Why Small Business Owners Are Desperate for a CFO Right Now

What if the biggest financial mistake small business owners are making is relying on numbers that are already too old to help them? 

In this episode of How to Win Big at Business, Joe breaks down why the role of the CFO is becoming more important than ever for self-employed professionals and small business owners.

Business owners do not just want historical financial statements anymore. They want guidance. They want clarity around cash flow, profitability, hiring decisions, pricing, and growth. They want someone who can help them understand what the numbers mean before they make the next big move.

Joe explains the real difference between an accountant and a CFO, why cash flow matters just as much as profit, how better financial insight leads to better decisions, and why AI is making strategic financial guidance more valuable, not less.

If you are a business owner who wants more confidence in your decisions, or a financial professional looking to increase your value in the marketplace, this episode is for you.

If you’re a self-employed professional trying to build a real business, this podcast was created for you.

New episodes break down the systems, strategies, and structures needed to move from solopreneur to sustainable business owner.

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If you want fewer headaches, fewer IRS surprises, and more smart systems running your business (so YOU don’t have to), let’s talk.

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Because running a business shouldn’t feel like wrestling an octopus… alone. 

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 #SmallBusiness #VirtualCFO #CashFlow #Profitability #BusinessGrowth #SelfEmployed #Entrepreneurship #Accounting #CFO #SmallBusinessOwner 

Thanks for listening!

If you want fewer headaches, fewer IRS surprises, and more smart systems running your business (so YOU don’t have to), let’s talk.

Book a strategy call: www.timewithjoe.com

Because running a business shouldn’t feel like wrestling an octopus… alone. 

Also check out:
www.Bedrock360BusinessSolutions.com (Complete Coverage)

www.Bedrock360TaxSolutions.com (Tax Gaurd 365) 

www.Bedrock360BusinessTraining.com (Courses)

Transcript

SPEAKER_00 0:05

There is a serious, serious shift happening in the accounting and consulting world. The truth is, today business owners aren't interested in historical financial statements and facts and figures. What they want is they want somebody to tell them where their cash is going. They want guidance. They want to know if they're making the right decisions. And this is why the virtual CFO landscape is growing at an infinitesimal rate. And for people that understand this, you are going to reap the rewards. You're going to be light years ahead of everyone else. If you're a small business owner and you're listening to this, stay tuned because you're going to relate to exactly what I'm going to talk about in this episode of How to Win Big at Business. This is episode number 16, and this podcast was developed. It's been created specifically for self-employed professionals like myself. I mean, let's face it, you're faced with a lot of decisions. All of them are crucial. This is why every small business owner doesn't only need an accountant. It used to be, hey, don't start a business unless you can afford to hire a good accountant. Now the the saying is going to be, don't start a business unless you have a good CFO. Now, let's face it, small business owners like the ones that I'm targeting here, the self-employed professionals, can't realistically afford a CFO, but can they? You see, that's not really true anymore. A few decades ago, I started hearing these terms called the fractional CFO, which was pretty interesting. It was pretty interesting because in the past, I always thought of a CFO as working for a huge company, wearing a suit and tie, going to board of directors' meetings, discussing all kinds of analytics, but it's just not like that anymore. Especially with these amazing AI tools that we all have at our fingertips. So in this episode, I'm going to talk about exactly what a CFO is, how how a CFO does things differently than a typical accountant. I'm going to talk about the kinds of guidance and information a good CFO can bring to the table. I'm going to talk about the opportunities, the tremendous opportunities for people that are in the financial world. If you have a financial background, if you're even a bookkeeper, if you know how to read a financial report with the AI tools, creating all of the analytics, all of the ratios, and creating them in ways that are understandable so that you could communicate this valuable information to your client. And if you're a business owner, you're going to want somebody that can dissect your historical figures and put them into plain language that you can understand so that you could make better informed decisions. So I hope I've gotten your attention. If not, you can you can shut off the podcast right now. I hope that you continue because this is going to be some valuable, interesting information. I guarantee you. So let's start with what a CFO actually brings to the table. First and foremost, cash flow. Not what the cash flow was, but what the projected cash flow is going to be. That's invaluable because I've always said a viable business needs two things. Number one, sales. If there's no revenue, there's no business. And number two is positive cash flow. Now you could be profitable and actually have negative cash flow. And I'm going to give you some examples of how that could happen. You could also be losing money and have positive cash flow. That's why it's important that you have somebody that can actually explain why that is and what's going on. And not only that, what can be done to reverse it? A good CFO is going to help you become more profitable, more knowledgeable. You're going to have a much better handle on what's going on in your business. Another couple of things is that a CFO is going to remove the financial insecurities. It's going to remove the the black hole of what's going on with my finances. And probably most importantly, a good CFO is going to position you for growth. Growth, profitability, positive cash flows. Are these some of the things that you're interested in as a business owner? So, really, in a nutshell, the difference between an accountant and a CFO is the accountant is looking at historical data. That's what they're interested in. The accountant is concerned with accuracy, timeliness, you know, strong financial information, making sure that the accounting system is actually working, that the bookkeeper isn't only just entering data, but all the accounts are being reconciled, classified correctly, and that all of the transactions are being recorded. For instance, let's say you have a Shopify store and you're on a cash basis of accounting. Well, if your bookkeeper is only taking the deposits and recording that as sales, they're missing a big piece of the of the puzzle because there's fees involved. And guess what? Soon, as soon as the IRS figures out when this is going to happen, everybody's going to be getting 1099s from all of these platforms: eBay, Shopify, PayPal. And guess what? The 1099 is going to have the gross amount, not the net. And that makes a big difference. So if you want to know, you know what your costs are and what your revenue is, if those if those little backs and figures aren't accounted for, your financials are skewed. No, accountants are important. Don't get me wrong. I'm an accountant. I've been an accountant for over four decades. I'm also a CFO for the clients that let me be a CFO. Now, what's the difference between the CFO and the accountant, really? Well, the accountant is really a historian. A CFO is looking towards the future, planning, budgeting, analyzing, weakening, because business is fluid. Business just doesn't exist. Every time there's a transaction, the financials are changing. So that's the difference between an accountant and a CFO. You need both. But now if you're the one delivering the service, would you rather be an accountant or a CFO? Now you like me, you can be both. You could be both. But think of how much more valuable you'll be to a client. If you could help a client become more profitable and be able to show them in black and white, in facts and figures, the results of your work. Unfortunately, a lot of small business owners look at accountants, tax repairers, as an as a necessary evil. In other words, they don't see the real value. The value that most of them see is that we keep them out of trouble. When the government comes knocking, and it's not if the government comes knocking, it's when they want somebody that they know they can trust, that they know has their back. Now, if you're a business owner, don't you want somebody like that that you know has your back, that's watching over you, that's basically you know protecting you from yourself and also helping you improve your profitability, managing your cash. I always use this this example because it's it's always relevant. Not too long. Well, it might be long ago to to a lot of people, but at one point, Apple Computer was was going to run out of cash. They were looking at bankruptcy, they were huge at the time, thousands of employees, billions of dollars in in sales, but their CFO knew that they were gonna run out of cash within 90 days. And I always looked at that. I said, oh my God, if a company that big can can know that they're gonna run out of cash in 90 days, why can't a small business owner be like that? The answer is they can and they should. And the CFO is gonna help you do. So let me pose a question to you. If you're an accountant or a tax repair, when was the last time a client asked to see a journal entry? I don't even know if they know what a journal entry is, and and that sort of thing probably scares the living daylights out of them. This is what they really want to know. If my sales are up, how come my profits are down? Can I safely invest in this equipment? Can I afford to hire somebody? What kind of cash cushion should I have? Which of my products or services are the most profitable? Are there any products or services that we should not be offering? I'll give you an example. So I I do a lot of courses. I'm I'm on Udemy. I have another ThinkIffic platform where where we we do communities, we have uh courses, we do coaching. But now on Udemy, what what I've realized is they have a tremendous amount of analytics and and and suggestions on how to how to improve on those analytics. So I have right now, let's say, 20 courses published. And the funny thing is the best courses, I believe, the best courses that I've ever created are getting very little traction. The courses that I did years ago and weren't even designed to be on a platform like you to me. They they were live courses, they were recorded. Two courses, my payroll course, my payroll master class, and my comprehensive sales tax course, the the traffic and the sales are through the roof. Out of out of the 20 classes, those two courses are like 70% of my sales. Then I have the the best courses, and I'm I'm lucky if I got a couple of sales. So what am I gonna do? Am I gonna am I gonna do more of what I think are the greatest courses ever? Or am I gonna do more of what the people want? I've learned a long time ago in marketing, you can't try to sell people what they need. You have to give them what they want. Now, sometimes you can give them what they need and disguise it as something that they want. For instance, changing the title, giving, putting a better graphic up on the course. These are some of the things that I learned from looking at those analytics. And these are the things that a small business owner wants from a CFO. So here are some of the deliverables that a CFO can can provide a small business owner. Now there's monthly deliverables, which could be KPIs, budget reports, analytics, ratios, quarterly deliverables like uh budget projections, cash flow projections, and and obviously ongoing, you want to be able to use this information like I just used in my example. You want to use this information not just for information purposes, but you want to use it to help make decisions, to help make the right decision. I hope I made the right decision. Now, whether you're uh an accountant, a business owner, we've all had those times. All of us. For me, too many, uh, way too many. I've reduced them over the years by surrounding myself with the right people, by surrounding myself with people that were better at parts of my business than I am. And and that in a nutshell is is one of the keys to success. I just had a couple of new new hires take the the Clifton Strength Finders assessment. Now, what that is, is it I it's it's sort of like a personality assessment. It asks a whole bunch of questions. I don't know how they come up with this, but they nail it. And and what it tells me is, do I have did I hire the right person? Now, in the future, maybe what I'll do is have them do that before I hire them. That that would make more sense now that I'm talking about. But you wanna you wanna be work from a position of strength. And for most business owners, they don't have the tools, the wherewithal, the time, the talent, the the experience to come up with these kind of uh uh of numbers and analysis and and make the decisions off of there. Now, some of you might be thinking, oh, well, I'll just use AI to do that. Well, let me give you an example of people that think that they could uh do what an accountant does using AI. About two years ago, somebody that was close to me fired us, fired my my firm because she felt that we we were making too many mistakes. The the truth is we didn't make any mistakes. She had issues with with money, she was a very uh nervous person when it came to her finance. She had major money issues. And what happened was that the her she changed her bank account without telling us the the the direct deposit didn't go into her bank account. She she panicked. Uh a week later, the IRS mailed her a check. Anyway, she sent my she didn't even send it to me, she sent it to my team saying, Oh, uh, you made so many mistakes. And what I found out later through uh a close friend was that she never hired another accountant, she decided to use AI. Well, this morning I got an email from the state that she's registered in saying that her her annual, her biannual report was way past due. She has to file it, and she's gonna get incur a late filing penalty. And if she doesn't do so within 60 days, they're gonna dissolve the corporation by proclamation. Now that's that's just a simple example. So don't fool yourself thinking that AI is gonna replace anybody. What AI does is AI makes things more efficient. It it it's like having another team member. What I've done with AI, and I know this is a little bit off topic, but it really isn't. What I decided to do with AI was take my graphic designer and say, hey, you're gonna learn how to use AI to make more graphics. I told my social media person, hey, you're gonna start using AI to create the content. Instead of me firing them and trying to use the AI to do graphics. I've been there, I've done that. I've done my own websites, I've done my own social media, not by choice, because I was the only one. And like I said, being a self-employed professional is a lonely place. So don't make that mistake. Don't don't try to use AI to replace people, use it to empower people, empower yourself. Stay with your strengths. And now, what I'd like to do is I'd like to wrap up with with the the reason, some of the reasons why this virtual CFO industry is exploding. So, first off, let me preface this by telling you that this isn't the first technological watershed in history. There's been plenty. There's been plenty where computers, so and this was in my lifetime, computers. Accountants were worried, oh, computers are gonna replace us, they're not gonna need numbers crunchers anymore. Well, what computers did was it actually created more opportunities for accountants. QuickBooks, when QuickBooks was created, accountants freaked out. They, in fact, for five years basically, they wanted to uh act like it didn't exist. QuickBooks is going to replace us, they're not gonna need accountants to do their financials anymore. Well, nothing was further from the truth. Uh, I think what QuickBooks did was cement the fact that small business owners shouldn't be doing their own bookkeeping, even if they could. And it's the same thing with AI. If you the only way AI is gonna replace you is if you let it. If you let it. What it's done, what it's doing, is it's put everything on faster speed dial. Business owners want to see results faster. AI is giving all of us the tools to do this. Now, I'm doing a course on on transforming from bookkeeping and accounting to becoming a CFO, a virtual CFO. And I and I I before the course, I I pose a series of questions and I asked them their level of AI experience. A is they're proficient, they've been using it all the time. B is they've tried it, but not using it on a regular basis. C is uh I've tried it, but I don't understand it, and D is I haven't even tried it. I'd say 90% of the 100 people that responded were B's. I had about five A's, a couple of C's, and I don't think anybody was brave enough to say D. But think about that. Most people out there, most, it's a small sample size, but it's probably very close to what's going on out there. Most of them have like dabbled in AI, but they're not really using it on a regular basis. So that that's one thing. The other, you know, motivating factor is competition. Competition. People want clients, they want jobs. And AI is accelerating that. It's it's making, how could I explain this? Competition more fearsome. There's more people trying to hop on the bandwagon. And I saw this with the internet too. You know, there were the the oh, and with social media. When social media was started, everybody was a social media expert. What what made them a social media expert? Well, because they knew how to do a Facebook profile or a LinkedIn profile. So, you know, that those are some of the things that are actually driving this this uh this new, and it's not new, but it's it's a uh an evolving fluid industry, if if that's the right term. About two decades ago, all of a sudden I started hearing about these coaching businesses. Before before the coaching industry, which is a multi, multi-billion dollar industry now, the only people that had coaches were were athletes, uh actors, singers, musicians, though those people had coaches. Now, surgeons have coaches, accountants have coaches, coaches have coaches. So these things evolved, and technology has a lot to do with it. It's a major driving force, just like when Amazon first started. The only there were only a couple of ways to get books. I guess you can, you know, order them through like direct mail, or you had to go to a bookstore. Now, the bookstores were limited to what they had in stock. Think about that. It was a huge investment. They had to pay huge amounts of rent. Now, I'm sure if you walked into a bookstore and they didn't have one in stock, you could probably go in there and say, Hey, I want to order this book. They would get it for you and then you you would pick it up. That was before the internet. What the internet did was Jeff Bezos said, Hey, I don't need a store and stock all the books. All I need is some kind of deal. And I don't know how he did it, but he did it. And and basically he was able to sell every book probably ever written. So think about some of those examples. If you're on the fence, get off the fence because there's a lot of people on the fence, and the fence is gonna break, and you're gonna wind up on the wrong side of it. That's my story. I'm sticking with it, folks. God bless and thank you for listening. Drop us a uh uh a like, follow us, download the episode. It helps the analytics, and you know from from what I just said, we we talk about analytics. And good luck, and see you in episode number 17. Thank you.