Simple Four-Step Strategy to Grow Your Business and Profits

Welcome back to CFO Weekly, where we're talking with financial leaders about how to build efficiency in their teams, create time for strategy, and ultimately get results with your host Megan Weis. Let's jump right in.

Megan Weis: Today my guest is Ken Wentworth, otherwise known as Mr. Biz. Ken is a fractional CFO and strategic business partner who helps business owners run their companies more profitably and more efficiently. He is a three-time best-selling author, a six-time world record holder, and an award-winning host of Mr. Biz Radio. Ken, thanks so much for being my guest again today.

Ken Wentworth: Yes, absolutely. Megan, I'm honored to be here and humbled to be a repeat guest. So looking forward to it.

Megan: It's been a while since we last spoke. When was that?

Ken: It's probably been a couple of years, I would guess. I would actually probably pre-pandemic even. It's hard to believe that that's already been two-plus years.

Megan: Time has flown by. I can definitely see that you've been very busy. You recently published a new book and I'm excited to talk about that today. As well as some advice on multiple topics regarding the CFO role and small to medium-sized businesses. Let's get going.

Ken: Sure. Sounds good.

Megan: As always, let's start with you, and if you can give us a recap again, of your career journey, and how it is that you got to where you are today?

Ken: Yes, I had a, let's just call it a 20-plus year career, Megan, we don't have to get specific on dates. You can tell by my gray hair but enough about my age. Anyway, I worked at JP Morgan for 20-plus years and was fortunate enough to be able to do a lot of different, really cool things. Mostly in the financial side of things, but I also worked in different operations groups. I worked in private equity for a while, was able to just do a lot of cool things under that JP Morgan umbrella, worked in many different pieces and parts of the business, and got exposed to a lot of really cool things.

It just had reached the point where I had always wanted to kind of do my own thing and have my own business, didn't really know what that was going to look like. In my corporate career, I got to a point where I had two revenue-generating ideas within about a three or four-month period that both got put on the back burner because of some of the bad things you hear about large companies. Some of the bureaucracy, some of the red tape, et cetera. Back to the second one, it was like, okay, this is it. This is the sign. This is what I needed. Literally, as I tell people, kind of odd, and people look at me like I'm just crazy, which I might be a little bit but from the elevated–-

Megan: Yes. 20-plus years with a company and then you decide to go do your own thing. That's courageous.

Ken: Megan, here's the odd part about it is that, first of all, I didn't know what I was going to do. I had no idea what business I was going to start or what I was going to do. Second of all, I literally made a decision.

Now I had been mulling. Again, I always wanted to kind of do my own thing, so it wasn't like it was completely all out of the blue, but that second idea that got shelved on an elevator, a 48-floor elevator ride at 270 Park Avenue, headquarters for JP Morgan. I'm riding the elevator down to the bottom floors as I leave the building to go to my next meeting and during the elevator ride, I was like, "Okay, that's it, I'm going to resign."

The funny part about that story is, I got to the airport that evening, and I call my wife, and ironically enough part of the meeting was, my boss told me I was going to be promoted. I was in the top 3% of people at JP Morgan. I was going to be promoted to the top 1% so I told my wife that. My wife's a nurse, not a business person whatsoever but she said, "Oh my gosh, that's great. You're getting promoted. All your hard work is paying off." Blah, blah, blah.

I said, "By the way, I'm going to leave", and she said, "Wait, oh, your plane is leaving. You got to go because your plane is leaving?" I go, "No, I'm going to resign." She’s like, "Excuse me? What, you told me you're getting promoted, and now you're telling me you're going to resign?" She said, "Why don't you take a nap on the plane ride home and we'll talk about it."

Once I explained it to her, she understood. I think secretly she probably thought I was a little crazy, but I think she trusted me enough to know that I would figure it out and I'm grateful enough to say I was able to figure it out and I'm completely blessed in what I do now. I'm a business strategist/fractional CFO. I hate to say just fractional CFO b1ecause I take a very holistic approach when I work with clients, not just the numbers side of things.

Because of the broad experience, I was able to get at JPMorgan, I'm able to approach things-- The way I look at it is when I go into business, I try to look at what's working, and how do we accentuate that? What's not working and what do we need to do about that? How do we fix it? Do we need to stop doing that? Whatever that may be. It comes in a lot of different forms. It's not just looking at the numbers. Of course, that's a big part of it but it's not just that. I left JP Morgan in 2015. I’m coming up on about seven years now. I've been left the corporate world and been out more in the entrepreneurial space.

Megan: Yes, obviously, a decision you haven't once regretted.

Ken: No, and it's really funny because my corporate career, it wasn't like I was fed up. I wasn't frustrated. I didn't go, oh, my gosh, I can't wait to get out of this. I loved my time at JP Morgan. They treated me very well. I had a fantastic career. Again, in regards to being able to do a lot of different really neat things. Even those two ideas that were shelved, I wasn't thoroughly frustrated. Like that's it. I'm out of here. It wasn't that at all.

It was just, I think subconsciously, I was looking for a sign because I'd wanted to do something on my own. I was like, "That's it. This is it. This is the sign. This is the second one." I knew that I can help more people and that second idea getting shelved was an indication to me that I wasn't going to be able to help as many people there. Whereas I could go and figure out something else outside of the corporate world where I can be able to impact and help more people. That was the decision. The straw that broke the camel's back, I guess. [chuckles]

Megan: Absolutely. I mean, all of the things you learned working for such an amazing and successful company, it's nice to be able to share that with maybe, smaller, medium-sized businesses that don't have access to that kind of knowledge.

Ken: Yes, absolutely. By the way, I'm so blessed that what I do now, and this sounds so corny and cheesy and cliche, but it's not work for me. I absolutely love what I do. If anything, I have to pull back the reins, because again, it's not like work. Someone asked me on an interview, several months ago, they said, "Well, how many hours a week do you work?" I said, "I have no idea." They said, "What, you have no idea how many hours a week you work?" I said, "No." I said, "I hadn't really even thought about it." I said, "I think it's because again, it's not work to me."

It's not like I'm going in and punching a clock. I've got clients. I'm in the Eastern timezone. I've got clients on the West Coast, that are three hours different than me. Sometimes I've got a call at 9:00 PM at night my time but it's not that big a deal. I work it around my family time. I work it around all that. I have the freedom and flexibility to be able to do that and I love what I do.

I will look for ways when I'm at home and not in my normal office, I have a home office as well. When I'm at home in the evening, there's always a sweet spot. I'm going to share a little secret Megan, there's always a sweet spot in the evening. My wife gets home from work. The kids will get home from school and there's always a sweet spot after dinner where everyone disappears.

Goes and gets their showers. Works on homework and I'll sneak in quote-unquote sneak into my home office and do 20 to 30 minutes worth of work while they're all doing that. Because I'm looking forward to it. I'll stop for dinner. I'll be like, man, when I go in the office for my little sneak in 20 to 30 minutes, what am I going to work on? Because I just love it. I really, really enjoyed it. I'm very blessed to have been able to find this thing that I do that I love so much.

Megan: Yes, absolutely. That is a blessing. As you look back on your career, of all of the positions you've held, which was the most pivotal or instrumental in making you a business leader, and why?

Ken: Probably the last role that I had when I was at JPMorgan. There was a lot of different roles that I had over the years that contributed to it, of course, but I think in regards to honing and refining my leadership skills, it had to be that last role.

The last role I had, I was the head of corporate planning and analysis. I had teams and especially in today's day and age with post-pandemic, I had teams in six different locations, on different continents, big timezone differences, et cetera. I had to learn how to lead remotely, first of all. I had to learn how to have a cohesive team that were in six different locations and needed to work together. I had to learn the time zone management and being able to handle that, what works most effectively with that.

Again, looking back, once the pandemic hit and everyone went to zoom and you're doing all that sort of thing and really, and it's continued. People have continued with a lot of remote and virtual meetings. I got a head start on that by having teams all over the place.

Again, really, the thing I learned most from that role was, is in regards to leadership is, again, how do you lead a team that is-- has a 10-and-a-half hour time difference that you'd, has a completely different culture. It's a different country, it's a different culture. How do you figure that out? How do you figure out how to motivate those folks? Have them lead those folks to where they need to get to and to help them with their careers and help them again, be a cohesive unit as a team and work together well as a team?

Learning a lot of that is what really, that role helped me refine that part of my leadership because I've had teams, I've been managing folks and leading folks since, gosh, I don't-- at that point for almost 20 years, but it was mostly always people that were either in my building or not very far away that I would visit pretty often. Having those people in different locations and things like that really helped me hone that particular part of being hopefully a great leader.

Megan: Yes, definitely helps you hone your people skills when you're working with people of multiple cultures.

Ken: Yes, definitely.

Megan: You have a new book out it's called Don't Fake the Funk. Tell us about this book and what inspired you to write it?

Ken: Yes. Specifically, in regards to the title, Don't Fake the Funk, it's-- I don't even know where I picked it up from. I've been using that term since college. I remember using it back in college about different things.

It's funny, I actually did an interview on my own show with Grant Cardone and the intro to my show, there's a part where the person does introduction or whatever, says something to the effect of, if you're ready to stop faking the funk and take your business to the next level. Well, Grant Cardone, that does stop faking the funk, stuck in his head so much that I met him probably six months later, I met him in person and he remembered from six months earlier the interview we did. He remembered that particular part because when I met him, the person that introduced me to him said, you know what I know about this guy, he doesn't fake the funk, and I was like wow.

Megan: It's catchy.

Ken: This guy remembered that from that long ago. It's something that's unique, you don't hear people say that very often, so I said, I got to run with it, so, and really this book came about because my first two books were very business-specific. This one is, you don't have to be a business owner, you don't have to be an entrepreneur, this is for anybody. Anyone who sets goals and really big goals that they are having trouble achieving, if you set new year's resolutions every year that are toast by March, this book will help you.

I didn't even realize that I had over the years-- I've been fortunate enough to, in my athletic career, I set six world records and I didn't even realize that I had unbeknownst to myself created this framework on how I attacked my goals. I did it in the business world, I applied it to my personal life, I applied it to athletics, and I have some folks that I mentor.

Specifically, I was trying to help one of them tackle a goal that he'd been three years in the making trying to accomplish and he just wasn't making headway and got frustrated and I started lay out how I approached things, again, not even realizing that there was a framework. There was a four-step process that I had used over the years and literally got done.

He's taking notes fever, so he said you have to start doing, you have to speak on this. "I do keynote speaking." He said, "You have to add this to your keynote topics." Well, coincidentally two or three weeks later, I got contacted to do a keynote. I said, hey, actually I have a new topic that I haven't actually done on stage yet, so this would be the first time, but if you're interested, it's about attacking goals and a four-step process, you don't have to be super smart, you don't have to know people, you don't have to have money, anyone can apply this. They said, "Yes, great."

I did the speaking and it went really well. People loved it and afterwards people come up to me and they said, well, have you written a book about this? I said, "No, this is the first time I've ever even spoken about it publicly." They kept going and kept going, and then the pandemic hit and I saw folks that were really starting to struggle with working virtually and not the whole those changes and those pivots that all of us needed to make. A lot of people in my family, in my personal life, colleagues, et cetera, were struggling with being able to stay on course and stay focused to accomplish some of the things they wanted to accomplish.

I was planning on writing another business-related book and I said, "No, I'm pushing that one back and I'm going to write Don't Fake the Funk to really try to help people with-- that are struggling, coming out of the pandemic and really struggling with getting refocused on their career or in their personal lives. I said, any type of goal you have. That's really the genesis of where the book came from and and how it came to be.

Megan: That's a great story. As you and I were talking before, it's so easy to just make up excuses or talk yourself out of something because of all the reasons you think it can't be done, but it's a mindset to convince yourself that something can be done and it's worth it.

Ken: Yes. I'll tell you and I promise Megan and I did not practice this ahead of time, but so the four-step methodology is an acronym, S-M-A-C, SMAC. The S is coincidentally enough, is start with yes, which is exactly what we're talking about. We so often, and everyone will recognize this person or people in your life, whether it's a family member, work colleague, doesn't matter is we all have these people in our lives when you mention to them that, "Hey, let's do this," "Hey, let's go do that".

It might be something as simple as, "Hey, let's go to the zoo today," and that person, the first thing that they want to tell you why it's not a good idea to go to the zoo. "Well, it's nice and sunny out, well, it's going to rain later." They start thinking all the reasons why it's not a good idea to go to the zoo. Well, I heard the hippo baby, you can't see the hippos because the mother just had a baby so that-- All these different things and they don't start with yes. Instead of looking at things and say, "How could we make it work? Let's figure out how can--"

Now, what's required in the steps and the execution that's necessary in some situations to make it work. Maybe those are things you don't want to do, maybe there are things that are outside of the realm of timing and possibility with where you're at at a particular time, but at least you have the conversation and you start with the mindset of, where there's a will, there's a way. This can be done, am I willing to make the sacrifices necessary to make it happen? At least starting with that mindset is the very first thing you have to do.

Megan: Yes. What's M-A-C?

Ken: M-A-C, so M is model expert behavior. more than likely anything that you're trying to do, someone's been there done that even when I was tackling world records and things like that are obviously something that no one has done, but other people have broken old records and in different avenues, areas, aspects of athletics. Find someone who's been down that path before and model their behavior. You don't copy what they're doing necessarily, but they have a framework, they have an approach. What did they do? What are some key things they did to help them get to where they are?

I'm talking about picking big people. If you like Elon Musk and you're trying to semi follow in his footsteps, do some research, read some books about him, read articles, watch videos, find out different things that you know he's done, so that's the M. The A is accountability. Creating a sphere of accountability. Some people-- this is a little counter to what some people say, Megan, and that's, well, accomplish your things in silence. Don't tell people what you're doing.

My approach is completely the opposite. I want to tell everybody and anybody that what I'm trying to do-- Not what I'm trying to do, what I'm going to do because I want them to know, and that creates that sphere of accountability. Once a work colleague, and I don't go around telling people, "Hey, make sure you check in on me on this." No one wants to do that, that's like giving someone homework and no one likes homework, but once someone knows what you're trying to accomplish, they're probably going to be supportive.

Now, frankly, in that mix, you're going to have some haters as well. Some people that maybe secretly want you to fail. That's okay too, because they'll motivate you. Because you know once they know the goal you're trying to accomplish, they're-- you will stay focused because you know they're going to ask you about it and you don't want to have the awkward conversation of, "Oh, I fell short or, oh, I gave up on that or whatever that might be."

That sphere of accountability is really, really important. Keeping yourself responsible, accountable to yourself, people close to you and then people even outside of that, and there's a whole bunch of different ways in the book, you can do that without actually coming out and asking someone to hold you accountable, which obviously is one way to do it, but again to me, that's like giving people homework, but I don't like that. Then the C is what I call consistent perseverance, and they're in order specifically.

Start with the S. You have to start with the mindset. If you don't get that right, don't even bother going to the next three because you have to have that right to start. Then finding someone who-- Model expert behavior, creating that sphere of accountability, and then you're ready to tackle the consistent perseverance part. That is any goal that's big, any goal that's massive, you're going to have some shortcomings, you're going to have challenges along the way. That's just part of the journey. You have to be able to accept that, but you have to have consistent perseverance. It's the proverbial getting knockdown seven times and get up eight.

Frankly, I have people that I mentor that are-- I call them launch-preneurs, Megan. They maybe work in a corporate job, but they want to be an entrepreneur, but they just haven't taken a leap. Honestly, some of them, I had the conversation with them that I don't think they have the correct mindset frankly to be a successful entrepreneur. They could be really good at a lot of different things.

In this example, being an entrepreneur is very, very difficult, and you have to have that consistent perseverance. Above all else, I think that's what separates people who are successful entrepreneurs and people who are not so successful is that consistent perseverance. An entrepreneur, you will get knocked down, you are going to take some gut shots from life and from business, et cetera. You have to be able to just dust yourself off, get back up, and get back at it, and so that's the C, the consistent perseverance.

Megan: Yes, I love that. I'm going to use that. I was going to ask you, and maybe you just answered it with the consistent perseverance. What's the key difference between those who will achieve their goals on a consistent basis and those who never seem to?

Ken: Again, a lot of it comes down to that. Again, I'll go back to the mindset. We talk ourselves out of so many darn things, and it's that little voice in the back of your head, or it's that, the start with no person that's in your life maybe that you deal with and you tell them, "Hey, man. I'm thinking about doing X, Y, and Z." Again, they're going to start telling you all the reasons why it won't work.

If it's a big goal, you're probably already thinking, "Man, this is a stretch." If you have someone who's close to you in your ear telling you all the six different ways it's going to make it extremely difficult to do or impossible to do, you give in. You give up instead of thinking again of ways it can work. I think it's probably those two. You got to have the right mindset. You got to have--

One of my favorite quotes, and I might be a big Star Wars fan, but it's a Yoda quote. The quote is, "Do or do not. There is no try." I've preach this to our daughters growing up is they'll say, "I'm going to try this." I'm like, "No. You're either going to do it or not. Don't tell me you're going to try because when you say I'm going to try, you're already giving yourself subconsciously an out."

Megan: Yes, an excuse to fail.

Ken: Because they could try and say, "Well, you know I tried, but now I'm going to give up." You got to say, I'm going to do it, and you have to figure out how you're going to do it. Now, it could be one of my athletic goals I had that I declared was my training partners, et cetera. It took me seven years to get there. I had the mindset that I'm going to get there no matter what, and it's going to take me a while. It's not going to be easy.

Again, it was that mindset of, I'm going to do this. I'm not going to try to do it. I'm going to do it, and I'm going to have to have consistent perseverance. I'm going to have injuries I have to workaround. I'm going to have all sorts of different challenges along the way, but I'm going to do it. Not I'm going to try to do it.

Megan: Yes, that's great advice. You got to be positive, and surround yourself with equally positive people.

Ken: Yes. Honestly, I have some folks that are friends of mine that I-- Honestly, this sounds kind of bad, but I limit my time with them because they are the-- They find the rain in every cloud. They're the person I allude to earlier who said, "Oh, man. It's beautiful I tell you. The sunshine." Their response is, "You know it's going to rain later."

Megan: [laughs]. Yes. I think we all [crosstalk]--

Ken: [crosstalk] Can we just enjoy the sunshine? It's great. Look at it. "Well, it's going to rain though. It will be here before you know it." Like, "Oh, my gosh."

Megan: Yes. We all have those people in our lives.

Ken: Yes. Along those lines, again, this is going to sound maybe a little bit harsh. If you have people like that in your life, in your lives, what I would ask you to do is, look at their lives and think about how A, happy do you think they really are. Obviously, you don't have this conversation with them, but just think about it.

How much have they accomplished? When I say accomplish, I don't mean you're rich, or you got this promotion. Accomplish is-- There's a whole bunch of different meanings of success, right? Definition of success. Success could be, "I want to be a stay at home mom, and have five kids, and raise a really cool family." That's success. That's being successful. That could be happy, et cetera for that particular person. For someone else, they want to climb the corporate ladder, become a CEO. Who knows, right?

Those people that are super negative, and find the rain in every cloud, really take a step back if you're questioning that advices, and look at their lives and how happy do you really think they are. I will be willing to bet you, they're probably not very happy people, and a lot of it's that mindset. If you look for negativity, trust me in life you will find it. It's everywhere. Positivity's everywhere too, and so often we're just get program to just look for the negative things. I think that's a big step for folks no matter what you want to accomplish.

Megan: Yes, that's great advice. Switching gears a bit. Let's talk about the business that you started. What do your current organizations, Mr. Biz Solutions and Wentworth Financial Partners, what is it that they do?

Ken: Those are-- Both is organization. Wentworth Financial Partners that was initial business, and that was direct one-on-one working as a business strategist, fractional CFO with business owners. Then what morphed from there was, I was having a lot of business owners that were coming to me that needed help, but couldn't necessarily-- Start-up or still early stages revenue. Couldn't really afford to hire someone as a fractional CFO, but they needed the help.

I really started to think about how I can help those folks reach more folks, have a bigger impact. Obviously, there's only 24 hours in a day. I can't scale time. I can't create time, but how can I try to scale that as best I can, as well as make it very affordable for those business owners that are like I said, don't have the revenue support hiring a fractional CFO. That was where Mr. Biz Solutions kicked in.

We have several different things there. Obviously, we have the books, we have an online course. We have most importantly a continuity program, a membership program so you can come in. I've got myself and five other experts that we do virtual sessions every month to talk about specific things, and these other five experts are experts in fields other than what I'm an expert in. For example, we have an attorney that comes on each month. You could have a legal question that I think people overlook a lot of these things, and they try to Google their way out of things. Legal is not something you want to really trifle with. It could cost you your business frankly not setting things up.

I had an example of someone I had met just real quick, and super smart guy, very successful businessman. Now, he's worth hundreds of millions of dollars. Has his own Gulfstream jet, all this other stuff. He told me a story about the first company that he started. He cheaped his way out on having an attorney review when he took in private equity money, and he got six years into the business. They grew it like gangbusters. They're doing 60 million a year in revenue.

The private equity investors come into him and said, "By the way, pack up your stuff. We don't need you anymore. We're going to buy you out." He said, "Wait, I'm the founder. You can't buy me out." They literally pull out the contract and say, "Here, look on this page. This paragraph right here. [unintelligible 00:28:36] $500,000 buy out." He got bought out for half a million dollars, his own company that had grown to doing 60 million-plus a year in revenue, and was wildly successful. Got bought out of his own company because as he put it, he just cheaped out on the legal side.

We have experts like that. We have a financing expert when you need different financing aspects to your business. I have people come to me all the time and go, "Hey, I got to sign some loan papers. I really don't know what this stuff mean. I know I should, but I really don't because it's just not in my wheelhouse." We have someone to be able to explain that. When the banker says they need X, Y, and Z, why do they need that? What are they looking at? How do I present my business in the most positive light?

Anyway. We have six experts in the continuity program, and that is again much more affordable. It's all virtual. You can come on and ask any questions you want. We'll help you, and help you continue to grow your business, and expand, and help you [unintelligible 00:29:31] the rough spots, and the challenges that are inevitable in running a business.

Megan: Yes, that's an amazing offering. Since starting your businesses, what are some of your proudest achievements?

Ken: That's an easy one. Proudest achievements by far. Most of the businesses I help are family businesses, private companies. It hit me very early on, I was helping a client and he literally lost-- I'll spare you some of the non-savory details, but he literally wanted to meet with me to tell me in person that I had helped save his marriage because I helped him with his business. His business was failing and he was working harder. He had three young boys and he would-- He has a strong work ethic, so he just worked harder. He's working more hours. The problem is he didn't quite, he, he was really good at what he did, but he's not good at running a business.

I was able to come in and help him and we made some initially some minor tweaks to his business and he just took off. He was able to scale back his hours. He was able to spend time-- His wife was super frustrated because she had a full-time job, and yet they have three young kids and she was running the kids here and doctors and sports practices and everything else while he's essentially an absent father because-- It's not because he's a bad guy, it's because he's just trying to work his butt off to provide for his family and his business isn't working. His answer was, "I'll work harder. I'll work more."

That really taught me a lesson of the impact that helping business owners has. Often you have businesses that are family-owned and it's not just that immediate family that might own the business, but you might have a cousin, aunt, uncle, or brother that's working in the business as well. Think about the impact of that immediate family in the tethers out from that family as well, that if that business goes under, holy cow, what's the impact on that family overall, when all of a sudden you have, I don't know, six, eight people within the family that all don't have a job?

That impact and seeing that impact in the positive ways that I can help folks with things like that is by far for me, that's just the game-changer. It's just so rewarding to be able to see that happen and see it happen over and over and over again. That's without question that's the most rewarding part about what I do and the thing that I enjoy the most.

Megan: Absolutely. You're changing lives.

Ken: Literally. I said I hadn't, I guess I hadn't really thought about it that much until that one client several years ago that and this was, this guy worked in construction. This guy was like a big burly old-school construction guy. For him to tell me he wanted to meet me in person to tell me in person I'm not an emotional person at all. It almost brought me to tears.

Again, because I'm thinking, I've got three kids and I'm thinking about man what if that was me and I probably would've approached it the same way. I just keep working harder. Again, I do things I don't try to do things I do them so I would just keep trying harder and harder and harder to do things. I could really relate with where he was and then realizing how much of an impact it had on his family and how positive it was and things like that.

Again, picture this big old-school construction guy, and he starts off the conversation with me. We met at a Panera Bread because he wanted to meet me right away. I'm like, geez, what's going on? What's so urgent that we couldn't even just talk on the phone so we're at a Panera Bread, it's a little two table, two-top tables, right. Pretty small and this big burly construction guy leans across the table and starts the meeting with this. "I want to kiss you right now." I said, "Scott, first of all, you can't afford that. That's not on the price list. What the heck's going on?" He said, "I just wanted to tell you in person, the impact that you've had on my family," and et cetera. That's, it's so, rewarding and it makes it all worth it.

Megan: What is a fractional CFO? Can you tell us some of the advantages, of finding one?

Ken: Fractional CFO think about it this way and by the way, when I was in the corporate world, when I met I had a mentor coming out, trying to figure out what I wanted to be when I grow up, I didn't, I had never even heard of a fractional CFO. I had no idea what the heck it was.

Think of a business that needs a CFO, a chief financial officer, needs that business strategist type of role, a strategic business partner, but they don't need someone full time. They don't need someone that's going to work 60, 70, or 80 hours a week. They're not that big yet. Maybe the owner has some of those skills, but the owner is kind of being stretched in a lot of different ways and needs a little bit of help. It's bringing on a chief financial officer resource in a part-time fractional on-demand type of thing to where they're working less than 40 hours.

I've got some clients that I only meet with once a month. I've got others that I'm at their office every single week for four to five hours, as well as other work outside of that. It just depends. Every engagement I have with clients is different, but it's having that resource because oftentimes with a small to medium-sized business, even if you have departments and of course, the owner has direct reports, let's say they have five direct reports, more than likely those five direct reports only know their silo piece to the business.

It's very valuable for an owner to have someone else that can see the macro view of the business to make sure that department A and what they're doing is congruent with the goals we have for department D. They're not going to get us in hot water in three years because now we've been going in disparate directions with which in the short term made sense, but in the long term don't make sense.

Having that resource I think, is very critical and again, that's the role I serve a lot as the owner to have that macro view strategist, to be able to say, "Hey, by the way, we need to shift gears on this. We need to shift gears on that." My undergrad's in accounting. I've got a master's degree in financial management, but I'm not, I'm more of a strategic person. I'm not day-to-day. I don't close the books. I don't do any of that kind of stuff. I'm thinking more about how we get the business where it needs to be, in 5, 8, or 10 years, how do let's, what's the exit plan? What's the owner's ultimate way they want to exit the business?

Whether that's in, two or three years, or whether that's in 15 or 20 years, we need to make sure that the decisions you make in the short term are congruent with that long term goal. While it might not seem as such, there are often times you can make short term decisions that make a lot of sense in the near term, but really could be detrimental to your longer-term plans.

The shortest way to answer, well I tell people when they ask me what I do, I don't necessarily tell that I'm, I don't have a title to it. I just don't, I help owners run their businesses more profitably, more efficiently, because in a nutshell that's really what it is. A lot of business owners have never even heard of fractional CFO, but once I kind of explain sort of the role in some of the ways that can help they go, "Oh my gosh, where have you been?"

Megan: For small and medium-sized businesses to have access to a CFO is I'm sure invaluable and, the strategic vision that role brings to the table.

Ken: Definitely. Again, another aspect to it is as a business owner, especially the, if you're a small business owner, maybe even on the medium side, you get pulled, you wear so many darn different hats, you get pulled in so many different directions that oftentimes your head is you get buried in the weeds. One of the things that I'm able to do is basically grab you and pull your head up out of the weeds and say, "Look over the horizon. Look where we're headed."

I have one particular person who's been a client for-- I guess about five years or so. That's all he wants me for. He said, I get, I know that it's his weakness of mine. I get buried, and I have trouble delegating. I meet with him once a month for 60 to 90 minutes, cell phones go outside the office, and the door gets closed. There's no interruptions phone goes on silent. His, office phone was on silent. No one is allowed to bother us and we sit down for 60 to 90 minutes and just talk about the strategic vision. Just talk about looking out on that horizon.

Again, making sure that some of the short-term things that we're doing makes sense in the long term, and if not, how do we change that, et cetera. Having that, I think resource, I've found to be very helpful for business owners.

Megan: Having had so much experience with these smaller businesses, where do most of them fail?

Ken: It's a variety of things. A lot of it depends on, the owner's primary skillset and what things are in their wheelhouse. As I mentioned with the fellow earlier, a lot of the time business owners, get into business and they're really good at the widgets they create or the service they provide, but they might not have experience running a business.

A lot of that comes down to-- I have, I call, I have three pillars of financial success and that's where every single client I have, we start with those three things. Some businesses are okay, and two of the three need help just in one. Some of them need help in all three, et cetera. Those three pillars are cash flow. It doesn't matter how old your business is, or where you're at in the business.

Life cycle cash flow can almost always be improved. There's subtle ways to do that and even if your cash flow's okay, you can run into problems. People don't realize-- You see Amazon and what a behemoth it is now. About 10, I guess, maybe 12 years ago. Now Amazon ran into cash flow issues, believe it or not. Right. They're making hundreds of millions of dollars and they ran a cash flow problem. There's no shame in the game. It happens for a variety of reasons but so starting with cash flow, making sure we get. that tightened down make sure we make any tweaks we can to make that as optimal as possible.

Then when we go to-- I hate to say it, Megan. It's the B-word, it's not the one people are thinking of though, it's budget.

Megan: [laughs] That was the one I was thinking.

[laughter]

Megan: I guess I'm an accountant.

Ken: Yes. Literally, a budget to me is so critically important that if I meet with a prospective client, and they balk at having a budget, that's a deal-breaker for me. I can't work with them. Because the budget is so critically important. A budget gives you your goal for the year, and it enables you each month to determine are you trending towards that goal? If not, why not, and what changes do we make right now?

You don't get to the September and say, "Holy crap, we're going to miss our revenue goal for the year. How do we turn this huge battleship between September and December to achieve that goal?" Oftentimes, depending on the business is too late. It's too difficult to be able to make that change and not pivot that quickly. The budget is so critical. Having that and tracking and trending against every single month.

Then finally, and this is one that pops up in almost-- I'm trying to think I think there might be one business, I used to always say that I've never had it happen but there has been one subsequent now that I've had a client. I'll say this, every client, except one that I've ever taken on, has had pricing problems. You might not realize their pricing problems. I coined it the silent business killer. The silent business killer is a product or service that you have, that unknowingly is priced at best a breakeven, but oftentimes at a loss position.

Now you say, Ken, "Why would I do that?" Well, you wouldn't do it knowingly, you have done it because maybe you did the pricing for whatever that might be on the back of an envelope when you were generating the idea, never went back, never revisited, cost of change, et cetera. Oftentimes, what happens with that, I'd sign a business killer, that product that's unprofitable, is you sell it like crazy because it is priced too low.

Think of it this way, you could increase volume and your revenue is go through the roof but your net income is getting lower and lower and lower, you're losing more and more money, or you could be at a loss position, or you're making less and less money because when you have a product or service that is losing money-- Think of it this way. Every one of them you sell, you're losing money.

Megan: Yes. It's a race to the bottom.

Ken: Yes, your revenue looks great. I say this all the time revenue is vanity, and profit is sanity. Revenue looks great. You're like, oh, my gosh, makes no sense whatsoever, and again, it poppin do you start having cash flow problems because every unit of this product or service you sell is actually costing you money. You might as well tape, whatever, a $100 bill with every product that goes out the door, which obviously sounds really silly. Getting that pricing really honed in--

I don't mean, just go just raise your prices by 20% across the board. That's not what I mean, at all, I mean, peeling back the onion on pricing, especially on some of your high volume thing, products, or services, to ensure that they're at the margins you want because even if they're not at a loss position, or you breakeven, there might be a position that doesn't make sense for your industry.

If you're in an industry where you should be running a net margin of-- I'll make it up 20% and you've got products that are out there that are 5%, well, yes, they're still making money, but they should be making a lot more and they're dragging down your overall net margin, which again, is dragging down your net profits, which is going to cause you cash flow problems, et cetera.

Really getting that third pillar nailed down with pricing and sometimes that's creating a pricing model and having the sales folks use it if you don't have that already, as opposed to-- One of the other things that kill people often with this is discounts because they give discounts and they say, "Man, I really want this job and if I get my foot in the door with this big company, I can get a lot more business." Well, they expect that same pricing when they come back two months later, three months later for another project.

Megan: Absolutely. They don't forget.

Ken: Yes. When you can't deliver, you don't win the bid. Then now you price something that initial project in an unprofitable manner, and now you can never make it back because you're trying to charge them your normal prices, and they don't want to pay them. You got to be really careful about that. Like I said, that's why I call it the silent business killer is it? Intuitively it makes no sense. Revenue is going up and net income is going down. Like, "Wait a minute. That's not how this is supposed to work." [laughs]

Megan: Yes, that's great advice, cash flow, forecast, and pricing. Got to get those three things right.

Ken: Yes, absolutely. Like I said, for every client, we start with those three things. Initially in the first 60 days or once we get those we branch off and now other things because again, I look at those as the three pillars you have to have those foundationally correct and humming along like a well-oiled machine before you start even consider doing other things in the business?

Megan: As you look out into 2022, what's the biggest challenge that you see facing small businesses? What advice can you give to help them overcome it?

Ken: Well, specifically with small businesses, and everyone hopefully has learned this lesson during the pandemic. One of the things I often look at with clients, and then folks that I mentor, advisor, et cetera, is, and this is going to sound silly, but that that behemoth I mentioned earlier, Amazon isn't going away. They're going to continue to grow, they have a lot of assets in a lot of different areas. They're going to continue to expand.

One of the things that we push into some of our strategic planning is, how do we Amazon-proof our business? As best we can Amazon-proof our business? Now, it might sound a little paranoid, but I want to make sure that, who knows? Amazon started out as an online bookstore and now look at it. They're continuing to expand into other areas of business, et cetera.

Again, I'm strategic to a fault, Megan, I say that because I'm thinking out five years, 10 years, maybe 15 years, but it's still a fault because in the meantime, my trip over the curb that's right in front of me. Really thinking about those types of things of-- again, asking that question, is this something that Amazon might get into? Is this something that I might have to compete with them in the future?

That doesn't mean you don't get into the business. If the answer is yes but how do you protect yourself as best you can? Risk management is super important. That's part of that risk management is not putting all your eggs in one basket, to where if Amazon moved into that particular part of the business, you'd go belly up and wouldn't be able to continue the business.

That's a big thing is think about not only Amazon-proof, but what happens if flash when there's another pandemic, and there's a lockdown? What impact does that have on your business? What should you be doing right now, to protect yourself against that, if it happens in 2, 3, 4, or 5 years from now, to be better positioned? As we all know, many businesses did not make it through the pandemic, because they were not positioned.

We had a lot of businesses, for lack of a better term, Megan, a lot of owners that became fat, dumb, and happy, during the economic prosperity that we had, in the whatever, 10, 11 years or so leading up to the pandemic, things were good. A lot of business owners got a little complacent and thought, geez, I can not have to do a whole lot and that can grow 10%, 12%, 15%, year over a year pretty easily, and not thinking about strengthening up their balance sheet to be prepared for an economic downturn.

What I was doing, I was the one in 2018 and 2019, aligning my clients to say, there's an economic downturn coming, of course, I have no idea. I'm not Nostradamus, I didn't know there was going to be a pandemic. The normal business cycle was typically five years. We had been at 10 years of success and prosperity, I'm like, it's coming, there's an economic downturn coming, I want to make sure that we are positioned, to when that happens, we can weather that storm.

Frankly, we can not only weather it but come out even stronger beyond. Some of my clients that were in that mode of madness is so easy, and Ken, you're just being paranoid, the pandemic hitting, they're like, "Oh my gosh, you are genius." I'm like, "Hold on. Again, I didn't know there was going to be a pandemic and I didn't know it goes like this." Don't give you that much credit, but they were positioned and some of their competitors had to go out of business.

We were able to buy assets at dimes on the dollar, we were able to save jobs people, competitors and we're closing up shop. We're going to get experienced workers in our industry, save their jobs, enabled the owner that was going out of business or bankruptcy, et cetera, to get some money out of the business by selling some of those assets, et cetera. It was really a win-win situation in many of occurrences.

That's very, very important is make sure you're positioned for whatever that might be down the road, that you have that strong balance sheet to be able to withstand some of those things. Making sure your cash reserves are enough but at the same time, you don't have too much in cash. You don't want to have those cash assets sitting on your balance sheet that aren't really doing anything for you. You want some you can sleep better at night, but you don't want to overdo it that fine line between where you're at with that and being able to have still have plenty of liquidity in your business, but also utilize that money as best you can to continue growing it.

Megan: Yes. Sounds like you position your clients to weather the storm.

Ken: Yes, thankfully we didn't-- I would admit it if I did, but I didn't lose any clients. As a matter of fact, we've got several of our clients had come out of the pandemic and had record-breaking years in 2021 because we kind of slungshot. Is that even a word? We slingshotted, I don't even know how to say that in the past tense.

We slingshotted out of the pandemic and because we are positioned well for it. We're able to do some of those things I mentioned where if a competitor goes out of the business, now we have opportunities to increase our market share and service their clients that they were and their customers that they were not longer going to be able to do because they're out of business. Really being able to be in that position, to be in a position of strength and not having the bank calling for the loan payments and you're struggling with all that.

Megan: Yes. Being able to take advantage of opportunities when you're strong enough business to do so.

Ken: Absolutely. Yes.

Megan: Ken, thank you so much for being my guest today.

Ken: Yes, absolutely, Megan. again, I'm honored to be back on the show. I'm glad you asked me back and I had a great time talking with you.

Megan: Yes. We're going to have to do this regularly. I've enjoyed speaking with you and hearing about your experiences and thank you for sharing your story with us again. Good luck with the new book.

Ken: Thank you.

Megan: It's available on Amazon. I know that. Anywhere else?

Ken: No, Amazon's easiest way to find it.

Megan: Yes. I guess the Amazon is all you need.

Ken: That's right. That's right. [inaudible 00:51:29]

Megan: Our listeners, please tune in next week, and until then, take care.

[music]

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