Making Metrics Matter - KPIs for Small Businesses

In this week’s episode, I sat down with Dan DeGolier, CEO of Ascent CFO Solutions, to dig into the world of metrics, and how small businesses can start to think about this subject.

Some of the highlights from our conversation included:

✅ Why “cash is king” still matters – regardless of your growth stage.
✅ The biggest mistake small businesses make with dashboards – think noise vs. insight!
✅ How to make KPIs work best across teams – tip: link them to bonus schemes.
✅ The difference between tracking leads... and tracking the right ones.
✅ Power BI vs Excel – when to upgrade and when to keep it simple.

If you’ve ever looked at a spreadsheet and didn’t know where to start, then this one’s for you.

Business Book Bonus:

Traction: Get a Grip on Your Business: 

https://amzn.eu/d/8Mlexvz

Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant:

https://amzn.eu/d/hOKTFT7

Transcript

Adam Cooper (00:02.949)

Okay, welcome to the Fractional CFO show. And today I'm delighted to be joined by Dan DeGolier, the Fractional CFO and founder and CEO of Ascent CFO Solutions. And Ascent CFO Solutions is a fractional CFO firm based in the beautiful Boulder, Colorado, providing outsourced finance and accounting services to high growth startups and established brands worldwide. Dan, welcome to the Fractional CFO show. How are doing?

Dan (00:30.862)

I'm doing great. Thanks for having me on, Adam.

Adam Cooper (00:34.217)

No, well, thank you for being here. I'm really looking forward to this one and your area of expertise is a subject matter that I'm very interested in. So we're be diving into KPIs and metrics and how we can be smart as business owners and small business owners and startups to use smart metrics to really drive and scale our success. So firstly, let's dive in a little bit about your background, Dan. Would you mind just giving us a...

a bit of a high level overview of how you've got to where you've got to. I see that you started out back in the day in audit in BDO and so how did you get from there to running your own fractional CFO firm?

Dan (01:17.132)

Yeah, that's it. Thanks for asking. So yeah, I started out in public accounting, CPA doing audit and a little bit of tax, but really was interested in disruption and growth and technology and things like that. So I pretty quickly focused my career on those types of areas around really software and venture capital backed firms and things like that. And so had taken roles as

controller and VP of Finance and CFO of various technology firms. Really excited about the, again, the disruption, changing the way, making things more efficient. And I just really appreciated technology and technological advancements. so after several, working for a number of different companies in that kind of a role,

I had taken a role with an early stage company raising around adventure and right away realized they couldn't afford full time. It really wasn't a full time role because of the size of their company. And so that was kind of my light bulb moment that it would be pretty interesting at the time that the term fractional wasn't really, it was barely, it was not widely used. And in fact, most people wouldn't know what it meant back then. And so.

You know, for me, I looked at it as being, as having, working for three or four different companies as a, as a part-time CFO to support their growth and their financial modeling and their forecasting and fundraising efforts and things like that. So I really leaned into that. Um, and then after doing that for a few years, I realized that I could make, potentially make a business out of this. There was a, there was a lot of interest in, in what I was doing and I was at a capacity to do the work myself. So I decided to.

bring on additional folks. And now we're approximately, we're 40 head count now, full-time and part-time CFOs and controllers and VPs of finance, accounting managers, financial analysts, and so on. So that's kind of how I got to be here was to just saw a need and started doing it. And then it kind of caught, you know, I think there was some tailwinds around this sort of quote unquote industry. And now it's kind of a

Dan (03:41.548)

well regarded way to handle your accounting and finance if you're early stage or even scaling company.

Adam Cooper (03:50.181)

Excellent, really interesting and congratulations on the growth to get to the level and size you've got to, that's no small feat so well done for that. I'm interested in terms of the types of businesses you work with, is it a certain size? You talk about tech firms and early stage, what size are the firms that you work with and how do you identify whether they're right for you?

Dan (03:58.232)

Thank you.

Dan (04:17.518)

Yeah, that's a great question. Generally, we're looking at companies between 5 million and 75 million US dollars in revenue turnover. That's kind of our general area. we'll work with earlier stage companies if they're funded, if they've raised capital, and they recognize how we can help them set up their systems early and properly and create

know, KPIs and dashboards and, and, and accounting and forecasting. So we'll work with earlier stage companies in some case for companies greater than say 50 or $75 million. Um, we also offer interim solutions. Those tend to be a better fit for companies that are at a later scale where they want probably need somebody full time, but it may be, uh, if it's a private equity backed firm, maybe they need a.

interim solution as they look for their long-term fit, or maybe there's a situation of somebody going on leave, all kinds of areas where we can support on a closer to a full-time basis, provide an interim CFO.

Adam Cooper (05:26.079)

Okay, that's great. And so I'm interested, obviously you've got quite a range of businesses that you work with and to come back to the subject matter at hand, the KPIs that you use for a $5 million business versus a $75 million business, again, high level, but how would you approach identifying what are the right KPIs for those different sized firms?

Dan (05:52.254)

say any firm, whether they're earlier stage or later stage or profitable or burning cash because they're venture backed, really at the end of the day, cashflow is a key piece of the equation. And a growing profitable company can still run out of cash. And obviously a company that is very early stage and that is investing in R &D and sales and marketing.

needs to have a really close eye on their cash flow. So I think when we're looking at KPIs, it's what are the drivers of the business? And in a lot of cases, those point to what the cash flow of the business might potentially look like. So obviously, we work across all kinds of industries. We're with...

90 or so clients, we touch all kinds of different kinds of business and our people have diverse backgrounds. So they've worked in different industries. know, something like a SaaS business, a B2B software as a service business is going to have different metrics than a manufacturing company that has inventory or a retailer or a e-commerce company. So it's looking, you know, every client's unique. Every company is unique as you start to...

to dial in like what are the specific drivers for the business? are the things that maybe are the bottlenecks in the business to creating cashflow? And so I think there's certain commonalities between different industries, but there's unique aspects to every business and what they should be tracking.

Adam Cooper (07:34.911)

Okay, great. And I don't know if you've found this, but do you struggle to select the best KPIs? And what I mean by that, you mentioned about bottlenecks and what are the drivers of the business, but often when you go into companies, do you find that different teams and different members of staff within the business have a different idea about what those drivers are, what those bottlenecks are? So do you struggle to refine and identify those key?

performance indicators or do you find that not so much of a challenge?

Dan (08:09.07)

Well, I mean, there's, there's, guess, a couple of different levels there, right? So at at the company, at the, at the top level, you have, certainly have drivers that are going to ultimately impact the business and they're going to be the key drivers to the business. But then as you roll that down and you look at it at the departmental level, marketing is going to have a different KPIs than production or, or R and D or things like that. So, um, you know, I think it's, it's kind of a hierarchical, um, situation as you, you know, I look at a little bit like, um,

like EOS, the entrepreneur operating system, if they're familiar with that, like there might be, you know, the, executive team, the, the leaders of the business, the top level, they, they, have their rocks, they have their KPIs, they have the things that are driving them. And then those functional functional areas kind of trickle down into the, the specific, departments, if you will, or, or functions within the business.

Adam Cooper (09:06.879)

And is there something that you find is often overlooked when it comes to that alignment piece of making sure that those top level KPIs trickle down? I think it's often known that you need to have a sort of waterfall effect of everyone working towards common goals, but is there anything that sort of scaling businesses miss as they try and do that alignment process?

Dan (09:34.83)

Well, you the best example is revenue, right? So if you're going to, if you're a, have some level of recurring revenue in your, in your business, you want to be, you know, your operational side, you're going to be tracking your, your churn rate and you're going to be, you know, your client retention. There's a lot of things that are critical on the operational side, but then on the, the new revenue side, you've got, you've got marketing, supporting sales efforts. So you've got pipeline and funnel and, quality of deals, the velocity of.

of opportunities coming your way. know, there's, revenue is obviously a critical piece for every single company. And so the ways, you know, the ways that that's impacted are going to be retention and it's going to be new business. And so on a new business standpoint, you've got sales execs and you've got marketing, creating lead generation. All those metrics are going to lead into new business and then client retention and.

know, growth within the client cohort is going to matter on the operational side.

Adam Cooper (10:39.263)

Okay, great. And yeah, no, that's a good example. I think as you say, everyone has revenue challenges and needs to identify the right KPIs to drive those and the right dashboards for them. Do you ever have the situation where there are some mistakes in sort of how those KPIs are chosen or how they're interpreted? where, you there may be that they're relying on too many metrics or...

Dan (10:39.886)

So that's an example.

Adam Cooper (11:07.251)

getting noise as a result of insight, sorry, instead of insight, as a result of identifying the wrong KPIs. Be interested to hear your experience of that.

Dan (11:12.419)

Mm-hmm.

Dan (11:18.158)

Yeah, I'll stay on the revenue chain of thought there. I think that, you know, marketing qualified the leads are different than sales qualified leads, for example. Right. So if it's the quality, you may have a high volume of leads, but if you're not, if your conversion rate's really low, maybe you're not really creating the right types of leads. Maybe you're better off having, having fewer leads, but having a better, better mechanism for.

qualifying potential customers and have a higher quality of leads. Otherwise your salespeople might be just chasing around leads that aren't really a great fit for your ideal customer profile, for example. So I think that's an area where I think there could be some noise and you need to learn. You got to look at them in tandem. got to not look just at quantity of leads and marketing qualified leads, but the quality of those leads and how those...

conversion rates are changing over time based upon different marketing initiatives you might have.

Adam Cooper (12:21.171)

Okay, great. And in terms of so that frequency of information, how do you typically suggest a business owner, small business owner, access the data in terms of what's the frequency that they should be tracking those kind of metrics to so there's not too much or not too little.

Dan (12:40.302)

That's what they are. think certain metrics you can track daily and depending upon the size of the organization and how key those key performance indicators are, some of them are daily. Other ones are monthly or quarterly. But certain things that affect cash flow, take accounts receivable collections, for example. That's something that you may want to track if you're in a tough spot, you may want to be tracking those daily.

Other companies might be in a situation where they're not as concerned about the day-to-day cash flows. So maybe that's a weekly or monthly or less often. And so I think it varies a lot by customer when it comes to the revenue. I would hope that the chief revenue officer or the sales management ought to be paying attention to those leads and those conversion rates and those new closed deals.

on a very, very regular basis, whereas the CEO may be looking at them less frequently.

Adam Cooper (13:44.061)

Yeah, no, that's great. And as you say, it differs depending on the type of metric that's being looked at. I'd like to sort of dive into cashflow a little bit because that's something, as you rightly say, is relevant for all companies, big or small. So in terms of those kind of real time decision making around cash, how do you typically see that working best for smaller companies in terms of giving them that real time or day to day visibility?

So what tools or what methods do you find best to communicate that on a daily basis?

Dan (14:20.312)

Well, you we start with historical, you understand what are your, what are your days, days sales and all the things that affect your cash day sales and accounts payable. I'm sorry. you know, days and days and AP days and inventory terms, days and inventory, and especially, you know, day sales and accounts receivable. And so as you look at those, those metrics and you, you know, you're historical, you're going to forecast based on those. Okay. We're going to make a little bit of improvement in our collections, process.

And then as you track against that, you're seeing whether you're on on track or off track. If you're if you're collecting on on plan and your day sales are in accordance with your payment terms, whether that's 30 days or something else, you see that things are. But as soon as you start to see that that number creep up, you know that the things are starting to get, you know, you want you want to dig into that. So it's a you know, we call them dashboards for a reason, right? You know, your engine light goes on, your your know, sometimes going on, you're getting a warning that that pay attention to something.

And so if, you know, again, day sales outstanding, in accounts receivable, you see that numbers start to creep up. Well, what's going on? Is it one particular customer that's having their own cashflow issues? we, are we not following up as we're supposed to be doing? Are we, do we have the ability to have, do we have any kind of a lever to, with, you know, to potentially cut back on or, you know, stop services for something if they're not paying their bill. so you've got, they're all,

You know, drivers of, of, information that, that tell you, give you something that you can action.

Adam Cooper (15:55.709)

And in terms of like particularly for the smaller companies, like you mentioned, you work with $5 million type companies. What tools do you find sticking on the cashflow side for a minute? What tools do you typically find are best to communicate that information? Is there a particular technology or tool that you use for those smaller businesses so that all members of the team are getting visibility on a daily basis?

Dan (16:22.136)

Yeah, for sure. So we have a, we have an offering we call insights by a sense CFO, for example, in which we're used tools, including things like power BI and other tools that allow us, you know, to allow you to have a dashboard that a executive could have on their screen, you know, have a tab open at all times to look at. And so that gives you real time data. we, you know, power BI is one great tool.

There's a number of different tools out there that connect with using APIs to connect to various systems. You can connect to your ERP or accounting system. You connect to your CRM system, your HR system. There's lots of things you can do there.

Adam Cooper (17:09.011)

And I mean, getting quite niche now, but Power BI, do you find that that's a tool that works well for a $5 million business? Or do you feel it's a little bit sort of overkill? Do you find there are different tools you use for your larger firms and smaller ones?

Dan (17:23.864)

Yeah, at a $5 million, don't think, so Power BI is pretty affordable and we've got a great resource on our team who can deploy really great dashboards using that tool. Excel is kind of your fallback would be something like Excel that obviously requires a little more manual updating and you're probably not gonna be updating it daily necessarily, maybe you will. But a $5 million company, you're probably gonna be.

you know, have a kind of a cycle of, of, of how you love, of when and how you update, the visibility into things like that. But yeah. you know, I would say if you're, you know, earlier than, than 5 million, maybe you want to look at something else. again, I, and, know, some, some tools have great built in systems. don't know, not necessarily, consistently, but, there are some, you know, some tools out there that.

that are built in into your ERP systems and things like that. again, we find that the Power BI is one of the tools that is really pretty useful to be able to get that real-time visibility.

Adam Cooper (18:32.889)

I love the fact that you referenced Excel. I've been working in this field for about 20 years and I was told on day one that we were replacing Excel and we're still using it.

Dan (18:41.198)

Yeah, it's never gonna go away.

Adam Cooper (18:44.649)

No, exactly. Everyone's saying it's going to be replaced by AI. I'm convinced I'm going to retire and Excel will still have a role to play. Just sticking with the, so you mentioned there about the sort of rolling it out in a way that makes KPI tracking a daily habit or a habit that is kind of used by everyone in the team, having a tab open. There's a cultural piece there, right? In terms of training the teams and those businesses you're working with to get into that.

Dan (18:52.064)

Yeah.

Adam Cooper (19:14.111)

I'd love to hear your experience about how you've seen that work best.

Dan (19:20.398)

It's like anything where you're bringing out change. You've got a system that provides valuable information, but it requires training. requires retraining. It requires reminders. It requires that people, that they see the value. If it's cumbersome, it's complicated, if it's, you have.

trouble dialing it down to the few KPIs that really matter, people probably aren't going to use it. So I think there's a lot of it is, and then also getting that user feedback, I think is important, right? That's nice thing about a customizable dashboard. It's like, I don't think this really matters to my business. I want to just see these four, five, six things on my dashboard. I can dig deeper into other things if I need to, but this is what really is going to be the key information I need on a day-to-day, week-to-week basis.

And so getting that user feedback, think is also really important, just roll it out and say, here, look at this. It's gotta be valuable, actionable, and worthwhile to them.

Adam Cooper (20:29.693)

Yeah, absolutely. I think that's key, isn't it? Having that dashboard that drives action, but doesn't overwhelm. I'd love to sort of hear your process for incorporating feedback. You mentioned there about user feedback and how do you work with your clients to incorporate that? Do you have a sort of structured process where, you know, once a month or once a quarter or once a year, you're sort of sending out questionnaires and incorporating feedback or is it a bit more?

informal less formal than that what's what works best for you

Dan (21:02.412)

answer that question as well. But first I want to step back a half a step to what we to the other thing about the feedback. know, KPIs also because you're trying to motivate behavior and incent behavior with KPIs. If you tie the bonuses to the various people, the bonus programs, the variable compensation program to those KPIs. Wow, look, they're going to pay more attention to them if they understand that they're

their paycheck is going to be affected by that. So I think that's part of the feedback loop as well. You develop good KPIs. What are the true drivers of what's going to demonstrate company success? Have that be what rolls out to the various stakeholders from a comp standpoint. As far as to your question of feedback loops, especially as we're onboarding a new dashboarding solution with an insights by Ascent,

We are, we've got an ongoing monthly sort of cadence for that. So we'll roll out version one, try that for a month. And then on a regular basis, we're going back and refining, we're getting feedback from, oftentimes these, clients are using it are our CFO and controller clients, right? So we've rolled out, we'll roll out a dashboard for the client. And then they come back and say, well,

This is great, we could also also like to get more visibility into that. So we're going to do an iteration and we'll produce a new view of that or a modified view or customizable view of the same metric or new metrics. And so it's kind of an ongoing cycle of improvement. It's very, very agile as far as the way that we're rolling those out. Now, is it possible that after, you know, six or 12 months time that they say, okay, this is what we need. And now we go to a.

Now we go to a quarterly cycle of review and refinement. That's certainly possible, but with early stage dynamic, agile businesses, things are changing, right? Companies are pivoting, companies are seeing new situations based upon geopolitical environment. There's a lot of things going on that it's not necessarily super static for a lot of growth companies.

Adam Cooper (23:12.137)

Mm-hmm.

Adam Cooper (23:19.687)

Yeah, absolutely. Absolutely. No, fascinating. And your point there before about tying the KPIs to their bonuses, to their pay packages, there's obviously an HR element to that and a wider, broader element than just finance and dealing with the CFO and the controllers. You you need to broaden it out. So how do you find that that works best? Is it a kickoff meeting where you bring in HR operations, the wider leadership team and then

get their buy-in because there's one thing people hiring a new CFO or a new controller and expecting them to focus on closing the books and the accounts, it's another thing where their bonuses and KPIs linked to their paychecks get impacted. So how do you best navigate that?

Dan (24:08.578)

Yeah, I'm going to come back to the revenue side of the house, right? So you've got the retention side, the operations, keeping the clients happy, keeping churn down, keeping retention high. And so there could be KPIs for that team is based more on hitting those goals and metrics there. When it comes to new business, marketing can be bonus based upon the number of

qualified leads they get in that convert from MQLs to SQLs, marketing to sales qualified leads. Obviously sales reps, that's pretty well established for hundreds of years probably as far as how commissions work and how closing new business is compensated. there's nothing new and revolutionary to the way that sales teams are compensated when it comes to KPIs.

It's once you establish and the executive team agrees on what KPIs should look like, and then they're rolled across the functional areas. And then you build bonuses. Like if you, you now have something within your control that it's going to to be dictating your bonus. You've got, you've got a budget to be able to execute against a marketing and lead generation. Well, hit those, hit those numbers and get your, and get your full bonus.

Adam Cooper (25:30.035)

Yeah, no, absolutely. It's really interesting, the sort of need to get buy-in across that senior leadership team and doing that collaboratively can really make a difference. And I'm interested, like you mentioned about the geopolitical changes and changing environments that the companies are now facing and everyone's facing at the moment, know, there's reacting too quickly and changing things too often.

that can have a detrimental effect and then there's changing things and reacting too slowly. How do you get the balance without being too knee-jerk, you know?

Dan (26:05.39)

Oh, wow. You didn't tell me this was going to be a hard, they're going to be hard questions. That's a tough one. mean, obviously, you know, manufacturing companies who are doing importing right now, especially, you know, in the States, especially with the tariffs and the whiplash that's going on with tariffs is pretty tough to navigate. So I'm not sure. I mean, by no means an expert when it comes to things like that.

You know, I think it's a matter of, you know, my advice would be, know, stay the course, understand that things might change, but be ready to react. don't overreact, I guess. You know, that's just, it's a really tough one, Adam. I mean, you know, we're seeing something unprecedented here.

Adam Cooper (26:56.255)

I'm sorry, I didn't want to make it too difficult. But no, it's just as you said, how do you plan in the current environment? It's very difficult. I think just like, I think that's great advice. It's being responsive, but not being too over responsive, right? Yeah.

Dan (27:09.646)

Well, you can run different scenarios too. you know, in the case of whether you're going to see, you know, very high tariffs on your imports, build one version of a financial model forecast, assuming, you know, that things are going to, you know, keep going the way they've gone for the last whatever, months. And then another one that says, okay, well, what do we do here? What do we, how can we affect, you know, how much can we raise prices? How much, what other things can we do? Are we going to have to cut?

costs elsewhere, are we going to have to find other sources? So I think it's a matter of just understanding that the different possibilities exist and try to run a cashflow forecast financial model based upon multiple scenarios. some of those might require very, very difficult changes to be made within the organization. And you'll have to decide from there what your alternatives are.

Adam Cooper (28:08.573)

Yeah, no, I think that's exactly it. It's using the tools that we've always used, but using them more sort of flexibly at the time in the way that it makes most sense. then, yeah, using your wisdom and partnering with people like yourselves to sort of give some guidance and some experience. So there's no easy answer. Just changing tack slightly, one more question and then I'll move on to our sort of final section. But you mentioned EOS earlier and I've...

I'm increasingly hearing about this. I've actually got another podcast coming up where I'm speaking to a specialist on that. I'd love to know your thoughts of that as a system, how much you use it for your own firm, for your clients firms and is it something that you've done a bit of reading about and you refer to it or is it something that you have more ingrained in your ways of working?

Dan (29:01.57)

Yeah, great question. So, entrepreneur operating system is based on the book Traction by Gina Wickman. And we see a lot of our clients using like fully implemented. We're a relatively flat organization. we don't have a full, we're not a full EOS company, but we do utilize some of the concepts within EOS.

We have quarterly rocks, which we've been running level 10 meetings in the organization. We've, you know, so we've got some of the tool, we use some of the tools in the toolbox, but we're not a full system. I'm a big fan, I think for a company that is starting to grow and hitting their stride, it provides discipline. There's other solutions out there that are, you know, and certainly EOS.

takes from some other areas of company operations. it's a really valuable tool that lot of our clients love. I, in particular, really do think it is a bit of a game changer for certain companies that need additional discipline on how they do things. And it comes back to KPIs in a lot of cases, right? Like, what are those?

understanding those drivers of your business and then compensating people according to those KPIs.

Adam Cooper (30:30.034)

Okay, now that's great. think also good advice to end on is, you know, the fact that you've got to choose the tools that are right for you and your business. the EOS is, it seems like from the bit of reading I've done, a very good system, but there are other systems and it's using the right system and the right elements of that system that work for you. now really good, really good advice there. So just moving on to our final section, which is where we always ask our guests to recommend.

a business book or a podcast or other resource that's been really influential for you on your journey. So, Dan, what's been helpful for you and what would you like to recommend to the audience?

Dan (31:08.046)

Well, I just brought up Traction and EOS. That's certainly one. I think that it's a good read for any founder or business executive to read that. I guess the other one that I find to be really impactful is Blue Ocean Strategy. I think it's another great book that

talks that, learn about, it's a little bit, I don't know if they've updated it. It's a, know, some of the examples might be a little bit dated at this point, but maybe it's been refreshed and I just haven't found it yet. But it's, you know, it's all about disruption and realizing that what is traditionally a, you know, they talk about the red, red bloody ocean of competition where you're, you're competing at the level of, of a, of a commodity.

versus doing something differently and approaching things in a different manner and disrupting an industry. So there's some pretty good examples there. That's another book that I would, I recommend, I need to reread it. been a few years since I've read it, but I feel like it's one that I wanna lean back into myself.

Adam Cooper (32:22.643)

Okay, great, two good suggestions there. Traction and Blue Ocean Strategy, we'll put links to those in the show notes. Thanks for that. And I guess final point is, can people find you if they want to find out more about Ascent CFO and learn more about what you guys are doing over there?

Dan (32:30.318)

Excellent.

Dan (32:41.804)

Yeah, I would say there's there's two places that were most active. One is one is linked in. Feel free to follow me or follow us and CFO solutions on LinkedIn. Those are there are two. Areas that we we try to put out valuable content or we don't. We're not trying to put out. We're focusing on quality over quantity and then if you go to our website you can sign up for our newsletter as well. We only we only put out probably.

probably about once a month we're putting out a newsletter again with some of our better content. So ascentcfo.com, A-S-C-E-N-T-C-F-O.com is our website and you can sign up for a newsletter there and learn more about us. And you're welcome to, there's a form there that you can, if you want to learn more, can fill out and somebody will contact you within the day.

Adam Cooper (33:31.369)

Amazing, amazing. Well thank you so much Dan for joining me today on the Fractional CFO show. I really appreciate your insight, your perspective and your time. Thank you.

Dan (33:40.886)

My pleasure, Adam. Really great to spend a few minutes with you.