00;00;05;19 - 00;00;25;29

Unknown

You're listening to the Profit First for Real Estate Investors podcast. This show is all about helping real estate investors and entrepreneurs bring clarity and structure to the financial side of their business. In these sole episodes, we focus on practical financial strategies that real estate investors and business owners can actually implement, whether it's profit, cash flow forecasting or mindset.

00;00;26;00 - 00;00;43;26

Unknown

The goal is simple to help you run your business with more confidence and less financial stress. Enjoy the episode. You could be losing a lot of money if your fractional CFO is not doing the right things. And if you're like fractional CFO, what the heck? I don't even have one. Or what is that? Because I hear that a lot.

00;00;43;26 - 00;01;05;06

Unknown

When people say fractional, what does that mean? Fractional just means what's a fraction? It's a fraction of a whole. So it's for a fractional CFO. A CFO is a chief financial officer. So it's a financial leader in a business in the big tech companies and the big companies out there, they have a CFO sitting in some ivory tower telling the CEOs and the owners what to do.

00;01;05;09 - 00;01;24;27

Unknown

But in a small business, you're usually too small for a full time CFO, but too large not to know your numbers. Like if you are growing a business, you need to know not just what's coming in, but what's going out the door. And what do you get to put in your pocket, where a CFO is really all about making sure you keep more of what you make?

00;01;25;04 - 00;01;45;15

Unknown

Because bookkeepers and CPAs, while you need them, they don't do certain things that CFOs do. Sometimes you're also trying to fit a bookkeeper or a CPA into a CFO box, and you might not even know it, but you're like, hey, here's my stuff. You give all your receipts, you give all your bank statements, you give everything to a bookkeeper or a CPA and say, fix it for me.

00;01;45;15 - 00;02;06;27

Unknown

Like, just make it work. Like, go file my taxes. And you're wondering why are you not getting from them the actual decisions that you need to run your business, but at the same time, they are bookkeepers or CPAs and their whole focus in life is making sure that you're compliant. Usually for the IRS, they don't really care about your day to day.

00;02;06;27 - 00;02;31;20

Unknown

They don't care about the business management. They care about okay, are they making enough to still pay us and like to manage the books and to be able to have tax strategy and tax planning? Usually CPAs and bookkeepers are there and they're very important. They are lynchpins. You need to have those people, especially if you hate the financial aspect of your business, but they won't get you some of the things from what you really want from your business.

00;02;31;20 - 00;02;48;23

Unknown

What do you want as an owner? You want financial freedom. You want time. Freedom. You want to be able to do whatever you want. Make the decisions you want. You want cash in the bank like you want to pay yourself what you're really worth and what all the sweat, blood, hard work, the tears, everything that's gone into your business to be worth it.

00;02;48;25 - 00;03;22;12

Unknown

Like those are the things you want to feel. And that's where a CFO comes in to make sure that if you're going to go out there and bust your butt to get deals in the door, to make sure that you're closing sales, that you're getting cash and revenue, and you're really focused on the business as a business owner that you're also getting from your business, the things that you want from it like that financial freedom, whether that's the time, the energy, the money, like the resources, the capital, the reserves, if it's taking trips, if it's going and buying the biggest car or buying a plane or whatever it is that you want from your business.

00;03;22;14 - 00;03;42;06

Unknown

And there's a really big difference between the people that are on in that financial seat for you. Now, if you are a business owner, let's just split this up. If you're doing, let's say, 500,000 in revenue and below, how can a fractional CFO help you? You're like, there's no way I just need a bookkeeper, right? Or I just need a CPA.

00;03;42;09 - 00;04;01;11

Unknown

I would argue that if you find a good fractional CFO, they'll have a plan for you to make sure that you at least have a good financial foundation, like when we work with people at simple CFO. I don't care if you're below 500 or above 500,000 revenue. We lay the financial foundation. That's our process. With every new client that comes in the door, we do three things.

00;04;01;11 - 00;04;19;26

Unknown

Make sure they have a good bookkeeping system process in person because you need a good PNL and a balance sheet. We implement profit first, which is a cash flow system, making sure you're keeping more of what you make from every single sale that you do and helping you know where all your cash is, because that's usually a big headache and a big concern of every business owner.

00;04;20;01 - 00;04;37;19

Unknown

Third thing we build is a dashboard. So you make sure that you have numbers in front of you. You can make decisions from make them faster, better, and put more money in your pocket because I don't want you failing at business because you're doing so well on the front end. You're making the money, but then you're not keeping anything, or you're spending more than you're making.

00;04;37;21 - 00;04;57;09

Unknown

Ask me how I know I was in a company where we're doing 25 deals a month in a real estate company, just like you see on HGTV, doing these flips, doing all these renovations, all that stuff. But we were spending 26 worth of deals out the door. We were really good at making money, but we were not good at the spend portion or if we weren't keeping much at all.

00;04;57;11 - 00;05;18;16

Unknown

This is where I wish we would have had a good CFO of someone. That was a fraction and I did not. We didn't. Even though we were doing that many deals, we did not need a full time CFO yet. We didn't need to be paying someone two $300,000 a year. We just need to be able to pay a couple thousand a month, maybe to be able to say, hey, we're doing all this deal flow and we're making seven figures.

00;05;18;17 - 00;05;37;24

Unknown

How do we scale up but actually not lose our shirt? How do we make sure that we're profitable while we scale? That's what a CFO does versus a bookkeeper who's just going to hand me a profit and loss on a balance sheet and say, good luck, here's your numbers, and I'm just going to keep emailing you questions, if I have any, on how to enter the data for you.

00;05;37;26 - 00;05;56;23

Unknown

Then the CPA of like, hey, I've got your tax plan ready or I filed your taxes and here's how much you owe. Good luck. I hope you do well in your business, you know, and see you next year. This is where a CFO is in the trenches with you. Just think about it. Even if you're a newer business owner and you don't have this huge team, you are a leader in the business.

00;05;56;23 - 00;06;18;08

Unknown

You are the CEO, even if it's a one person operation, or even if you just have a couple people. You're the CEO, a CFO is not the chief executive officer officer. They're the chief financial officer. Making sure your finances are pointed towards what you want from the business, but you kind of have to have that yin and yang, right?

00;06;18;08 - 00;06;37;22

Unknown

You have to have the person who is literally driving and their sole purpose in life. This is you, your sole purpose in life is to get the money in the door to the revenue, the sales, making sure that you're making the money. At the same time, if you're going to go out there and literally make that your life's mission, you need someone else to make sure you're keeping it as well, too.

00;06;37;23 - 00;06;58;09

Unknown

You need that hand in glove. You need that peanut butter and jelly. It's like making sure that you have someone on your team that cares about you as well too, as a business owner, that they don't just speak accountants, they speak business owner language like a CFO should be able to speak your language, not just the language of accounting and business ownership.

00;06;58;15 - 00;07;19;14

Unknown

They should speak your language, which is entrepreneur and business owner, and making sure you have everything you need in order to make the best decisions from the business. But also, do you have the profit you want? Are you paying yourself what you want? Do you know where all your cash is going? Do you not want to have to manage the bookkeepers and the CPAs in your life?

00;07;19;14 - 00;07;37;07

Unknown

And like if there is a tax plan from the CPA, do you know how to implement it? Like this is what a CFO does. They come in to help you exactly where you are to make sure you get to that next level, but not through just more hard work. I want you to work smarter, right? It's that clichéd statement work smarter, not harder.

00;07;37;13 - 00;07;53;15

Unknown

And a CFO helps you work smarter in the fact that how can we make you and help you keep more of what you are making? But then also, if you want to scale up how do we scale profitably? How do we make sure that you're on the right track and we always take it back to that foundation if we know our numbers?

00;07;53;22 - 00;08;10;25

Unknown

Number one, you have good bookkeeping, then we know that we can make decisions. Well, how are we going to make decisions? Well, number two is profit first and cash and a cash flow system. Where are we putting our cash to get the biggest return. And are you building reserves and are you paying yourself. And then the dashboard is going to tell us, like where are we leaking money?

00;08;10;26 - 00;08;28;22

Unknown

Do we need a forecast if we need to hire someone, what's the numbers that in order for us to be able to hire that person in this seat? This is where if you have a good foundation of making sure you know where all your money's going. That CFO doesn't just provide that clarity. There's also a level that a CFO provides that a bookkeeper or CPA won't.

00;08;28;22 - 00;08;46;28

Unknown

And that's accountability. Like you said, you wanted to be financially free by five years from now. You wanted to sell your business within the next 5 to 7 years or whatever. It might be the big financial goal you have, or you just want to take a trip or start paying yourself consistently. This is where I see if I was going to hold you accountable to here you go.

00;08;46;28 - 00;09;05;01

Unknown

Here's what you said. Here's your deal flow. Here's how we can reach that goal. Like here's the actual steps with the cash that you're making to reach that goal and then holding you accountable to that. Let's just let's be real here. A lot of the people we work with, they come in with financial baggage. They don't like talking about money.

00;09;05;07 - 00;09;24;28

Unknown

It's emotional. It's things that money just affects us on many deep levels, and lots of us have baggage, maybe from our parents, maybe people saying, you know, money doesn't grow on trees and just all the garbage that were fed. Then they come to us and they're like, help me, I don't know what to do. So some of it is just having someone there to, number one, give you permission to be able to pay yourself.

00;09;25;03 - 00;09;40;23

Unknown

Maybe you're making enough already to pay yourself, but you just don't know. Am I not going to hurt the business if I pay myself? Well, that's what a CFO is there to help you understand. This is what you can do. This is what you can take out. And of course, you can take this out. There's so many people that we have to give permission to just to pay themselves.

00;09;41;00 - 00;09;55;25

Unknown

Another big thing is what about on the tax side? Like are you saving for taxes? So tax time doesn't have to be stressful. You know, when tax time comes around and you keep pushing it back and filing extensions and all that, well, wouldn't it be a lot more peace of mind if you save for those taxes throughout the year?

00;09;56;02 - 00;10;10;27

Unknown

And a CFO is holding accountable in that form and fashion? What if you want to take a big trip? If you tell us you want to take a big trip with your family or whatever it is, or like you just want to go and explore the world, okay, how many months do you want to do that by? What do we need to save by then?

00;10;10;27 - 00;10;27;13

Unknown

What are the systems we need to put in place? How do we make sure that you have enough cash? And even if you didn't do business during that month, that you had a, you know, like, would you still be okay, like making sure that we make plans with you? That's what a CFO does versus a bookkeeper. Would you still need want them because they're entering the day to day data.

00;10;27;18 - 00;10;49;18

Unknown

But then you need a CPA as well to file the taxes that CFOs more on your team to make sure you have the right people. And sometimes a CFO can do all those things. Like in our business, we have bookkeeping and taxes, and the CFO side, but people get the most value even from us or even out in the marketplace when they have someone who understands them and then is holding them accountable to profitability.

00;10;49;23 - 00;11;11;01

Unknown

Have you ever heard that statement that what you focus on expands when you have someone's sole job on your team is dedicated to your profitability? Your profitability will increase. And this is someone whose sole responsibility is to make sure that you have profitability and not just profitability, that you have cash in a bank account, and that you can keep more of what you're making.

00;11;11;01 - 00;11;30;04

Unknown

So a CFO is going to help you get to your end goal, is help you attain that financial freedom that you've always been wine and wanting to taste. And you can never really try and reach it or grab it with the people that have been in your life so far, maybe a bookkeeper, CPA. That's the big difference between what a CFO does and what a bookkeeper or CPA do.

00;11;30;04 - 00;11;49;23

Unknown

At the end of the day, the CFO is there to help you be profitable, help you keep more where the other two are, making sure that you are compliant for the IRS, and that you do file the taxes, and that you have the day to day and you have the balance sheet. But the CFO job is to make sure you're translating those numbers into actionable items to keep more of what you're making.

00;11;49;26 - 00;12;08;11

Unknown

Thanks for spending time with me today. If this episode gave you clarity or a new perspective, be sure to like, subscribe, and comment below if you're ready to apply what we talked about today with real guidance and accountability, visit profitrei.com/ to schedule a free discovery, call with us to create your path to financial clarity and freedom.