. So I am a founder that's made many, many mistakes over the past 20 some years.

Speaker 1:

Welcome to the club.

Speaker 2:

Yeah, exactly, and I've learned from a lot of them. It took me longer than I thought to learn from certain ones, but, you know, as we go through the day, I hope to share a lot of those mistakes with you and what we've done to actually work through them. But I created a concept called Virtual CFO Services back about 20 some years ago and the idea there was to help business owners scale their business. You know, scale their business on a financial side, whether it's, you know, with you know, creating, you know, consistency within the way that delivery, creating different ideas and focuses and really kind of keeping a business owner, helping them create a dynamic forecast that can help them lead the way. And the kind of cool part about it was my journey has been kind of weird. Over the years I went from a fully brick and mortar team back in 2002 to a fully remote team in 2013. I had brought it from bootstrap with really no employees to having over 50 employees when I eventually sold it in 2022 to a larger accounting firm.

Speaker 2:

Yeah. Yeah, so now I'm working with a larger accounting firm. We're in a hybrid type of environment where they're local and we're fully remote and with that's been an experience, a challenge, eye openers and we've finally gotten over the hump and looking forward to the next you know, three or four years, growing it from. Now we're at about 12 and a half million dollars in revenue to hopefully 50 million as the target goal. So that's a little bit about me and looking forward to sharing as much as I can throughout this podcast.

Speaker 1:

Well, that's great. So you were talking about you had lots of lessons learned. What is one that you would say is a key one, that if you could go back in time and tell your younger self not to do, or to do instead, or do better, what would that be? What would that look like?

Speaker 2:

Oh, there's no doubt about it Pricing appropriately. We always thought from the very beginning because, keep in mind, when we created this concept, it's like building an airplane in the sky, because there was nothing really like it before. And so with the virtual CFO concept, we're advising clients, so we're sitting alongside a client on a weekly meeting helping them grow their business and really kind of guiding them through that concept. So we did some of the accounting stuff, the bookkeeping we did that maybe a third of our clients and tax stuff if they needed it. But the main reason it came to us was for that advisory. And so we always thought that it's just common sense, everybody could do what we do. And then we found out pretty quickly that's not the case. That's why they're actually hiring us, because they need that third party insight.

Speaker 2:

And so then the other thing we did was we thought people aren't going to pay for this, and so we started out really low offering the service and we were finding out that we weren't making any money and we thought, well, we need to increase the price, but we're going to lose all of our clients. And so we increased the price. Nobody left. We still brought clients in left and right and we're like, well, that's not what we expected, but we still weren't making money. And so this continued on, rinse and repeat, and I always told my wife, hey, next year is going to be the year we're going to make so much money, we're going to do so great. And then next year happened. It's like we're still not making money and because we always undervalued our service, it wasn't until we actually priced our service properly that clients love the service. We were able to hire people that are really high quality people to actually do our job for us, so that we weren't, you know, victims of being working in the business too much.

Speaker 2:

And and that's when it really that's when everything really started snowballing for us in a great way. Growth was, you know, growth picked up dramatically. We were growing, oh, 30% plus every year for, oh, probably for about eight, nine years. You know, doubling our size every three years, basically. And it's all because we were pricing it properly and it took us 10 years to figure it out, which is hilarious, because that's what we advise people on. It took us 10 years for us to figure it out, which is hilarious because that's what we advise people on. It took us 10 years for us to figure it out. So I know how difficult it is for business owners out there. Unless you just lock into the pricing, but never undervalue your service, people will pay for it. If you're giving a high quality, a top-notch service, and that's something that it just took us a long time to figure out- yeah, that is so true.

Speaker 1:

I talked to a salesperson who gave me wise advice. If you're getting too many clients, then you're undervaluing yourself. If you're not getting any clients, you're overpricing. If you can find that like sweet spot of enough clients, but at the right price, you know you're at it. So that's what I kept doing was like oh, I definitely. I learned very quickly I was like you, I undervalued my pricing for sure.

Speaker 1:

I think that's the hard part right, because you don't want to outprice yourself, you don't get clients, and then, at the end of the day, you kind of need it to be right, otherwise you're not making the money.

Speaker 2:

That's awesome. Our bank actually told us that. It's kind of funny. He goes oh yeah, it's great. I don't think I've ever lost a quote. People just love us. And he's like you really think that's a good thing, and I was like huh. So I did some research on it and they said the average sale should close about 30%. You should have a 30% closing ratio. That is like that's where you want to be and it's like that's where you want to be and it's like I'm like 80, 90%. I'm like wow, and so that's what we started doing. We started increasing our price until our closing ratio came down to that 30%. Once we were there, we're like we're there.

Speaker 2:

And we actually went to the other extreme, where we're like okay, now we're at 20%, so then next year we didn't increase it as much and it brought it back up to 30. It's amazing how that worked, but that's exactly. You're a hundred percent right. That was our barometer, and it still is on where we need to have our price in order to to be, you know, be effective in our, in our, in what we do.

Speaker 1:

I want a powerful statement of how metrics and reporting analytics are so key to the success of your business. Yeah, so you're obviously in finance, and so what do you guys do? I mean, are you guys like fractional, interim consulting, like, is that basically what you offer?

Speaker 2:

Yeah, so we created the concept virtual CFO. You've probably heard of it before. We created it back 20 plus years ago and it's not in virtual CFO. There's a lot of different ways, or basically that term is kind of got many different definitions to it. You know it is. You know some people it's just accounting, you're just doing bookkeeping or whatever. Some people are on the opposite side where it's just simply it's consulting, high-end, project-based work, that sort of thing.

Speaker 2:

The way that we define and created it. It's an ongoing process where you're actually your virtual CFO, we're actually in meetings once a week with you, helping you guide the ship through creating KPIs and forecasting and really kind of helping a business run you know, run their business. And then what happened was, over time it kind of morphed a little bit where because the clients we're looking at were, I'd say, $2 million At that time, it was probably a million dollars-ish clients we were hoping to get. That's what we were hoping our audience were to be.

Speaker 1:

Start there and then help them build and get yourself fired.

Speaker 2:

basically, the problem was they couldn't afford us and an accountant, bookkeeper, whatever. And so we're like, okay, well, we can do that. So we started adding services to it to where a third of our client base we're doing the bookkeeping also. So we're doing the CFO side, the high-end stuff, as well as the accounting, bookkeeping, that sort of thing Two-thirds of our clients. They've got somebody in that place and we just oversee the process, maybe tie the books out, making sure that they're good. So we're great advice as we're going through. So that's kind of what we, that's what we do as a. That's our service offering, I guess.

Speaker 2:

And the cool part about it is is that we started out in Indiana, grew it to about 18 people and in 2000, I think it was like 13, we went fully remote. So we got rid of the office and we started recruiting abroad, Cause I realized really quickly that the only way that we're going to grow is if we poach other accounting firms in Fort Wayne, Indiana, which is only 300,000 people.

Speaker 1:

How is that?

Speaker 2:

How we're going to grow to a ceiling pretty easily. And I was like I didn't want to go to something really big. And, thank God, one of our clients was one of the first fully distributed companies in the world. I think they were one of the top first 25 and they had 65 people that worked for them. It was like, wow, these guys have a really cool culture, they're doing everything really neat. They don't get any turnover. Um, yeah, everybody just loves working here and I thought, well, heck, I could probably do this. And so within the first two years of the engagement, I'm like, oh, this would be really cool. And we like I guess it were at 18 people and I'm like, you know, this is going to be awesome. I'm going to, I'm going to pull the trigger and we're going to go fully remote and and accountants hate change. I mean, they just hate change, and so that that's a significant change, right. And so at all of our meetings we had standup meetings. You know where we met in the conference and we all stood up.

Speaker 2:

So that you know how that standup meetings were like going through and we always start with a joke. That's our. Our joke is always the first thing. And then we do a fun fact thing. We kind of make it lighthearted and I I was so excited about this change that I was I was going to make that. I led right into it and everybody's waiting for the punchline.

Speaker 2:

It was like and it was like you could hear a pin drop. It was like just dead silent. And they're like you're not really serious about this. And I'm like, yeah, I go. We're virtual CFOs, right, we, we don't need to be at the client's office to do this. You know why would, why would we need to be here? And they're like well, collaboration, you know, blah, blah, blah. You know all the stuff they said. Everybody's in coven. I heard it and I was like, oh my gosh. And my partner, um, you know, he's like my business partner. He's like I can't do it. I got four kids at home. I there's no way I could do this. You know, yeah, you know, I wish you had to talk to me first. You know, it's like I just assumed that you would think that was a good idea, the visionary that I am, you know you guys all love this and they and they did it.

Speaker 2:

And so I'm like shoot. So I, I, I own the building that we had the accounting firm, and so I, I told everybody, hey, well, I'm going to kick you out for six weeks, I'm going to remodel the entire building. We're not going to go remote. I'm going to make this really cool so you have a cool place to come and live, you know, because you're living at work for the most part. And uh, they, uh, you know the the construction took a little longer, spent like a hundred grand, and one by one, they all came to me and said you know what I kind of like this remote stuff. I'm going to make it, I'm going to try it and I made it into an office. It works great and I'm like and so it's like one. All the three people like I got to come to work. I was like well, fine and well look.

Speaker 1:

I never signed it.

Speaker 2:

100,000 to get everyone to recognize yeah, it's like damn I could have sent them to Hawaii right, yeah, yeah, that would have been so much nicer yeah, that's so much funner, yeah oh, my god the funny part about it was is that I never, we never, we never got into the office. We never, no one ever came in the office, and so I then had the subleases out. They didn't like the way it looked, so they gutted it again, so I had offices that had never had anybody in.

Speaker 1:

Oh, that's unfortunate. Oh man, brutal. Yeah, totally, but it was awesome.

Speaker 2:

You know, and and we, we, we actually developed a really strong team. The cool part about it was, as soon as we went remote, forbes wrote an article or interviewed me. Forbes interviewed me and I, I, you know, I didn't think you know, you know how people, you people reach out. You just don't know it's like this. This is a great interview. Well, in 19, I think it was 2015, they put an article in there of one of the first 125 remote companies in the world.

Speaker 1:

And I was like I was listed.

Speaker 2:

It was like Apple, dell Summit CPA Group, all these giant companies. It was like dell summit cpa group and they kept all these giant companies.

Speaker 1:

It was like little me, 18 people and uh it was like.

Speaker 2:

It was like oh, this is cool. But the cool part about it was my um. All of a sudden I was like, well, how am I gonna, how am I gonna find remote people?

Speaker 2:

now you know and well, people even know what that means- to you and they, you know, I, we got 2500 resumes within, oh, easily a day and a half. Yeah, I thought I was getting spam, you know, because I ran the marketing side and I'm like all of a sudden, it was my thing was like going off. Every second and a half another resume would pop in and I'm like calling. I had a HubSpot guy and I'm like calling him hey, you got to turn this off. I go, I'm not sure what's going on here. I, you know what, but you know my, my, my, my database is getting filled up or my memories getting filled up All these resumes coming, he goes no, they're all original, they're not.

Speaker 2:

You're not being spammed. I'm like like, well, how did all of a sudden? Isn't that crazy? Oh yeah, it was unreal. Then the issue is how do? You go through the resumes.

Speaker 1:

It's like you know. It's like are they fishing?

Speaker 2:

It's like what do you do? But that's really kind of helped us in growing. So we grew to 30 people within probably a year and a half. So I would have been out. We only grew the office to 30 people. That's how I built the office, for hey, we're going to expand to 30.

Speaker 1:

We would outgrow in that office like in a year and a half.

Speaker 2:

Yeah, doing that, and it's like, oh my gosh. And then we grew to 50 people, grew it to $10 million in revenue, and then a CPA from St Louis purchased us and CPA firm out of St Louis purchased us, and so the idea is, hey, we're going to go from 10 million to 50 million, which is a cool thing, but the difference there is that we're fully remote. So I got like 75 people all across the United States, some in Canada, some in India, the Philippines, mexico, and then all their people are in St Louis, and so then that's another issue. So now you've got a hybrid no-transcript finally there, which is really, really cool.

Speaker 2:

And you know, with that it was a big step back because we were on our growth trajectory. We doubled our size every three years because one for a couple of different reasons one, we had a product that nobody had. You know, that wasn't even the term, wasn't even being used and people thought, well, this is great. So we were doubling our size because of that. Plus, our workforce was international or national for a lot of, for a lot of folks, and so we could hire the best anywhere and that, which was great. And so our, our, our quality was great. The, the, the man was great, so it was a lot of positive things there and we had very little turnover, which was awesome, because turnover will derail you, you know. And then, yeah, so that's kind of the, that's, that's the story. And so we were to the point now where we took a big step back in the merger because it was it was two completely diverse, different you know, organizations colliding with each other, trying to come up with the best solution.

Speaker 2:

And now we're to the point where we're back. We're back to where we were hoping to hoping to be from the very beginning. So it was my, my, my, my ignorance, I guess, or my, I don't know what you call it I just assumed that we continue to grow, everybody would embrace what we had, and I completely forgot the resistance I got when I initially went to go remote, and you can imagine the resistance we got, not only the remote side, but they were doing the accounting, bookkeeping side that I told you before, that they called CFO services. We were on the hiring and consulting side and we, uh, we did, only we only did their side by default, so it wasn't like we led by it, which they were so proud about. That was our default and so it was like it was completely a different and we had to actually figure out how to combine those two and really make it, make it solid. So that's my story. I know it was a long, long story, but that's, you know, that's where we went with it.

Speaker 1:

So that'd be really great and I love, I love your story because that's I kind of had a quicker trajectory of what you experienced. So you know I was coming in fractional HR. I'm like, what am I?

Speaker 2:

Same thing you experienced. So, uh, you know I was coming in fractional hr.

Speaker 1:

I'm like what? I'm the same thing, what is that? Yeah, yeah, and I was like, okay, um, wasn't even sure, like I basically kind of fell into it. A lot of people I talked to are, um, that are doing this now full-time. They've been doing like side gig stuff for a while. I basically fell into it. I'm like what, what am I doing? What do I want to do here?

Speaker 1:

And then, like in the first six months, my husband and I were like, okay, I have six months to figure out if this is going to be something viable for me for a full-time gig, kind of thing. Right. And so for six months I had so much work I had to bring people on. And then I created my company with the foundation of the value of doing what you love. And so the first person I brought on it was one of my clients were like, yeah, we need a handbook or a review of the handbook or something like that.

Speaker 1:

I'm like, because my background is actually actuarial, mathematics, management, engineering I'm a weird HR person that I'm a math girl, I love math, and so I know I'm like why didn't I get into finance? But I got out of college and got into compensation and I was like, what is this HR thing? Oh, this is pretty cool and that's how I grew into it. But so they're like, yeah, we need that. And I'm like, oh, I don't really want to do this. You know like, oh, I remember a really good friend One time we were at lunch a while ago and I asked her you know, like HR's got like finance, there's so many different things you can do inside of it. I asked her if you could only do one thing for the rest of your career in HR, what would it be? And she goes, oh, handbooks and policies. And I was like, oh, like that would be a very short life for me if I had to do that.

Speaker 1:

And so then I'm like, yeah, totally brutal. Like girl, do you want some quick money? Like do you want some a side hustle? Like do you want to help me with this handbook?

Speaker 2:

And she's been my longest person working with me over two years.

Speaker 1:

So that's awesome, yeah. And then, um, yeah, I now have about seven. I don't have employees yet. I haven't pulled that trigger yet. Um, but uh, that's why I'm going to the expo, that's why I'm trying to like my book, I'm trying to figure out how do I actually start building the business side so that I can do the employees.

Speaker 1:

This last six months have been really transformational for me because I've really recognized and realized that what I want to do now is work on the business not in the business and if I can do that, well then I can have employees and I can grow it and have a vision like you like actually being able to do that. So that's where I'm taking my company right now.

Speaker 2:

A hundred percent Cause I have not worked on a client work in over 10 years.

Speaker 1:

And you probably don't miss it right. Oh, not at all.

Speaker 2:

No, I enjoy doing what I'm doing. It's, it's awesome. I enjoy working on the business itself. It's it's beyond it's, it's why you become an entrepreneur, really.

Speaker 1:

Yeah.

Speaker 2:

And that's you know, that's where you're at, and so you know the the biggest thing that we did is I had to develop everything, had to have a process, cause I knew that I could go into a conversation without having any notes, without having any prep. And that client would come out thinking wow, that dude is wow.

Speaker 1:

He understands me.

Speaker 2:

You know great, you know this is great, can't wait to meet him, can't wait to talk to him next week. And I just made the assumption that everybody can do that, and it's a bad assumption. And so I had to develop processes for other people to follow in order to make that, to make me scalable, because I couldn't be the bottleneck. If I had 20 clients and I'm stuck there, well then that's all the bigger I'm going to get.

Speaker 1:

Yeah, exactly that's where I'm at too is processes and templates and things like that. So I hired a. I was a junior, but she's probably five-ish years into HR experience.

Speaker 1:

And so you know I took a gamble, but her and I kind of we came to a financial agreement. You know because of it that I was going to have to work a little bit more with her to help support the client Right, but it's been great because it also shows me where I need to add more support into my processes and to my tools. So it's been a good lesson learned, I guess, as we go along.

Speaker 2:

It's an awesome lesson learned and it's really the only way you can scale. I mean, you have to be able to, you have to be able to have processes in place in order to scale, and that's and that's a problem that a lot of um I especially in the accounting world, where there's a lot of folks that they quit. They think, oh, this is a easy, easy gig, you know I can do this. And then they got three clients and they can't get any further than that. They're like well, how did you, how do you get, how do you, how do you have time to pick clients up, how do you? It's't be the. You got to set the relationship up where you're not going to be that person. I mean, even when I started out, adam, my business partner, I gave him all the work. You know, my job was to go and get business and do that, which was genius?

Speaker 2:

at the time, Of course I didn't think it was genius. I wasn't making any money.

Speaker 1:

I had no salary.

Speaker 2:

It was brutal and you know giving him all that that that the work and building it up, and and that that was that's where I needed to be from the very beginning, whereas a lot of people fall in the trap where they become everything. They become the clients, everything and then it's super hard for that client to you to give that client off to somebody, mentally yourself, although you know eventually you can do whatever, the clients aren't going to leave because you're off the case and you bring somebody great in, but you've got to be able to teach that person how to, how to, how to be great.

Speaker 2:

Yeah.

Speaker 1:

Yeah, exactly, and I think for me it was just kind of a natural. Natural, like I want to really stick to my values and my values are do what I love and I don't love this. So who can I pass it on to? And as I started doing that, I was like, oh, I'm making money when these people are working and I'm not working. This is great. I need to do more of this yeah, yeah, you need to build it.

Speaker 1:

Yeah, for sure, yeah so yeah, it was like the fun part. I was like, okay, how do I rinse and repeat this? And that's kind of where it got you know over. I'm uh, uh, unofficially three, about three years. Well, a little bit more than three years. Officially, november, it'll be three years so, oh, awesome, awesome yeah yeah, still a baby. Yeah, no, no. So you're making pretty good money and everything.

Speaker 2:

Yet are you? Uh, you're still trying to, you're still trying to figure that out or the first year I did. It took us about 10 years to make money. It was a long time. We're slow learners.

Speaker 1:

Yeah, no, the first year I did because I was working it.

Speaker 2:

Yeah right.

Speaker 1:

And then the last year and this year, like you, I'm not. I am making money, because I also have the problem right now that's keeping me from going like full throttle is I have a full client right now that I'm working on and they're in a place where I would never want to rock their boat, they're just in a. Really there's two things kind of like happening back to back and so once those two things are done probably quarter one of next year then I'll reevaluate where things are at and hopefully say goodbye and then I'll probably be on credit cards for a hot minute while I continue building up. But my goal has been like how can I start building up now while working for them full time and have enough money to pay the bills? And that way, if all else fails, at least the engine's warmed up. I'm hoping the train has left the station before I leave them, right, but that's the goal. That's the goal. Yeah, so the book and the expo, those are two things like I'm like. Well, we'll see what happens.

Speaker 2:

How we did that is, we brought a junior on on every call. So, when I'm, when I'm meeting with this client that I've had for in that case I've had the client maybe for five years and strong relationship. It was the client I was telling you about that was fully remote and everything.

Speaker 1:

Oh yeah.

Speaker 2:

I brought in a junior in every single call so that junior got to know the client really, really, really well. And eventually I started bowing out of the meetings and letting the junior take the lead and kind of seeing how that person did, how she did, and with that she did really well. And so I'd pop back in the meeting and we're talking and everything, and then and then the transition was so smooth because they already knew everything about this client, your big client you're talking about, they're doing everything about them, they're helping them with different things that I wasn't even involved in because they're in the meetings and and I'm always, I'm always directing traffic toward that, towards her.

Speaker 1:

And that was that was huge. Yeah, and that's how we.

Speaker 2:

That's how I got off. My big client like that. But that's how we did it originally with all of them.

Speaker 2:

So I was just me and this other person, or Adam and another person, or it was Adam and I initially, you know, and so that's how we actually were able to scale and kind of teach them, teach that junior that had never done this before how to talk to clients, because that's their biggest fear. They have no clue. They think, oh my God, I've got to come with a silver bullet all this time and it's like no, you don't, you just have to talk. Listen, hear what they're saying. You know you have to talk. Listen, hear what they're saying. You know you have to have high emotional intelligence and that's the key to it. Your EQI is everything when it comes to consulting.

Speaker 1:

Absolutely. I mean, that's ultimately what they're paying for, right, and I think too, coming out of it it's also you're able to kind of look into the business and see some trends and see some things, because you're not in.

Speaker 2:

it 're just able to kind of go okay, what's going on down there?

Speaker 1:

exactly and I also think what, uh, what was one of my favorite things was, uh, working with one ceo. Uh, we, we were able, we actually were able to have a double date and he told my husband, his, you know, your wife said to me the first week we started working together and I'm like, oh crap, where's this going?

Speaker 1:

you know, and I'm like, oh crap, where's this going, you know? And I'm like what's going to happen? He goes, she said no to me and I'm like, yeah, and here we are, like weeks later still working with each other. So like I think that there's a little bit more of an impairment. Uh, because we're not in the business. You're hiring us for our expertise and knowledge. Subject matter expert. I'm going to tell you no, it's your decision whether or not to listen or pay attention. I'm not going to be a yes person for you. That's not what you're hired before. I love that empowerment too.

Speaker 2:

You hit that around the head. That's huge. That's a life lesson for sure. They want you to be objective.

Speaker 1:

That's why they're not hiring you to run the no-transcript, like right. It was like you got to make sure that you actually connect at some point. Yeah going over top of each other right all of a sudden you're like wait, this is Americaica, how do we get over here?

Speaker 2:

yeah, oh yeah yeah, because you just basically pointed your differentiation between hiring internally versus you yeah, yeah, I'm willing to tell you no yeah, exactly my slogan yeah, I mean, I mean really that is your differentiation, I mean um that alone, because you know as an employee. They went through a job, yeah yeah, and they've developed that personal relationship and they can't say no, a lot that alone because you know as an employee they went through a job yeah. And they've developed that personal relationship and they can't say no, they're just a doer, whereas you're going to say hey.

Speaker 2:

I just don't think this is the right way of going about it. Your choice, but here's why I wouldn't do it.

Speaker 1:

Yeah. Yeah, we should probably talk about some finance stuff, and so do you. You guys obviously are targeting like the startup, small size companies. It's kind of like your, your.

Speaker 2:

Our client base is typically $2 million or above. So it used to be really anybody, and as we've gotten bigger and as we've gotten more specialized and as we've hired more expensive people, the the the 2 million and below. They can't afford us, Our average client. We'll charge about $90,000 a year for a client. Per client, Some of them go as high as a couple hundred thousand. Some will be 30 or 40,000, depending on size, because we price based on size. So it's typically, I would say 20 people-ish is about a $2 million client.

Speaker 2:

It's typically, I would say 20 people-ish is about a $2 million client and then it could go as high. You know our biggest client's a hundred million, but we don't have many of those and we don't go after those. You know that that was a client that started at 10 million and within five years grew to a hundred million.

Speaker 1:

I wish I could say it was all, because of us, but it wasn't.

Speaker 2:

They gave.

Speaker 1:

Len some money. We helped navigate through that. Yeah, we helped navigate through it.

Speaker 2:

But yeah, that was a pretty. That's pretty exciting when you see a client do that. So our big thing is that and on the finance side, we really focus on what we call profit-focused accounting. It's something I turned my coin probably in 2004-ish somewhere in that ballpark and what it was. It was designed to help our CPAs learn how to provide CFO stuff. You know, because they you know. Like I said, I was super good at what I did, I just did it naturally. My partner super good at what he did. He did it naturally.

Speaker 2:

The next person wasn't super good, you know they were super smart, but they had no clue what to talk about, and so we based it on four metrics, and the first one was cash metric, then it was a production metric, then financial metric and then pipeline metric. So those are the four that we focus with every client, and with that, the cash metric. We say, hey, a typical business owner needs to have between 10 to 30% of their revenue in the bank, and so if they're a $300,000 a year company owner needs to have between 10 to 30% of their revenue in the bank, and so if they're a $300,000 a year company, they need to have $30,000 to $90,000 in the bank at all times.

Speaker 2:

And that's going to be liquid funds available so that they can make mistakes. So because there's a lot of mistakes when you're an entrepreneur so they can hire the person that they couldn't afford and they shouldn't be hiring, because now they can take the person that they couldn't afford and they shouldn't be hiring because now they can take more risk because they've got more cash in the bank. And so we really focus on that and we really focus also with clients and tell them hey, you need a line of credit when your business is doing well, not when your business isn't doing well, and so you need to get that line of credit in place.

Speaker 2:

Hopefully never use it, but always have it at that still at 10 to 30% at that risk thing, and the 10% is two months of expenses you probably heard that and 30% is six months of expenses. And so the Dave Ramsey's of the world that say you know, hey, I need six months of personal stuff that's true in business as well, and as a business owner, if you are a low risk tolerance, then you need to have closer to that six months of expenses sitting there. Now it just doesn't mean sitting there and making no money. We always say keep two payrolls in the bank at all time. The rest of it slide into a high interest savings account. Maybe it's American Express or an Ally or a SoFi bank where you're making 4% interest on it Not 0.4% but 4% interest on it. Or it's a CD where you can ladder it a little bit and so you're making interest there. We can easily get it out, even if there's a penalty. But you don't want to put it into like the stock market, where that could disappear tomorrow. Or you don't want to put it into bonds, where you can't get it out with high penalty. So you want to have it in something that is easy, easily access money, market accounting and then the and then you know over there, then you can make those really informed decisions. And so the first thing that our CFOs concentrate on is making sure that, hey, we've got that established so that we are a solid company and our average client has about 17% of their revenue in the bank, and so we've grown that. They didn't start that way. We've grown it so that, hey, this is what we think that they should have. And the second metric has helped us get there, and that's the production metric and what that is. That's breaking down the non-financial indicators and really kind of helping a client figure out here's how you actually drive revenue. So the production metric is focused on revenue, and so it's one of those things.

Speaker 2:

When we put together a forecast, we don't. You know, the forecast is very dynamic, a budget is very static, and so a lot of people put budgets together at the beginning of the year and then they compare themselves the whole year to that budget. We create forecasts because forecasts always looking out 12 months, and so you're always looking at the next 12 months. You really could care less what happened the last three months. But what the last three months is going to tell you is going to tell you how to adjust that forecast and what you're doing Right. So we build a forecast based on the non-financialists, like on a service-based company.

Speaker 2:

Might be full-time equivalents. It might be utilization rate you know how, how utilize your is. It might be utilization rate you know how utilized is your team working on clients. What's your average bill rate, not what you're charging a client, but what are you actually realizing per client. And then kind of breaking that out and figure out what the effective rate is and these different rates, so you can build your revenue and keeping in mind your revenue isn't you know, hey, we're built for $100,000 or a million dollars and spread that equally Every month. You're going to have different values for that because every month has different days in it, has different holidays in it, you know that sort of thing.

Speaker 2:

And so your November you might have a low utilization in November. And so you know, maybe you're going to get, you know, that million dollar company. Maybe they're only going to do 60,000 in November. And so you know, maybe you're you're you're going to get, you know, that million dollar company. Maybe they're only going to do 60,000 in November. And then when you hit, when you get to November and you do 70,000, you're like high-fiving.

Speaker 2:

If you had done it, the other way you'd have been like, oh my gosh, what's going wrong? Well, what's going wrong is you. You're not built to have a hundred thousand dollar November, you know. And so what that does it makes so much sense. Yeah, so it really. It breaks it down, helps the client figure out how they can control thing If it's a trucking company.

Speaker 2:

It's how many trucks do you need to come in? Are you repairing the trucks Like a truck repair? How many repairs are coming in? How many do you have sitting ready to be, you know, to go in to be repaired? What's the average truck repair, is it, you know, a hundred thousand dollars is 60,000, whatever that might be.

Speaker 2:

Those are the things that a business owner can influence, and so that's the. The key factor there, when you get to the production metrics, is things that a business owner has control over. They have control over people. They have control over, you know, trucks coming in, for instance, or baseball teams if it's a, you know whatever, and so that's the key. That's. The second metric is really kind of developing that forecast based on profit, scaling the non-financial indicators, and then the financial metric is the third one and that's kind of looking at the rest of the finances and breaking it up between marketing and admin and facility costs and knowing what each of them should be, based on the industry, based on what a service-based company might do. And so then you're being realistic on what you're actually planning.

Speaker 2:

But again, it's not taking numbers and dividing them equally, it's figuring out hey, we've got a conference coming up that we're speaking at in, let's say, it's March, and that's going to cost us $50,000 to be part of that conference. So here's the $50,000 I'm allocating in March for that thousand dollars to be part of that conference. So here's the fifty thousand dollars I'm allocating in march for that. Um, here's, you know when my insurance is going to be hitting. Here's when all my people you know my and my people, my production people are up and up up in the production side. But let's go with all the people that are marketing or admin or whatever. Here's when their costs are getting hit. Um, with their, with their. Um, you know all their burden costs, you know their, you know their insurance, their taxes, whatever that might be.

Speaker 1:

Yeah, like people who have bonuses or commissions that are quarterly or semi-annual, annual, slide them in exactly when they come in.

Speaker 2:

And so you know, month by month, what your net income is, your bottom line number is going to be and what that helps an entrepreneur or an owner is like.

Speaker 2:

Now I know how much money that I'm allocating out there. And let's say I want to have $100,000 salary, or $150,000 or $200,000, whatever. Whatever that number might be half a million, I don't care. You build that in there and you say, okay, so here's my, here's what I'm going to pull out of the business. And then you can play the numbers game. I call it the penny game A lot of times. I have 100 pennies. How are we going to allocate those pennies? This is going to be so much is going to the people that's doing it, so much is going to me. And you got to figure what you want to get out of the business yourself. And so that's the. Those are the financial metrics. And then the final metric is what we call pipeline metrics, and that could be for a restaurant, that could be the seasonality.

Speaker 2:

You know how, how clients are coming in. You know not, not not what you're built for, but what you know what. What, what's going to drive clients in. For a service-based company. It's how many leads you have and what do you have under contract, and there's a lot of things that go into that. And so what the pipeline metric does? It takes the revenue, the production metrics, and it normalizes them. So it says, hey, over these next three months we're built for $100,000. Our pipeline only shows that we have $80,000. I need to adjust it down so I can see how that impacts things Not only on the revenue side.

Speaker 2:

But you flip it over on the cash side. It looks like, oh, in November we're going to be short now in cash because we had a bad March or whatever it might be. Or November is solid. We can pay some credit cards off that we had out there, because now we've got a know, because now it changed everything dramatically, and so they all kind of tie in together.

Speaker 2:

And so you know, as a business owner, that you got to really know all. You have to have control of all those cash production. You've got to have that forecast that's ever changing every single month. You've got to look at it on a consistent basis, not only when you can't look at it just when things are going bad and that's when people typically do what happened, not only when you can't look at it, just when things are going bad, and that's when people typically do what. What happened, you know? And it's like, well, that's kind of too late at that time. So you got to look at it as you're going through it, so that you can say hey in March, like I said, november we're looking at eight months out November is going to be bad. What can we do now?

Speaker 2:

to impact November to improve it. And so that's the. That's the idea between what we talk about with Profit Focus County is really getting the business owner to understand that, and then meeting cadence is very consistent so that they can take that ball and run with it. Or, like we always talk about a map A map if you're in Indiana and you want to go to Florida. I used to live in Indiana and I live in Florida now. I don't need a map to go to Florida. All I'll do is just go south, Exactly.

Speaker 1:

I know that do is just go south Exactly.

Speaker 2:

I know that Florida is on the east coast, so I'm going to go south to hit the ocean. Then I'm going to go east. I might go all the way around Florida before I get to Fort Lauderdale to get there, but I'm going to get there. That's what a business owner does. They're just kind of going back and forth when you have that forecast in play. Now you've got the map that's showing you exactly how to get there the quickest routes, which is not always the great thing when you have a CFO helping you guide the ship. Now you've got the GPS system. Hey, oh, we've got roadblocks set. Here's how we go around the roadblocks. Here's how we go around the detour. Oh, it's a lot quicker. It might be shorter in mileage, but quicker.

Speaker 1:

Here let's take this route quicker, you know that's the difference between all three.

Speaker 2:

I can get to the same place, and business owners we do. We stumble there a lot of times. But we forecast a place and you do it yourself, you can get there. Then you have someone like yourself you know in the HR is going to help you get to that location quicker, because now you've got that person that's going to guide that ship for you.

Speaker 1:

Yeah, that was some great tidbits there. I love those four tools and if our listeners are hearing anything, I hope that's what they hear those four tools. Go back and re-listen, take your notes. I learned some great things right there, so that was awesome. Thank you so much, jodi. So, jodi, I'm having so much fun talking with you. I've learned so much throughout this time here. But, as we wrap it up, any last final thoughts or tips or words of wisdom you want to share with the audience today?

Speaker 2:

Yeah, yeah, Going over. It's been fun. It's been a lot of fun. I would say that the tips would be, as I mentioned earlier, price appropriately, but I would say the biggest thing is that, as an entrepreneur, really take the risk. You know, I tell people all the time risk taking is a big thing. It's got to be, obviously, it's got to be a solid risk that you're working through. But you know, the story that I tell a lot is my father-in-law has this great idea of opening up McDonald's and with McDonald's it was right on the corner.

Speaker 2:

It was like a half a mile away from his house. He had all these plans on opening up. He was looking at the land. He's really doing a lot of the background research and he was doing it for about 10 years. Every time I heard about this it was, hey, here's what we're going to do. And guess what? Finally the McDonald's went up, which was great. The problem was he didn't. It wasn't him, it was somebody else, and somebody else is making a lot of money at that location and doing extremely well and it's because he did all the.

Speaker 2:

He did everything all the way up until pulling the trigger. And I guess that's, as an entrepreneur, that's what you have to do. You have to be able to pull that trigger and that's what makes you so different and unique than an employee in any in an employee, because employee will not pull that trigger. An entrepreneur will. And the key is you just have to look at those different opportunities out there and know which one you want to pull the trigger with.

Speaker 1:

Yeah, absolutely, and sometimes it's scary, but you know, I think the key is trusting yourself and trusting that you know what you're working on, you know your industry you're in and that doesn't mean you know it all, and that doesn't mean you're not going to make mistakes, but like to really trust in your gut and your instincts and the knowledge you have built up over your experience and education and whatnot. So, yeah, make that leap and you might be the happiest person on the planet a couple years later because you did so. Jenny, this was a blast. Thank you so much for joining us today and for the listeners I hope you got I know I got several tidbits, but I hope you got at least one and until next time, have a wonderful day, afternoon, evening, wherever you are in the world, and we'll see you next time. Thank you.

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