The Benefits of a Fractional CFO for Women-Owned Businesses

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 - 00:00:18: Today, my guest is Kathy Svetina. Business owners often struggle to understand their finances. But what if they could have someone that helps them understand not only what they mean, but also how to actually use them and give advice tailored specifically to them? Kathy knows the importance of financial information and has seen firsthand how it can make or break a company. She is the founder of Newcastle Finance, a company offering fractional CFO services to women-owned businesses. For nearly 14 years. She did senior-level financial planning and analysis for Fortune 500 companies. She saw firsthand how big companies use financial information to drive those companies forward. She started Newcastle Finance because she wanted to offer those same powerful financial insights to small businesses. She helps women business owners make great financial decisions that result in a healthy, sustainable, and thriving business.

Megan- 00:01:25: Kathy, thank you very much for joining me on today's show.

Kathy - 00:01:29: Thanks so much for having me on, Megan. I appreciate it.

Megan - 00:01:31: Yeah. Today we'll be learning about you and delving into the benefits of a fractional CFO. I'm really looking forward to learning more about this important role, as well as how your previous work and passions have combined to shape this chapter of your career. So, as always, let's start with you and your background and how it is that you got to where you are today.

Kathy - 00:01:52: Yeah, it's been a long and winding road. I started my career in accounting and because originally I wanted to be an accountant, I did that for two years, and realized this is absolutely not what I wanted to be doing. Yeah, went into corporate finance, specifically FP&A, and I worked for a couple of different businesses, so most of my corporate experience comes from professional services businesses. So I was in insurance and HR outsourcing. And then I went into a company and worked for a company in the Netherlands called Wolters Kluwer. I was there for about six years. I was in the Global Shared Services Department and I really, really enjoyed working for them. And then I decided I always wanted to be in banking. So I went to work for a bank, and realized I do not like that. And that's how I ended up opening Newcastle Finance. Because after that, I was questioning, what do I really want to be doing? And I come from a background of entrepreneurs in my family and I really like that freedom and the lifestyle that it allows. So I said it's better now or never. And I started my own company, Newcastle Finance.

Megan - 00:03:15: And you did that in 2019. So can you tell us a little bit about it and what is the mission?

Kathy - 00:03:24: So, I work with women-owned businesses and the reason for that is, and this is why there's Newcastle, and the entire mission of it is because I'm very passionate about women and minorities, having that representation and wealth. And being in the C suite and owning your own business is one way of getting there. But you also need to do finances really well because we all know finances can be complex. So I wanted to offer that to women-owned businesses. Plus there's the other side of it as well as being a fractional CFO can be very personal. So a lot of women are more comfortable with having another woman in the business advising them on the finances than a man. So that's the reason why I wanted to start a new Castle Finance to offer that type of service to women-owned businesses.

Megan - 00:04:17: And since starting up this business, what has been your proudest achievements?

Kathy - 00:04:24: That's a great question. I think there are two. One is seeing the results of my clients and the healthy growth that they've been able to achieve by working with me. Like, for example, one of the clients' sales, profits, and cash, literally doubled in two years since we started working together. Another one grew significantly and in a healthy way in less than a year. But I think the other part of that too is personally that I have grown significantly as a finance professional. Almost like I like to equate this too. My world went from being black and white to now being completely in technicolor. Sales right now, to me is not just a number in a spreadsheet or marketing is just not another expense. I actually know and have direct experience with how to influence that number. So that really makes me a much better finance professional than I would ever be if I just stayed in the corporate world.

Megan - 00:05:23: And you started this up in 2019, was it early 2019 or late 2019? Either way, talk to me about having started up your own business and then going through the last two and a half or three years.

Kathy - 00:05:40: Yeah, so I started this at the beginning of 2019, I believe it was about March. And you know, I'm really good with finances. But ruining a business, there are a lot of other things that you also have to be good at. So you have to be good at sales, and you have to be good at marketing. You have to figure out how your operations are going to look like. And it's been three years, almost three and a half, four years that I've been doing this. And it's been such a significant growth. Originally I started working with very small businesses, like under a million. And then I realized that's not really where I want to be spending my time. That's not really where my expertise is. I want to be working with businesses that are really on the high end of growth and they're between a million and ten. Obviously, women own businesses because that's when they really start to meet that financial structure and they need that financial structure in place, which I have experience with. So it took me a good, I would say about a year and a half to realize this, to realize what type of clients I really want to be working with, what are the pain points, and where can I find them. What type of marketing do I want to be doing? How do I actually operate in the business? Because starting as a solopreneur, I always thought, well, I'm going to be doing everything. But even though it's me doing the client work, I have a lot of people in the background that are able to help me. I have an assistant, I have a content writer, I have a marketer, and I have all of these people that are able to help me. So realizing that and going through that transition period was originally very painful. But as the business grew, I was able to mature more as a provider as well. So it's been an interesting journey.

Megan - 00:07:35: Yeah, I'm sure being an entrepreneur yourself gives you a real appreciation for what it is your clients are trying to do.

Kathy - 00:07:41: Yeah, for sure. Absolutely.

Megan - 00:07:43: So talk to us about the benefits of a fractional CFO.

Kathy - 00:07:48: It really depends on what the business is trying to achieve. So some of the businesses, if they're in the startup phase, if they want to get funding, it's important that they do have someone that helps them with the financial models, with advice, how to get the investors. So that's one side of it. I don't deal with startups because it's just not something that I enjoy. I deal with businesses that are already more mature on the revenue side. They need to have, I call them these post-revenue businesses. So a lot of these are very focused on compliance and taxes. And we all know taxes obviously are part of life, are part of the business. But that's not the reason why we do finances. And having a fractional CFO is very beneficial to a business that is growing because now you have someone to help you navigate a lot of business decisions. How are we going to grow, obviously in a healthy way? Do we need to hire more people? When do we hire these people? How are we going to pay them? What do we need to invest the money in? The businesses that I've worked with, for example, have a lot of cash in the bank. And you would think that's not a problem, but it becomes a source of anxiety because now you have this cash in the bank, what are you going to do with it? How are you going to use the resources that you have? Not just the cash resources, but also the human resources. You might have a lot of people in the business. How are we going to use that? And the other piece is that running a business can be a very lonely place. And if you have a CFO, you have someone to talk to, it's a safe place for you to talk about business issues that you have and they become a great profile for the business.

Megan - 00:09:41: It's hard for me to imagine a business functioning without a CFO at any level.

Kathy - 00:09:47: Yeah, it's hard. It's very hard.

Megan - 00:09:50: So at what point would you recommend switching from a fractional CFO to a full-time CFO for a growing business?

Kathy - 00:10:01: That's a very hard question. I would say when it makes financial sense. Because a full-time CFO can be a burden for a small business. You know you're going to be paying them 300, 500,000 a year, making sure that you can actually afford that expense and that it's going to give you that benefit. It is an investment to have someone like that in the business. But until you're there that you really do have that need to have someone full-time in the business, that you're able to afford them, a fractional CFO is a great way to get that expertise for a fraction of the time, a fraction of the cost. Yes, it is true, they're not going to be 100% dedicated to your business. But there's also a benefit there too, because you're working with other businesses, other industries, and they're able to I call this cross-pollinate ideas and financial models or whatever it might be, and bring those best practices to business. So there's definitely a benefit to having a fractional CFO versus a full-time CFO, not just on the price level, but also in how you're working with them.

Megan - 00:11:07: And for small business owners out there listening, if they're looking to find a fractional CFO, what advice would you give them for finding someone that's a good fit?

Kathy - 00:11:20: That's a really great question, and I get asked this a lot, believe it or not, a lot. One of the things that I always say when you are talking to fractional CFOs, go talk to a couple of them. Ask lots of questions about the experience. Do they truly have the business acumen and strategic thinking that you need? Because a fractional CFO is very different from an accountant and a bookkeeper. They need to be very high level. But also, if you're in a small business base, they need to be able to roll up their sleeve and get out in the mud with you. So that's one, the other one is also, how are they going to work with you if there's a fractional CFO service out there that they're just going to meet with an owner once a month, go through the numbers, give them some advice, say, well, you need to be working on this. How are you going to be working on this? Now figure it out on your own. That's not really probably a fractional CFO that you want in your business. A fractional CFO that in your business understands you understand your business, understands your business model is able to give you suggestions and also introduces you to people that you need in the business. For example, when I go into the business, I also look at do we need to hire someone for sales, or do we need to hire someone for marketing, operations, or whatever it is. So I need to be able to see what is happening in the business. And just having a meeting once a month, that's just not enough. The third point that I like to make too is personality is important as well. Do you jive with that person because you're going to be spending probably a lot of time with them and they're going to be with you? They're going to have a lot of information about your finances, probably about your personal finances as well, especially in the small business space because those two are very related to each other. So have someone that you are comfortable with working and being open with.

Megan - 00:13:21: And I'm just curious, if there was a client out there that wanted to pay you just for 8 hours a week or a month, would you take that client on?

Kathy - 00:13:33: No. My fractional CFO service, I'm a boutique service. I do not work on just an hourly basis. I am in the business and for me to be able to really understand the client, and help them, I have to be able to work with them all around on a monthly basis. So that's the reason why I don't do the hourly types of engagement. I do monthly engagements. So you can think of it as a retainer, but really they're the monthly support. That's how I call them because it might be that I need to jump on a call with their salesperson, I need to jump on a call with their operational person or we need to have a meeting with an accountant. And I don't ever want to be in a position where a client is thinking, oh, I got to call Kathy, how much is that going to cost me? And that's just not a good place to be for the client or for myself.

Megan - 00:14:27: Yeah, I completely understand. So as you look at your clients, what are some of the biggest challenges that they're facing in general? And two, they're facing women owning businesses.

Kathy - 00:14:42: You know, I like to equate this, that they are growing and it feels like they're driving 100 miles an hour down an unpaid road. They're essentially doing offroading and it scares them. And the reason for that is that right now where they are before we start working they do not have a financial structure in place and there is zero planning. Usually, by the time I come in, there's zero planning. They've never had a budget, they've never had a forecast. They do have accounting and bookkeeping done. I will not work with a client that does not have accounting and bookkeeping. That's definitely a prerequisite before we start working together. But they know that they need to start planning and they understand the value of it but they have no idea where to start. And this uncertainty is making them very nervous. It also becomes a blocker because it's really hard to drive the business when you have no idea where you're going to be three months from now, six months from now, or a year from now. You kind of has the gist of it. But it's, it's, it's very you just don't have the concrete numbers that you can kind of anchor to. So that's the thing that I really help them with first putting up, you know, making sure, obviously, make sure that the data is there and that it's relevant and the accounting is clean and everything of that but that the budgeting forecasting and planning is in place. That is the number one thing.

Megan - 00:16:07: Yeah, it's got to be exciting to be working for those high-growth businesses but I'm sure you're right, it brings on a lot of anxiety.

Kathy - 00:16:14: Yes, exactly.

Megan - 00:16:16: And now you've worked in finance leadership in global corporations and for early-stage high-growth companies. So talk to us about the different skills and energies that you need to bring to these different stage companies. As a finance leader.

Kathy - 00:16:33: That's a good question. Working with these types of businesses is very different from a corporate environment. There's a lot of ambiguity and generally, there's zero to very little structure. So you need to be ready to get your hands dirty and do a lot of that initial work because before you're able to hand it over to someone else and hire that finance manager or whatever they're going to have in the business. So you kind of need to be in that mental space of being a builder versus a maintainer. I see the corporate environment more as a maintainer type of energy but in smaller businesses and startups you really need to be that builder. So you have to be able to get your hands dirty. You also have to have a very broader vision and more of a holistic approach. Like I said, to be able to do finance well for me, I need to know about the sales, the operation, the marketing, all of these other pieces which in the corporate environment, you really don't need to have that type of expertise is because you have people already in the business that you can call and get help with. Here you have to be more attuned to what's happening in the business because if you're not able to spot it, maybe the owner is not able to spot it. So how are you going to be able to see those potential issues down the road?

Megan - 00:17:52: I like that analogy of a builder versus a maintainer. You're right. In a mature company, you're stepping into a role that's very well-defined and someone's probably done it in the past. Whereas these early stage high growth companies, everything's being defined on a daily basis.

Kathy - 00:18:12: Yeah, I mean, you have a blueprint already. You have operating procedures. SOPs whatever you have over there already, even in the finance department, in smaller business, you don't have that. You have to start doing it. If you don't do it, no one else will.

Megan - 00:18:26: And you said that alongside your business, you love audible podcasts, puzzles, and cats. So I'm also a fan of lifelong learning. Talk to us about the importance of being curious in other areas and how that aids your work.

Kathy - 00:18:43: Yeah, I always say that everything we do in business ends up in your numbers. So I think it's important that as a practitioner, you are curious. So I do a lot of reading and I do attend a lot of other industry events, like events on sales, events on marketing, and sales of operations. Because I'm always looking in the back of my mind, what can I learn? So that when I see issues that are happening, how can I go and first of all, have that network of people that I can have come in into the business and fix the issues that we have? Because I certainly can fix them. I'm in finance, but I'm not in marketing. But also the finance becomes more interesting, it becomes more colorful. Like I said before, it's not just a number on the spreadsheet. It has a meaning. There are deeper discussions that you can have with these people in the other industries because you have, as I would like to say, just enough knowledge to be dangerous. And that's always been my goal. I want to have just enough knowledge to be dangerous. But that's it, not more.

Megan - 00:19:59: Your answer reminds me of the fact that a lot of times these days when talking to CFOs, I hear the role of a CFO described as a storyteller, whereas in the past it was just recording financial history. Now it's really about being able to tell the business's story.

Kathy - 00:20:18: Yeah. And also drive that story forward. And if you see the issues with it, how are we going to fix that? It's not just we're going to throw it to the other departments, but being able to be that liaison between other departments, finance, and the owners, to figure out what is the best approach. And I think coming from the FP&A environment, I think that is really how I see FP&A evolving in the corporate world now, too, is to be that almost like an internal consultant. And I see myself in my business, even though I'm a fractional CFO, I also see myself as an internal consultant to the businesses. How do we fix the problems? As I said, I might not be able to fix it because I don't have that knowledge, but I can figure out who we need to bring in, and what type of conversations we have to have. Because I am much more aware of, okay, if I'm seeing this happening, that's probably a beginning of a yellow flag. We want to fix it before it becomes a red flag, then definitely before it becomes a huge problem.

Megan - 00:21:19: And you're also the host of a business podcast yourself, so can you tell us a bit more about this podcast and why you decided to start it?

Kathy - 00:21:28: Yeah, this is a great segue into why I started this podcast. It's because of the name of the business, it's helped my business grow. And that's exactly the reason why I started this podcast, because when I'm talking with the clients, they tell me, oh, there are issues that I have in my business, or I see that they have issues. And obviously, I cannot fix sales marketing operations, but I can advise people that can talk about those specific problems and those specific questions that the client asks me, and we can help them this way. So, for example, I've had a couple of episodes on how to structure a commission plan because that was very relevant for the client that I was working with at that point. And we were really looking at how we make sense not just in terms of the financial aspect, but the behavioral aspect of the salespeople as well, and in need of the expertise of a salesperson. The other topic, for example, is how you build an HR structure if you don't have one. And there could be also topics like just simple things. How do you have one on one meetings? We have a 40 minutes episode on just how you run a one-on-one meeting, or how you have team meetings, effective team meetings. So these are all specific questions that I'm here for clients, and that's why they said if my clients are having these types of questions, the chances are that probably other businesses are having these types of questions. Why wouldn't we just create a platform where more than just one person can benefit? So that's how this podcast was started.

Megan - 00:23:00: That was a great idea. So as you look back on all your guests, what's the one piece of advice or insight that you've learned that you would consider having been the best?

Kathy - 00:23:12: There's so much I mean, I've had such great guests on this podcast.

Megan - 00:23:18: How long have you been doing it? I'm just curious.

Kathy - 00:23:21: I started it in August of 2021, so it's almost a year and a half at this point and it's been a very rewarding journey. I love doing it. I absolutely love doing it. I think one of the best episodes would probably be about how being busy can be a really bad place to be. And I've seen that in my own practice. That is for my work to be of the most quality. And the best work that I do is when I have that peace and quiet and when things are intentional because that's where I'm able to focus on doing the high-value work, not just doing the busy work. So that episode is all about how do you actually do that and what does that mean? And ever since I recorded that episode, I've been intentionally structuring my business and my time around it to eliminate this busyness as much as possible and to really be intentional and what I do and how I plan my work, and how I plan my time. It's a great episode. I highly recommend it if you have a chance to listen to it.

Megan - 00:24:28: And what advice do you have for other CFOs or maybe aspiring CFOs out there? How do you get to this level?

Kathy - 00:24:35: There are so many ways to do that. Does it really depend on what type of CFO you want to be? Do you want to be in the corporate world CFO? Because of that I probably don't have much advice to give to you since I was not a corporate CFO. But if you are planning to go down the route that I am, being a fractional CFO, working with the smaller businesses, again, there are many ways to do this and it's really operating with the way how you want to lead your life, and that's how I start. How does a business structure going to support that? What are your goals? For example, for me it was I like the freedom, I like to pick my own clients, and I like to pick the problems that I want to work with. I don't need a lot of clients. It's a very boutique, high touch, and I value that, my clients value that. But that is the path that I chose. Or you can be in a high growth company when you can be multiple, seven, eight figures, fractional CFO company, have a lot of people working under you. If you want to do that, that's great. It's just picking up. What do you really want to do? But understand that once you start building your own business, especially if you're going from corporate to a fractional CFO world, it's not just understanding finances, you're also going to have to understand how to actually run a business. So sales, marketing operations, hiring people, firing people, all that other stuff. So it's not just being good at what you do, but also running a business. And I have had calls with a lot of people who are aspiring to be fractional CFOs and they're very surprised when they ask me how much time you actually spend on business development and client work. And I tell them, most of my time is really spent on business development because you don't ever want to be caught in a position when you're in a feast or famine. So you might have a lot of work right now, but you have to be investing your time into business development so that you have work in the future.

Megan - 00:26:34: Last question, how did you work up the courage to leave the corporate world and venture out on your own? That's a scary thing to have done.

Kathy - 00:26:45: It was, I will not lie, it definitely was very scary. But I think I've always had this drive to do things my way and I love building things. If you ever see any of that, I absolutely love Legos. I build that a lot. And I like puzzles, I like to solve problems. So even though it's scary, it's also a platform for growth. And I've always liked growth, so I always think of it in the office that, yes, things can go horribly wrong, but things can also go really right. And having that freedom was definitely more of a benefit than just avoiding the pain of being in the corporate world and just treading on as that was.

Megan - 00:27:34: Yeah, well, it definitely seems like you found your calling. So congratulations on all your successes to date.

Kathy - 00:27:41: Thank you.

Megan - 00:27:43: And thank you so much for being my guest today.

Kathy - 00:27:45: Thanks so much, Megan. It was definitely a pleasure. And thanks again for having me.

Megan - 00:27:49: Yeah, I really enjoyed speaking with you and hearing about your experiences and all of the resulting insights. And I wish you and Newcastle finance all the best. And to all of our listeners, please tune in next week. And until then, take care.

If you're ready to boost efficiency and streamline your accounting processes at significant cost savings, it's time to talk with Personiv. Their people-powered solutions have transformed the delivery of back-office tasks and general accounting functions for decades, partnering with clients to provide everything from accounts payable to payroll services. See what Personiv can do for you by visiting Personiv.com.

You've been listening to CFO weekly presented by Personiv. Please subscribe wherever you get your podcasts to hear all of our episodes. Want to learn more? Check out Personiv.com. Thanks for listening.