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;50;00

Unknown

The goal is simple to help you run your business with more confidence and less financial stress. Enjoy the episode. If your CFO does not produce an ROI, they're an expense, not an asset. A CFO, a fractional CFO. So a part time chief financial officer that comes in. This is actually very common in a lot of small businesses as you start to scale and grow.

00;00;50;02 - 00;01;13;10

Unknown

There's certain stress points that happened where you're like, okay, I just made my first 100,000. Now I made my first 500, now I made my first million. And as you continue to grow, if you have the exact same habits that are not serving you from 0 to 100,000, going from 100,000 to 1 million with bad habits, it's only going to put you further in the hole.

00;01;13;17 - 00;01;31;15

Unknown

So a lot of people say, I'm not really good as an entrepreneur at the financial side of business, or I'm just going to give it to a bookkeeper or a CPA, and they're going to manage this stuff, and I'll just worry about it when tax time comes. Then they as they start to grow in scale, they quickly realize, oh my gosh, like we're doing more, I'm making more.

00;01;31;15 - 00;01;48;13

Unknown

But why am I keeping less and less in my bank account? That's usually what triggers someone to reach out for a fractional CFO, because they're like, I don't have the profitability. Or if my CPA is telling me I have this profitability, but I don't see it in my bank account, where's it all going? That's usually what triggers an engagement.

00;01;48;13 - 00;02;07;19

Unknown

Or it's like, hey, I have a bookkeeper, I have a CPA, but they're not really giving me what I want or I'm not feeling the financial freedom. So how do you get a return on investment from an investment into a fractional CFO, a part time chief financial officer, or a financial leader? Someone who comes alongside you and speaks your language?

00;02;07;22 - 00;02;29;10

Unknown

The business owner language that they help you. Make sure that you're keeping more of what you make. How do you get a return on that? A lot of people, when they first start working with the CFO, they don't know how to work with the CFO. They've never worked with one, especially if you are just starting out and you're getting bigger and you're at the million dollar mark, like this might be something you've never had an interaction.

00;02;29;10 - 00;02;45;21

Unknown

Or if you did in a W-2 job, this was someone maybe you never interacted with, or they were just off in their own corner and they were doing their own thing. So how do you work with the CFO to make sure you're getting a return on investment? I would say, number one, the number one thing would be open and honest communication.

00;02;45;24 - 00;03;05;27

Unknown

You have to be able to open up about how you feel about money, how you've handled money in the past. What habits do you have with money? Are you more of a spender versus a saver? Like what are you doing with the money that is even triggers you to reach out to a financial leader or financial coach to get you back on the right path.

00;03;05;29 - 00;03;28;11

Unknown

If you started to scale and grow and you're doing more deals, or doing more volume or more sales than you've ever done, but you're losing more money than you've ever lost. It's like being open of I'm not sure what's happening, or I don't know where my money's going and I need help. So being able to very clearly articulate what the issues are and maybe even how you interact with money, like I'm more of a spender.

00;03;28;11 - 00;03;41;29

Unknown

So if I get money in my bank account, I just like to have it go out. I don't like reserves. I just want to reinvest every dollar back into the business, whatever that mindset is. Or if you're on the other side, I'm a saver. I don't like spending the money. I hate going out there and, you know, going on trips.

00;03;41;29 - 00;03;59;28

Unknown

Or do any other things or just spending any money that I don't really have to. And I really just you're, you know, you're a miser. And so maybe you're not scaling like you want to or putting the money in the marketing like you should in order to be able to grow. So just being very open and honest, that would be number one, whether it's about downfalls or whether it's about.

00;04;00;06 - 00;04;17;22

Unknown

Number two would be your goals. So being open and honest about goals, not just about where you feel like you're lacking, but where do you want to take the business? A CFO is a leader. They are not just the bookkeeper who's in the day to day of QuickBooks or your transactions. They're there as a CFO to help you.

00;04;17;24 - 00;04;41;21

Unknown

And the real return you get is, are we really making progress on your goals? You told me you wanted X amount in savings or X amount in business reserves by this date. That's something that could be very well managed and be able to be measured as well too. I want to see did we actually grow the reserves? Did you want to start paying yourself more and were you able to, within this amount of time, be able to start paying yourself what you wanted to?

00;04;41;28 - 00;04;59;03

Unknown

That's why being very clear cut, not just on what number one where you might have some hang ups with money, but number two, what do you want from your business? What are those goals? And not just goals of deals or sales, but how much do you want to keep and how much do you want to pay yourself? And how much do you want in reserves?

00;04;59;03 - 00;05;22;26

Unknown

And then you can go back and forth with the CFO of what would be a reasonable date, you know, a reasonable time frame in order to get this to happen. So that would be another big one to be getting a return on investment is I wanted to be able to have this much in reserves or have this much that I'm paying myself, that otherwise if I just keep going the way that I'm going, there's no way I'd pay myself or no way I'd have reserves in the bank.

00;05;22;26 - 00;05;46;20

Unknown

So that's a very tangible ROI that you can get from a CFO. The other thing you can get is that clarity. So one of the things we do with every client and that any CFO worth their weight in gold, we'll set up a dashboard for you. What's a dashboard? It's literally just the numbers, the key metrics those key numbers you need to be looking at that help you to make decisions in the business, to help you get to where you really want to be as a business owner.

00;05;46;28 - 00;06;06;16

Unknown

So let's just take real estate investing, for example. One of the big things we track is if you're fixing and flipping, how much money do you have out, like in projects versus how much money do you still need left in order to complete the projects, and how much money do you have earmarked for projects, and do we need to go and get more money, or otherwise you're going to be dipping into your own reserves.

00;06;06;17 - 00;06;30;20

Unknown

It's also understanding that CFO should help you with this. One is a little bit harder to track, but the sleep at night factor like do they help you understand where your money is, where it's going, and the other alternatives you have versus just, let's just plow every dollar back in and hopefully we get more money out than we put into the business, because that's just a losing recipe for success.

00;06;30;20 - 00;06;48;01

Unknown

You are not going to attain success if you're just like, as long as more money comes in and goes out will be okay. What you need is someone to be there and to guide you to that profitability and make it a system, not just a set of circumstances that just magically try and get the form together. You need a system, and that's what a CFO does.

00;06;48;04 - 00;07;05;19

Unknown

And if you're wanting a return on investment, those are a couple things. Number one, be open and honest. Number two, really have clear goals because that's one of the things that you can actually measure is did we get more cash in our bank account. Do we get more cash into our personal accounts, making sure you're getting what you really want from the business?

00;07;05;24 - 00;07;21;29

Unknown

Maybe you don't have a goal for reserves or paying yourself, but you want to do more deals, or you want to get a better marketing ROI. It's being able to focus on those areas, but know what you really want, and then also being able to have the numbers in front of you to be able to make a decision, like having a dashboard.

00;07;21;29 - 00;07;50;11

Unknown

So those are some of the returns on investment from a CFO. Another return on investment is are they saving you headache in time? A CFO should also be managing like your bookkeeper and CPA relationships. So that way you have someone that's a go. And in between a liaison, someone that's there to make sure that the bookkeepers are doing what they should be doing, that they're keeping the books up to date, that they know exactly where every dollar is going, and that making sure that they're keeping it up to date so we can actually translate those numbers for you.

00;07;50;16 - 00;08;10;03

Unknown

Then the CPA relationship, if your CPA tells you to do something in order to decrease your tax burden, it's like, do you have someone like a CFO holding you accountable to that tax plan? So and not only that, holding you accountable, but helping you implement the tax plan as well. Because sometimes CPAs give you a plan. You're like, throw your hands up.

00;08;10;03 - 00;08;25;14

Unknown

I have no idea what to do here. Like how do I get, you know, how do I actually do this? What they're telling me to do, whether it's due to the payroll for a a child or whether it's, you know, the Augusta rule or some of the things out there that entrepreneurs can take advantage of. Are you taking advantage of them?

00;08;25;14 - 00;08;44;08

Unknown

Do you know how to do you have someone in your corner that's helping you manage that and making sure that you're getting what you really want from the business, and that you have someone that's helping you manage the people that frankly, a lot of people just would not take the time to manage or even understand if they're doing it correctly, like a bookkeeper or a CPA.

00;08;44;08 - 00;09;04;22

Unknown

And that's another big return on investment, is the headache of having to manage more people, especially people that you might not understand their role, their job, or how they do it as much, and having someone that you can really rely on. I would also say to peace of mind, that's another big return on investment of whether it's a tax account like that, the that a CFO helps you set up.

00;09;04;22 - 00;09;22;10

Unknown

So that way at tax time you've got the tax money. Therefore when taxes are due or whether it is, like I said, managing those people, and there's the peace of mind there of like someone's actually watching them, what they're doing not just at tax time but throughout the year. So that way when tax time comes, you have a clean set of books to be able to hand them.

00;09;22;10 - 00;09;38;12

Unknown

But you've also been meeting around the numbers throughout the year as well too. So these are just some of the returns on investment you can get from a CFO. Because at the end of the day, all you really care about is did you put more money in your pocket and did you save time because that is part of the financial freedom formula, right?

00;09;38;16 - 00;10;00;06

Unknown

It's time, freedom and money. Freedom and a CFO should help you immensely on the money freedom part to be able to understand and have systems in place to keep more cash. And then how do you get time freedom? You buy that time freedom in your business by taking the cash that you've saved up and those reserves to either hire people or systems or processes, or you take that money and you do what you want with it.

00;10;00;11 - 00;10;19;27

Unknown

And maybe the CFO needs to give you permission to be able to do what you want. Those are some of the ways you can really get a return from a CFO. And like I said, the biggest one is if you have goals you want from the business, whether it's you want to take a big trip or you just want to sleep at night, or you just want to be able to pay yourself more, or you want to have reserves being able to have a very clear goal.

00;10;19;27 - 00;10;46;12

Unknown

And then the CFO point in your whole business to make sure that we're accomplishing that goal together. That's one of the best ways you can get a return from a fractional CFO. 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.