Transcript Episode 34

Episode 34: Behind the Scenes of a CFO Meeting


Transcript Episode 34

Stephanie Skryzowski  

Welcome to the 100 degrees of entrepreneurship podcast, the show for purpose driven entrepreneurs who want to get inspired to step outside of your comfort zone, expand it to your purpose and grow your business in a big way. I’m your host, Stephanie Skryzowski, a globe trotting CFO whose mission is to empower leaders to better understand their numbers to grow their impact and their income. Let’s dive in.

Hey, everybody, welcome back to 100 degrees of entrepreneurship. I’m Stephanie, and I am so excited you’re here!

So, today’s episode, you’ve got just me. And I am taking you behind the scenes of a CFO meeting. So as you know, I’m a CFO and I run 100 degrees consulting. We provide CFO strategy and bookkeeping services to small businesses and nonprofits around the world. As part of what we do, every single month, we sit down one on one via zoom. We meet with our clients to review their numbers.

And you may be thinking about having a CFO in your business, you may be wondering what it is actually like, and what we actually do and how much time you get with your CFO every single month. And so I thought I would just kind of give you the rundown and pretend like we’re sitting together, looking at your financials from last month and looking at your forecast. So I’m gonna take you behind the scenes!

There are three things that we usually do every single month with our clients.

So the first thing we do is we look at last month’s P&L. So quick reminder, your P&L is your profit and loss statement. And we are looking at that for last month, sometimes last quarter, and also the whole year, year to date. And so often, if you see Y.T. D, that means a year to date. That means the beginning of the year, January 1st to today. Whatever today is for you that’s year to date.

So what we’re going to do is look at last month’s numbers, we’re going to look at revenue from last month. How did we do last month? Was it good? Was it bad? Let’s see, I’m recording this in August. So let’s say we’re looking at July. So we look at July’s numbers, and we compare to our goal.

Let’s just say we earned $50,000 in July. Is that a good month? Or is that a bad month? I actually have no idea, right? Without some more information, we don’t know if that’s a good month or a bad month. So $50,000. So then we say okay, well, what was our goal? Well, our goal was, say 40,000. Okay, we did great.

What was last year? What did we do last year? Maybe last year we just did 30,000? Okay, awesome.

So now we have these three different data points, right, we have last year, we have our goal. And we have what actually happened this year.

So as we’re looking at that, as we’re talking about that we ask questions like, why? What happened in July that maybe we can replicate? Right? If it was a really good month? What did we do in July that we can do again? Or if it wasn’t a great month? Let’s figure out why that’s the case as well.

If it wasn’t a good month, maybe it was not a great month last year, either. And so we anticipate July every year is a little bit slow. And so it’s okay, right? That just gives our clients, gives our business owners a reason to say okay, well, I’m not going to beat myself up about this. July is a slow month for our business, moving on, right? Like, let’s just move to the next and keep plugging forward.

I know a lot of times, if we have a revenue number that feels kind of low for us, we beat ourselves up, right? We’re like, Oh, my gosh, my business is going down the tube. I don’t know if I’m going to survive another three months, like things are just really bad. And you need that comparative information, looking at last year, looking at last month, looking at last quarter to tell you like Oh, actually this is normal. This is okay. Let’s just move on. Right?

So our meeting gives our business owners an opportunity to think a little bit deeper, to dig into the why behind why the numbers are what they are, either, what can we replicate? Or what can we do differently so that we can do better next month? So we look at the revenue in that way. And we’re not just like staring at a number. Okay. $50,000 is on the spreadsheet. Okay, moving on. Like we’re digging deeper, right.

So the next thing we look at, we look at last month’s expenses. So we kind of go through the P&L line by line and look at all of the expenses for last month, and we’re doing the same exact thing. We’re comparing our total expenses to both our goal or our budget, right? And we’re comparing to last year, maybe last month to just depending on your business, depending on what makes the most sense for you. We’re looking at different points of comparison, right?

So if your expenses are usually an average of say, 20,000 a month, but in July, there were 40,000 a month. We as the CFO would be asking a question, why did our expenses double in July?

Now, that might have a perfectly logical explanation like, Oh, we had to, you know, pay for our brand new website redesign in July and all the cash went out the door, then, okay, that’s fine. There’s no judgement from our side of things. Depending on how you’re spending your money, we don’t care, it’s your money. But we may ask certain questions to just help us figure out, okay, are the choices that you’re making, getting you closer to your goals. And they may be, they may not be, right? But that’s just what we’re doing and the conversations that we’re having.

So we’re looking at our expenses, or looking at them compared to last month, we’re looking at them compared to last year or looking at them compared to our goals. This is really helpful to also help plan for the following month, what happens a lot of times is that we don’t realize that over time, our expenses have begun to creep up. And before you know it, they’re like double what they were 6 or 12 months ago. And by getting into this regular cadence of looking at those expenses, compared to last month compared to last year, it again, helps you make decisions based on what is going to help you get closer to your goals.

So like I said, no judgement as your CFO, we absolutely don’t care what you spend your money on. If you want to spend 50k on a business coach or a mastermind or, you know, $10,000, to go do a business retreat in the Caribbean, that’s awesome, that is good for you, we’re just going to make sure that that fits into our overall plan.

So that’s what we do. When we’re looking at your revenue, your expenses, then we look at your cash. So as you know, revenue and expenses and cash are all very different things, right? So depending on the way that you’re doing your accounting, and your bookkeeping, revenue, and cash might not be equal, right? Just because something is recorded as revenue doesn’t mean it’s necessarily cash in the door, unless you’re doing cash accounting, of course.

So we look at your cash. Okay, how much money do you have in the bank right now? Or as of the end of last month? How much money did you have in the bank? And how many months of expenses is that? So like, if your business stopped bringing in money, right now, how long could you continue to operate at the current pace that you are, if not another dollar came in the door.

And that’s something that’s super important, we have a lot of clients that are working really hard to get to that three month or that six month mark, meaning they could operate for three months or six months, if not another dollar came in the door. They could pay their bills, they could pay their people, they could pay themselves for three to six months. So cash is super important. And we always look at that. How do we do? How much money do we have in the bank? Do we want more in the bank? Is this good? Do we feel good about where we are? And so we’re always looking at cash as well. So we really like, methodically go through each of those three items. Looking at last month’s numbers.

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The next thing that we do is we look ahead, so everything we just talked about, we’re looking behind us, right, we’re looking in the rearview mirrors, ancient history. So now we’re looking at a forecast right, a forecast is really looking forward, this is looking into the future. This is using our crystal ball to look into the future of our business, and to figure out how we’re going to get from where we are now to achieving our goals.

And so when we start working with clients, we put together a forecast for the rest of the year, sometimes into next year. And that means month by month, we map out in an Excel sheet, how much money we plan to bring in every single month in the future, what our expenses are going to be every single month in the future, and then where our cash balance is going to be every single month in the future.

It would be great to do at once, right? But the real value is coming back to that forecast every single month again and again, right? Because when we create something in January, our October could look wildly different than we thought October was going to look back in January, right? I think that 2020 is probably the biggest reminder of this. If you think about what your goals were, what your plans were for your business for your life in January of 2020. And then think about how different that looked just six months later in, say July of 2020. None of us could have predicted that. So, we come back to this forecast every single month. 

As part of our CFO meeting, the next, third I would say is we’re looking at the forecast. So we’re looking at everything we kind of sketched out last month, and we’re updating it. And some of those conversations are often like, “I really want to give myself a raise.” “I want to pay myself more, can we add that in?” And like, let’s see what that would look like. So okay, let’s add in, you want to increase your pay by like 30%. Okay, let’s plug that in. Or my team and I decided that instead of launching our new program in November, we’re actually going to wait and launch it in January instead. Okay, so let’s take the revenue from that launch out of November, and put it into January instead, right?

So we talk about your plans, kind of what you have coming down the pike, then we talk about your goals. So because we’re looking at both our actuals and our forecast, right? We’re looking at history plus future, all combined together, that gives us a really good idea of where we are going to land for the whole year. Right now, like I said, I’m recording this in August. And for talking about July financials, we have true numbers, like actual real numbers for January through July. And then we have our projections for August through December.

So when you add those all together, you’ve got a pretty darn good picture of what you expect your revenue to be for the year, or what you expect your profit to be, or what you expect your cash balance to be like, actually the money that you’re going to have in the bank at the end of the year.

And so we can easily say, Okay, well, if your goal was to hit $400,000 in revenue this year, based on what we’ve done so far, and what we are projecting for the next five months, are you gonna hit that goal? And if you’re not, okay, what do we want to do? Do we want to go with, you know, status quo, and what we’ve got forecasted now, or do we want to do an extra push to help you hit that goal.

Maybe our goal is not top line revenue, maybe your goal is profit. Or maybe your goal is having a certain amount of cash in the bank at the end of the year, right? So we can assess your progress towards those goals at any point throughout the year. And in fact, we do it at every single CFO meeting. And that can really help shape your decision making for the rest of the year. Just based on how close or how far you are from your goals.

And then oftentimes, we will also use our meeting to push out that forecast even further. So like I said, we always have a forecast through the end of the year, right now, we’re actually starting to build  forecast into next year. And that way, we always have this runway of anywhere from like six to 18 months into the future. This is going to really help you make decisions.

Then the third piece of our meeting is really just using that time to ask questions, do big picture planning and strategic analysis, and help our clients really be able to make the best decisions that they can for their business. So a lot of times this involves hiring questions. So I want to hire somebody new for the business, is that a contract? Or is that employee? What would the cost be? What’s the cost difference?

So what we’ll do is kind of talk through our clients plans. And if we need to, we can build that into the forecast. So they can really see the implication of hiring an employee versus a contractor or adding a few different people to the team and see what that might look like. We also use the time to talk about things like investments into the business. And so sometimes that means a business coach or a mastermind, or sometimes that means, you know, a new website or software. And especially when these are large one time costs, we can plug those in and see what the impact is going to be on cash flow specifically.

Because if you’re dropping 20 grand in cash on a particular investment for your business, that might be something that we need to think about in terms of cash flow, that might put you in a bit of a tight position for the next couple of months, until cash sort of catches up with that. So it’s something that we kind of talk and plan through together.

Oftentimes, we’ll also be helping our clients kind of do the math around maybe a new launch that they have and thinking, Okay, if we price the product at this amount, and we’re anticipating this many buyers, what does that mean in terms of revenue, or we want to host a mastermind and if there’s this many people that we want to enroll at this price point, oh, what if we actually did this price point instead? So there’s a lot of discussion back and forth, and helping with all of those decisions, anything that involves numbers, we kind of talk through together.

We’ve also had several conversations with a number of different clients around selling their business. Yes, like actually selling their business to another business and how to get their financials set up, so that they are ready to sell and how to evaluate their business and really put a value on the business. Like think Shark Tank, right? What’s the valuation of the business? And so having those kinds of conversations and figuring out what they need to do to get to that point where their business is really sellable.

We talked about cost, you know, cost of materials if you’re selling a physical product or cost of a service or an offer that you provide. And we’re talking about profitability of like, specific programs or specific clients. And so all of those things are things that we are digging into, maybe not every single one of those all on every single call every single month. But those are some of the ways that we are helping our clients and using our time together.

So this was not meant to be a sales pitch for our services. I just really wanted to show you like, Okay, what does the CFO actually do? Right? What does the CFO do in your business? What do those meetings look like, and what do you even talk about? Are you just looking at the P&L or just looking at spreadsheets all day? And it’s really a lot more than that. It is basically being a strategic sounding board, somebody who is coming to the table with the benefit of having that sort of financial knowledge to help you make decisions. And so that’s what I like to think of it as really, a strategic sounding board with the financial background to help you make decisions.

So I hope that was interesting. First of all, I hope that was interesting to you. I hope that was super helpful. And I would love to know if you’ve got any questions on what a CFO does, or how they might be able to help you. Or maybe even if you need one, definitely check out our quiz. I think I mentioned this before, but it’s

This can help you assess whether you need a bookkeeper, a CFO, a tax accountant, a financial advisor, and as part of that, you also get a little bit more information on what a CFO actually is and does and how we help. So definitely check that out. That could be a very useful one for you, if you are curious about what having a CFO in your business looks like.

And if you are like, okay, I noticed the info is I want to start with building out my own forecast. First of all props to you, because that is awesome. And I would love if you would download our template. So we have a template to help you build out your forecast. And it’s

That’s an Excel workbook where I kind of walk you through exactly what you need to do to build out your own forecast. When we start working with our private clients, we work on building out a forecast together and then maintaining that every single month. This is the template that we are using with our private clients. So, if you haven’t checked that out yet, definitely do and both of those resources are great ways to really help you get a little bit more on top of your numbers than you were before.

So I hope that was helpful, everybody. And always you know where to find me. I’m over on Instagram @stephanie.skry, and I’ll see you next time!

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Transcript Episode 34

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