Today I'm interviewing another educator in our space, Michael King, the CEO of KFE Solutions, a fractional CFO business, and the leader of The Connected Accountant Community. We have a value packed conversation about:
And we chat about whether strategic thinking skills are learned or inherent and incorporating your values in making business decisions.
We gave you some homework in the episode, so when you've done it, make sure to tag us both
@connectedaccountant @ambitiousbookkeeper on Instagram
So grab your notebook and favorite pen cause there's so much you're going to want to write down and save for later in this episode.
Follow Mike on Instagram
Thanks for listening. For more information about the Ambitious Bookkeeper Podcast or interest in our programs or mentoring visit our resources below:
Visit our website: ambitiousbookkeeper.com
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32 - Offering CFO Services with Michael King
[00:00:00] There's a ton of talk in our space about offering advisory services, fractional CFO, controller services, all sorts of these higher level services. And I get a lot of questions from my students and others. I see asking the same questions about how to get started with advisory services. So I'm super excited to have my guest on today, his name is Michael King. He's the CEO of K F E S solutions, a fractional CFO business, and the leader of the connected accountant community. We have a value packed conversation today about the best way to get started offering CFO or advisory services, the most important skill in offering CFO services, three things clients are willing to pay top dollar for and how to set yourself apart from others. We have such a great conversation. We talk about whether a strategic thinking skills are learned or inherent and incorporating your values in making business decisions. We also are giving you some homework on the episode. So when you've done it and make sure to tag us both at the connected accountant on Instagram and at ambitious bookkeeper. So grab your notebook and your favorite pen. Cause there's so much, you're going to learn and want to write down and save for later. So without further ado, let's get into it.
[00:01:55] Welcome, Michael. I'm so excited to have you here on the podcast. We met through, I think we met through Shannon and then we got connected and I've joined your connected accountant membership, which we'll get into in a little bit. But welcome. Welcome, please introduce yourself. Give people the background of your story.
[00:02:16] Sure. And let me start by saying thank you so much for having me. It's truly like humbling and super exciting to finally be at a point where I can talk to other people about my journey. Because for years, man, I was stuck in the muck, you know, just trying to figure stuff out. And so, uh, now it's super exciting to be able to go and talk with you and people like that are in your audience and share some of these stories with them. So thank you so much for, for having me here and allowing me to serve you and your audience this way. Cool. So the quick elevator story, my name is Michael King. I'm the CEO of a fractional CFO firm called KFE solutions. We will be turning six years old in March, which is really, really exciting.
[00:03:01] And I'm the creator of the connected accountant, which is just a community for bookkeepers, accountants and fractional CFOs. They want to grow their business. I have a very common story of how I got into the fractional CFO game. It's a story that your listeners, I'm sure I've heard a million times, but I started my professional career as a nuclear engineer on submarines in the Navy.
[00:03:24] And I did that for almost 11 years and I transitioned out of the military and did what every nuclear engineer does and said, I'm going to go to work in the plywood manufacturing industry. And so I got a job as an engineer at a plywood mill in the middle of nowhere, Virginia. Just as a staff engineer and through a random turn of events, I found myself running that manufacturing plant.
[00:03:52] About 18 months later, we were doing just about $90 million a year in sales. There were 500 some odd employees there that, that I was responsible for. And in that role, I had P and L accountability. And the, the biggest issue I had with that is, you know, with a degree in engineering and in a background in the military, I wasn't even really sure what P or L stood for.
[00:04:18] And I certainly wasn't sure how to be accountable for a $90 million a year profit and loss statement and you know, I had a controller and some staff accountants that reported to me and every couple of weeks, they, these sweet Southern ladies would bring me like printed out reports. And, you know, at first I said, yeah, Hey, just put those in my inbox.
[00:04:38] And I'll take a look after lunch. And as soon as they leave my office, I started like Googling, you know, what, what does IRR mean? What does cost of goods mean? And you know, as you might imagine for a P and L that big, you're not going to Google your way to understanding the financials or watch YouTube videos.
[00:04:54] And one day I mustered up the courage to go to the controller's office. And Ms. Denise was her name. She was probably 65 years old and just Southern. And I said, miss Denise, I don't know what in the world I'm looking at. And she said, you know, bless your little heart, sit down. And she tried her best to get me to understand what the financials were talking about.
[00:05:14] But I decided my career was in business from that point on, but I knew I needed to know more about the financial stuff. So I figured my nest next best move would be to get an MBA. And that taught me a whole lot of nothing about, about how to use finances, to make smarter decisions. And what I realized is, you know, you look at small business in the United States and you see 60% of them fail in the first five years.
[00:05:37] But when you dive deeper, what you find is the vast majority aren't failing because of bad products or bad services, they're failing because they're making bad financial decisions. And so I'm like so many numbers, nerds don't know how to communicate to entrepreneurs in their language. And to, to share with them, those things that they need to know so that they can stay in business and continue serving their customers.
[00:06:01] And so I said, Hey, I want to bridge that gap. I want to be the one that translates the financials. I want to be the one that, you know, where I struggled for years in business with understanding what are the numbers saying? I want to be the person that can help bridge that gap. And so that's why I started KFE like I said, almost six years ago now. So yeah, there's, there's my introductory story. Like I said it's a story as old as time itself.
[00:06:26] I always find it really interesting. Thank you. By the way, for sharing, I always find it really interesting to hear how people got into like finance or accounting because it's very rarely somebody's dream to become an accountant. Like the little kid is like, I'm going to be an accountant when I grow up. I certainly wasn't mine. Although I, you know, I got my feet into it when I was fairly young, but it wasn't anything that I ever thought I would pursue. So I always find it really interesting. how different people end up in the field and where you're maybe not necessarily an accountant, you are very well-versed in all of the accounting stuff and the finance, probably more of the finance side of things, but that kind of brings up the first point. I believe that makes someone really good at the quote unquote advisory services. And that is in fact, not necessarily financial acumen, but operational. Would you agree?
[00:07:27] Yes, I would. I'll take, and I'll just elaborate on that slightly. I think that the real trick and the real value proposition is somebody that can tell the story of the financials and how that translates into what they need to do from an operational perspective. That's the key is the storytelling charts and graphs and KPIs and those kinds of things.
[00:07:55] Those are all great for those of us that understand them, but most decision-makers don't know and don't want to know. And so if we want to get into that advisory game, and we all know that the money's in advisory, not in reporting, if we want to get into that advisory game, we've got to become really good storytellers.
[00:08:13] Mm, I like that. Okay. So taking your financial knowledge and your operational knowledge and basically combining them into normal people language. Yeah.
[00:08:25] And to simplify it it's how can the business owner make smarter decisions tomorrow based on what yesterday's financials told them? That's the key, that's the key thing.
[00:08:36] And so you don't have to be an operations wizard. We serve clients in industries that frankly, I don't know anything about for the most part. But it's understanding how to tell them and translate their financials so that they can then go and apply it to the operational decisions of their business
[00:08:53] Ah, that makes sense. Okay. So what are your other, I don't know, top. Top qualities, I guess. Whether there's three, you like to do three points on everything. So I'm going to give you two more
[00:09:05] I didn't know that. I didn't know that. What are my top three points on what?
[00:09:10] On what makes, what makes a good advisor? I guess? So the first thing is storytelling, right? Being able to bridge that gap.
[00:09:19] Well, in fact, I don't think that's the first thing.
[00:09:22] I think there's a more important pre-work you have to do. And I think a lot of people really, really miss this. You, before you can tell the story before you can help them figure out what to do next week, next month, next quarter, next year, you first got to make sure that you're super dialed in to that entrepreneur's goals, dreams, and aspirations.
[00:09:46] If you don't know where they're trying to drive the business and why they're trying to drive the business there, you're kind of shooting in the dark on what story you're trying to tell them. I mean, there's thousands of numbers, right? When we look at just a P and L and a balance sheet and a statement of cash flows, and, you know, you start looking at performance. I mean, there's just thousands of numbers. And then you add in KPIs.
[00:10:09] You've got to understand what's important to that entrepreneur so that you can pull out those different storytelling pieces and kind of put them together in a way that says, Hey, your cost of goods and your gross profit, they're not healthy. And the reason that's important is "bleh" and be able to tie that into whatever it is they're trying to do with their business. That's how you really, really kind of hook them in is always tying those things back to their goals, dreams and aspirations.
[00:10:42] And so few of us that are numbers nerds, and again, you're right. I'm not an accountant, I'm not a CPA, but I do have a degree in nuclear engineering and, I'll tell you, we are as number nerdy as you are. Okay. We tend to be so analytical as numbers nerds that a lot of times we forget that there's a story behind that person and there's a dream and there's something that's driving them and we've got to get really good with our clients at pulling that information out of them. And I will say it is a skill and it's something you have to practice. It's something you have to be deliberate about, but we, a lot of times, overlook that first step of figuring out what those goals and dreams and aspirations are, and then try to tell the story with the financials of how they can get from where they're at, to where they're trying to go. Does that make sense?
[00:11:31] Oh, it makes total sense. And it really helps too, when helping coach them through certain financial decisions. To, for example, I had a client just the other day that sends me a screenshot of a credit card offer. And she's like, I really want to join this mastermind. This is a 0% credit card offer. I can put it on here and pay it off before the interest starts accruing and she already has debt. And so I was like, well, from what you've told me, you want to be here in your business. You don't want to have that debt anymore. And if you keep tacking on more debt, how is that going to like really help you get towards your goal? And is that decision based on FOMO, fear of missing out of not being in that mastermind? Or is it you really think you need to be in that mastermind because she's a brilliant business owner. She's amazing at what she does. And she has also that operational knowledge, she knows what she needs to do. So she just really needed someone to hold her accountable, but I wouldn't have been able to hold her accountable if I didn't know what her end goal was, why she actually wanted to be in that mastermind was to really get referrals. You know, it wasn't really to get that much value from the mastermind, but she was like, if I'm in the room with those people, that's what you know.
[00:12:50] So and just some other combination of goals that she had, I was able to coach her through making that decision and get her to really sleep on it and think about it instead of--
[00:13:00] What did she ultimately decide on? I'm curious,
[00:13:02] She ultimately decided not to do it because she did not feel comfortable with having that much debt on top of what she is currently trying to pay off.
[00:13:10] Yeah. Is she a coach?
[00:13:13] Let me tell everyone that's listening to this, if you are just getting into the bookkeeping or fractional CFO game. There's so many coaches out there, right, and they're great to work-- I have, done coaching with a lot of coaches and I've done fractional CFO work for a lot of coaches, but I'm going to go ahead and just tell you right now. The number one thing you're going to struggle with with coaches is them overspending on other coaches and masterminds. It is hands down because a coach loves some coaching. They definitely drink what they're selling. And so just go ahead and know that as you get into this game, that that will be the number one thing that you hit. But I think Serena made, whether it was intentionally or unintentionally, you made a really important point in there.
[00:14:03] You said a key word and that's "accountability". And I think that when, when you're moving from what I call numbers reporting, which is the bookkeeping, it is the tax prep, those kinds of things. And you start moving into advisory services. There's three things that people will be willing to pay you for that will kind of get you to the next level in pricing. And a lot of times we don't think about this. So There's three things though. When you move from, like, let's say 500 bucks a month is a bookkeeper and you want to move to where you're charging 2, 3, 4, $5,000 a month for advisory services, which I'm here to tell you as possible. We charge $7,000 a month now. you are right. I do love sets of threes. I do. You're right. I do. I do love sets of threes.
[00:14:48] I thought that you did that on purpose.
[00:14:49] Oh no, no, no. See, I'm simple minded. I'm like I'm from LA.
[00:14:54] It's the teacher's heart that you're always talk about.
[00:14:55] I'm from lower Alabama. Right? So I like things nice and easy to understand. I don't say that to, to kind of sound braggadocious, but more just to let you know what's possible. But the key thing is you're doing less of the numbers reporting, but there's three things that they really need from you, whether or not they realize it.
[00:15:16] And the first one is executive level accountability. So just like Serena talked about, they need somebody to keep them in check, because what you have to remember is they don't have a boss probably for the first time in their life. They don't have someone looking over their shoulder and approving expense accounts and those kinds of things. They need somebody that understands not only the numbers, but that entrepreneurial hardship, like how do I think through this mastermind? Well, on one hand, I can see that it's an amazing business opportunity for referrals and growth, but it also there's these goals that I have that require certain cashflow obligations and, you know, gosh, that's really hard. So that executive level accountability is really important.
[00:15:58] The next thing that's really, really important is executive level decision-making. And a lot of times as entrepreneurs, we come up on these two priorities that a lot of times are mutually exclusive, you know, or we've got this big decision and we can't go to our VA. We can't go to our social media manager and say, you know, Hey, how would you do this? Because they just don't think of things at that executive level. And so having somebody that they can kind of feel like they're shoulder to shoulder with it gets it from a decision-making perspective is huge. Okay.
[00:16:33] So we have executive level accountability decision-making and finally executive level leadership.
[00:16:40] Again, it's so lonely at the top. I actually had a group coaching call this morning where I preached on this for awhile. What is leadership? And I define leadership is just that ability to motivate and inspire others to take action. And when you can show up is a fractional CFO or whatever you want to call yourself, and you can provide beyond proformas and cashflow forecast and tax planning strategies, but where, when you become that person that they lean into and they turn to when it's time for these big decisions that have a lot of zeros on the end, they come to, you know, hiring in, moving into offering new products and services because they want your perspectives on those. That's when you can start making money. And that's where your effective hourly rate goes from 50 bucks an hour to 500 or a thousand dollars an hour.
[00:17:31] If you want to start doing those kind of moving up into the advisory services and offer those things, I want you to be really deliberate, like think through how can you move beyond just the numbers reporting and start getting into some of the psychological things like leadership and accountability and decision-making.
[00:17:49] So let me ask you, I a hundred percent agree with you. Let me ask you. How long did it take for you to, because one thing I've noticed with, with myself is being that person for my clients is becoming easier. But how long did it take you to get to that point? Maybe you automatically started out with it because you came from a corporate leadership position, but a lot of bookkeepers and accountants who are listening to this might not have.
[00:18:16] That's such a smart question. And it's one of those things where I'll preface by saying, this is where the danger of judging your chapter one or comparing your chapter one to somebody else's chapter 15, it's dangerous, right? Because I'm on chapter 15 or something now. Right. We've been in the game for 60. And to answer your question. No, I did not leverage anything because it's such a different ball game from a, you know, a multi-billion dollar company like Georgia Pacific or the Navy. And I even worked for $50 million a year software company and some others in between. It's a different game, you know, go into an entrepreneur that maybe is doing a hundred thousand a year or $200,000 a year. So it's all about that journey that you're going on too. Like, you've got to get some reps and you've got to get some experience.
[00:19:04] When we first started six years ago, I was charging 300 bucks a month for my services, 500 bucks a month for my services. I didn't know how to offer executive level accountability to a business owner. That's doing $30 million a year. Right? And so it's an evolution, so you're growing and getting some reps and getting experienced. You're surrounding yourself with other people that are ahead of you in the game to learn from so that you can then turn around and serve your clients in that way. So, yeah, it's something that you've gotta be intentional about and know that as you grow and evolve, then the clients that you can serve and the way that you can serve them will grow and evolve as well.
[00:19:44] That's so refreshing, honestly, to hear, because I think a lot of listeners are probably like, okay, I know I need to offer CFO advisory services or whatever you want to call it, but I don't know how to get there. But if they're in the first couple years of their business and they haven't grown a business before this, it's not going to happen in the first two years.
[00:20:07] Yeah, it won't. But I can tell you the first step I would suggest you take to get into that game. And this will just be one step, not three. Sorry. This alone will separate you from, I'm going to guess and say 83.62% of other bookkeepers out there offer: cashflow forecasting. That's a great first step to go from numbers reporting to that future looking stuff. Cashflow forecasting is an easy first step because cashflow forecasting is not hard, right? It's like, okay, how much money do you have today? How much money do you think is coming in today? How much money is going out today? And then you do basic math and that tells you what your bank account balance is looking like tomorrow next week, next month, next year.
[00:20:56] So just start by offering that cashflow forecasting service. That alone will enable you to bump your prices up and get better clients because nobody else is doing it. They're handing over PNLs and balance sheets and sending an email saying, thanks, appreciate your business. You know, if you have any questions, let me know.
[00:21:12] So cashflow forecasting is a great way to get in there and using that to drive discussions around their goals and dreams and aspirations. That's a great, like you absolutely have the knowledge regardless of your background. You know, whether you come from corporate America or if you just finished, you know, your accounting degree, you know, enough to get in that game.
[00:21:32] It's a super easy way to get better clients charge more money, and the other thing that's cool about it is that a lot of people don't talk about clients are less likely to leave you, and they're less likely to price shop you when you start offering services like that.
[00:21:47] So when you talk about the cashflow forecasting is this is one of the things that comes up with my students a lot is they get really hung up on this one thing. And as an accountant, we all, and it's, it's just our personalities. I guess. We feel like we should. To do everything without asking any questions of the client. And that is impossible to do with a cashflow forecast, unless you have some amazing AI and great trends.
[00:22:14] No, that's actually, I know you were joking, but let me touch on that AI thing that is such a gross misconception. So I have an MBA with a concentration in data analytics. I know a lot because I did senior projects using AI with finance. Okay. AI is great at forecasting financials when there is an enormous amount of historical data behind it.
[00:22:43] Exactly it's predictability, but the truth is most of us are working with growth companies, just like ours, where the entrepreneur gets to work one day and says, I'm going to launch a new course, or I'm going to start doing this.
[00:22:58] Right. And so there's not that historical data. There's not that seasonality. There's not that trend analysis. So those AI platforms, they look pretty, they sound cool. They make for good sales fodder, but they're junk. And you will spend more time trying to correct the crap that's coming out. The other end of them, then it's worth. So what I would encourage you to do is just keep it super, super simple, using a basic spreadsheet. I have found after hundreds of reps with coaching clients and CFO clients start with a six week cashflow forecast where you're looking weekly ahead for the next six weeks and update it once a week.
[00:23:36] That's manageable for you and it's manageable for the client, but absolutely correctly said you can't do it without them. When you start getting into any of the future planning stuff, it's an exercise in teamwork and you can't do it without them and they can't do it without you. So you've really got to embrace the fact that they need you as much as you need them. And it has to be a team approach.
[00:24:00] Now here's where the challenge comes in. We're all very methodical thinkers. We think in terms of columns and pluses and minuses, a lot of entrepreneurs don't think that way they're more creative than there are more like the visionary type.
[00:24:13] And so you have to really come in with, I think you said the word earlier, the heart of a teacher, and you've got to explain to them how these things work. You've got to take the time and the patience, and you might have to show them four different ways of, of how, what this means and what it's telling them in the other reality that makes this, I think even tougher for a lot of us, most of our clients have never done any forward thinking planning before.
[00:24:42] So you say, what is your launch schedule for this year? You want to go out and sell this new course? Well, when are you going to do it?
[00:24:50] When I feel like it.
[00:24:51] I don't know. Well, how much are you going to charge? What are you going to spend on ads? And so you've got to then become an expert. It coaching them through how to think through that. And that's why I think it's so important. You know, a lot of times we don't practice what we preach, you know. I'll be the first one to tell you my QuickBooks hasn't been reconciled in seven months. Okay. I just haven't. Full disclosure. I just hired a bookkeeper. Right. You know?
[00:25:20] Good for you, Yaay!
[00:25:22] Yeah. but it's so important for you as the entrepreneur to do things like have your own cashflow forecast that you're filling out every week. I am very disciplined about that to do your own budgets, to do your own projections, because you've got to like be in the weeds, doing that stuff, to learn how to pull it out of your clients. And so if you're not mastering those skills and thinking about, you know, man, I didn't do my own cashflow forecast for two weeks. Why is that? How can I get better at that? Ooh, I need to put time on the calendar. You know, you've got to kind of get inside your own psychology to help coach your clients and to get your clients to do those things. And it's one of the biggest mistakes. I see. Even veteran financial service providers making, they're not doing the stuff they're trying to do.
[00:26:13] They get frustrated when their clients aren't doing it. And I'm like, you've got to get in the game and walk the walk with them. Or you're not going to be able to understand where they're getting hung up in the problems. Right. We've got a really good cashflow forecasting tool and a really good projections tool that's the result of me doing it for my own business. And like, man, this is hard. How can I make this easier? And then I'd roll it out to some clients. And they're like, Ooh, this is great. So I would definitely encourage your listeners, make sure you're walking the walk and doing those things as well, so that you can kind of understand from their shoes, what's going on.
[00:26:47] A hundred percent. And I'm a huge proponent of that too. I just pretty much finalized my two forecasts cause I have two companies now split them into two. And it's a great exercise too, and it helped me think through how can I package this in a way that makes it easy for my clients and how can we streamline this so that I'm not the one doing every step of it for my clients. And it's really good to just practice on yourself on all things, bookkeeping, finance, whatever operations, leadership, all of it.
[00:27:21] Okay. I have a question for you then. Cause we were starting to talk about helping clients forward think and that requires a level of strategic thinking, which have you taken like the Gallup Clifton strengths finder thing or anything like that?
[00:27:36] No, I don't subscribe to any of those things.
[00:27:38] Ooh. Okay. We're going to talk about that then, because I'm very curious. Since you don't subscribe to this, maybe we can have a great discussion about this. Do you believe that any bookkeeper or accountant could become strategic enough to help clients through this? Or do you think it's something that you are born with or that you learn?
[00:27:59] Well, I've met a lot of babies and I've, but I've never met one. That was a strategic thinker. So I definitely think it's a skill that you can acquire and refine over time. But one of the things that. I see a lot of people getting hung up on. And honestly, I got hung up on this too, for years. Is you said clients. Well, I think the better question is: which clients? Do you think that any bookkeeper can help any client strategically? No. I don't think that, you know, bookkeeper, Betty can go to Apple and help them think more strategically. Right. But I do think that a beginning bookkeeper can go to a business that's also getting started maybe, you know, 50 or a hundred thousand dollars a year in revenue and help them think more strategically and help them think smarter. So I think it's wise to figure out who it is we want to serve. And in what way, but along the way, you're going to tell yourself a story more than likely.
[00:29:02] And I'm telling you this because I've told myself these stories of, well, who the heck am I to be giving anyone strategic advice? What are my credentials that make me qualified? To give advice like this. And what we have to remember is we don't have to know all the things we don't have to be perfect. We don't have to know all the answers. We just have to be a little bit better than the people we're trying to serve. We've just gotta be thinking a little bit differently than the people that we're trying to serve. And there's tremendous value in that. And so if you find yourself having those thoughts of like, who am I to be doing this, I would just really encourage you. Like, you've got some level of training and expertise. You've got a different way of thinking about business then frankly, most, business owners have of any skill level and know that that's valuable to a lot of people. So don't discount yourself or your experience or how big or small you are, because there are people that need your leadership in those ways.
[00:30:04] But, to kind of go back, yes. It's it is a skill and like all skills. If you want to master those skills, then you've got to become a student. And I think that is probably the number one thing that differentiates me from most people in this world. I'm not an inherently smart guy. You people say nuclear engineer, you're smart. I'm like, Hmm, not really. I'm a freaking awesome student though. And I study, I spent, you know, 35 hours last week, learning how to be a better speaker in not even like outlines, but how can I use pitch, tone, melody volume to elicit different emotions from people. You know, I'm a loud guy and most people that are the numbers nerds are soft-spoken and that's not great. I'm too loud. Right? And that, that causes problems for my audience. It limits the, the range of things that I can do. And so I dedicated an entire workweek to studying how to use pitch tone, melody volume, those kinds of things. To better serve people. Right. And so just like you said, like whether it's leadership, whether it's accounting, whether it's coaching public speaking, whether it's bookkeeping, you've got to commit to becoming a student, a lifelong learner of whatever it is that you want to do.
[00:31:25] Oh, a hundred percent. Oh my gosh. It's like music to my ears. Cause you always, you always say like you call us all numbers nerds and stuff. And I honestly, I do not identify as a numbers nerd whatsoever. I was not strong in math in school because I like to get things done quickly and I didn't go back and check my work.
[00:31:46] And I think that's why I like accounting because it checks your work for you. Everything has to balance. So I don't have to go back and redo my math quiz or whatever. But I guess I could be considered a smart person, but I think it's more that I am persistent and dedicated and I study hard. That's what got me through the CPA exam. It's not like I passed on the first try on every section, you know what I mean? So I completely agree with that. There are some people who are just fricking geniuses and my husband's one of them. He like barely studied for the CPA exam and he likes to brag about it, but I'm like not me full 18 months.
[00:32:24] Yeah. Getting me through school was like pulling teeth. It was not fun for anybody involved.
[00:32:32] The big message. There is just, if you want to be in the entrepreneurship game, if you want to be in the game of business and especially if you want to grow beyond just being a solo 'preneur, if you want to get to the point that maybe you've got a small team or you're serving a particular number of clients You've really got to commit to being a lifelong learner and there is nothing wrong. This is a judgment free zone. If you just wanted to be a solo preneur, have two or three bookkeeping clients for some side hustle money. That's awesome. There's nothing wrong with that. But if your ambition and your goal is to have a multiple six figure or a seven figure business, and you want to get from where you're able to charge thousands of dollars a month, I'm here to tell you it will not happen on accident. You've got to learn how to study and B just become a dedicated student to all things business.
[00:33:23] Yeah, absolutely. I think now I understand why you don't subscribe to the personality stuff because you do believe that most everything is a skill, right?
[00:33:34] So here's the thing. So I mentioned earlier that years ago, I worked at a software company. And one, I was kind of in charge of hiring from a cultural perspective. And they wanted me to introduce some level of data analytics into the hiring process. It was this whole thing. And we got onto the topic of personality assessments and how much that should, or shouldn't weigh into hiring decisions. And in our little internal chat thing, there's different assessments that people are kind of proposing back and forth. And the CEO of the company chimes in and he's like, Hey, I found this really great tool that I'd like everybody to kind of try out and let me know, does it speak to you? Is it accurate? And so we all took it and you know, you're reading the responses in the thread of like, oh my gosh, this is so amazing. And it, it really hit here, you know, blah, blah, blah.
[00:34:19] So after about a week, CEO comes back in and he says, okay. So what I did is I coded a completely random set of questions. And I put in just a random set based on whatever you said, you got a random response back of, you know, I had like a hundred different personality things and it picked seven randomly and put them in like completely random. And he's like, I truly believe that this is a little bit like horoscopes where you kind of like, you read into it. And ever since then, I've been like fully bought in on that. I was like, it's a one small step away from being a horoscope. I know that there there's going to be some listener out there that loves the Enneagram. That's turning the podcast off right now because I just don't get it. Or I didn't have that. Hey, I don't, I don't knock it. It's just not my cup of tea.
[00:35:11] Yeah. I think it's important not to live by those things, if you do quote, unquote, believe in them, but rather like helping. Cause I don't know, some of them are, some of them are definitely like more personality and some of them like the strengths finder is like, everybody has all the same. Qualities or whatever, it's just the level at which they're like brought out. So like some people are just more naturally strategic thinkers. Um, and some people are more naturally like people persons people ... people people!
[00:35:43] It sounds like a little Caesar's commercial "People People!".
[00:35:47] I will tell you this cause I'm like you sort of. I'm a wave tops guy. I'm a high level strategy. I don't like numbers either. Like I get bored and my eyes gloss over really quickly. I will tell you, on the flip side, a lot of your listeners are probably very detail oriented people and thank God that they exist because we need them in our world. I would encourage you as you think about building a team to find someone that balances you, whichever direction you go in. So I have Carlos on my team and he's a CPA, he's a former auditor. In fact, he still does audits on the side because he just loves doing audits, right. Like, oh yeah. I know you can't see Serena's face right now, but, but yeah.
[00:36:25] I'm like throwing up.
[00:36:26] Yes, she's throwing up in the real world. But there's people like that. And so I would encourage you to think, I'm not a strategic thinker, I'm an "in the weeds" thinker. Who's somebody that I could bring on my team that is strategic and loves the high level, vision planning and those kinds of things. Because that's honestly like KFE does not exist without Carlos and his detail oriented, you know, drives me up the wall sometimes, but we do not exist certainly in the form we're in today. We might not exist period if it weren't for Carlos kind of balancing me out.
[00:36:59] Now, I'll say. Don't compromise on a misalignment in values.
[00:37:08] It's important to have somebody that kind of balances you out on things like visionary or integrator or whatever other buzz word you want to use. You know, whatever is kind of cool right now, but I would encourage you write out your values. Put time on the calendar and think through what are your values? What are the things that are important to you? What are the things that you won't compromise on regardless?
[00:37:31] And there's a great book called The Advantage by Patrick Lensioni. Even if you're a team of one, I would encourage you to do two things. One is read the book. And two is do the exercises in the book and really think through what are those values? There's some values that they call them, pay to play values that if you violate those, you're gone, whether you're a partner in the company, a client, a vendor you're gone. There's accidental values, there's aspirational values, right? So there's different kinds of values, but I would really encourage everybody, even if you're just getting in the game, come up with those values because they will become, if you use them the right way, a north star for virtually any decision you make in your business. Should I join this mastermind? Should I take on this client? Should I work with this vendor? Should I fire this person? Right. It will really, really give you a great compass. And I see so few people that actually go through that exercise. And then you turn around and you find yourself surrounded by people that you may or may not want to be surrounded by.
[00:38:32] Oh, a hundred percent. Oh my gosh. So figuring out your core values is probably not as easy as it sounds. At least it wasn't for me. Cause it took me the last five years to really figure it out. And what ended up giving me the most clarity was exactly what you just said. Being surrounded by people and ideas and situations that were not serving me. So in that contrast, you get the clarity. So unfortunately, because I didn't have a north star guiding my decisions, I just accidentally ended up places. Then I was able to really get clear on what I did value. So if you can do that ahead of time and not have to have hard conversations and all that kind of stuff, it's a lot easier, but it it's been the last five years of literally me trying to really figure out my values and I would figure out a few and then I would compromise on things. And I just don't recommend doing that. So if you can really just set aside a day. And honestly it was the past few months of me just randomly thinking about like, I think this needs to be a value and then just putting it in my notes app, and then coming back to it every so often and fine tuning it, reading some books. It makes a huge difference in hiring and selecting team. Like you said, clients, all that kind of stuff.
[00:39:53] Yeah, It's weird because so many coaches and gurus and books talk about. You know, who's your ICA, who do you really want to work with? It's interesting and honestly, disappointed. Cause they tend to focus on things like, well, what industry do you want to serve? Or what accounting platforms did they have? Or what revenue range should they be? And I'm like, you know, those things are all important for sure. Especially as you try to dial in your branding and your messaging, if their values aren't aligned with your values, then it's just not going to work.
[00:40:24] I was recently on a sales call. With a manufacturing plant in Kentucky or something $37 million a year. So that's even by my standards is a big client, right. They were going to be on our $7,000 a month package, which is like our premium package, like tons of margin, like, whew, that's a big win for us. And Carlos joined me on the call. Like we're kind of at the point where we're all high-fiving and excited to work together. And then the guy says the this, lead says this. He says, Hey, one thing I want to point out I know that you guys love doing like the coaching thing and you like working with that, he's like, I don't need those calls. Like you don't have to do those calls. Well why is that? And he said you know, I've been in business for, I don't know, 10, 11 years now. And he said, I've never had a coach. And I don't intend to start now. And, uh, I was like, man, he's like, no, the same price. It's still charged me. You're saying, Ray, you just don't have to have those monthly calls with me. I just want the reports and your analysis. And I was like, man, we can't work with you. And I had this grin and he's like, what do you mean? And I said you know, you're right. Coaching is kind of our thing. And I said, two things are gonna happen. And I said, one will be that you get really annoyed with us because we keep trying, or we're going to get really annoyed with you cause you keep pushing back and it's just not going to end well. And I said, well, I've got to graciously bow out because there are plenty of people that will serve you well, for what you want. They're infinitely qualified to give you great analytics and great reporting. That's just not why we get out of bed every day. And that's okay. I'm so glad you told us that. But yeah, that's just not what we do. And he got a little ticked off, but yeah, we noped out of that deal. And again, I'm not at a point that I'm turning down $7,000 a month business on the regular. But you know, one of the values we look for in clients and we have this written out is we look for clients that have a growth mindset and they are both willing and able to invest in their growth and their businesses growth.
[00:42:28] And if you don't check that box for us, then we're just not a good fit. we're happy to walk away from that today. So I would really encourage you, like, especially as you're thinking through some of these like ICA ideal client avatar exercises, or who do you want to work with and go after, junior varsity level is what industry are they in or what geography or what accounting platform, that's the JV level. If you want to be next level, then really think on that values level. Like what about people? What kind of people do you want to work with? What kind of heart do you want them to have? There's no right or wrong answers.
[00:43:04] And just like you said, Serena, it's something that you should revisit from time to time because you change over time. And so that might evolve and that's okay. It's not written in stone, but without that north star, you will get somewhere. I promise you, you will get somewhere. You probably just won't like where you land.
[00:43:21] Yeah. I'm glad to hear that my method for figuring out who your perfect client is, starts with values. So if anyone needs help with that, that's in my program. Because that's what I discovered too. I was like, I don't really care how much money they make, or how much they pay me, really, if they're not respectful of me. Growth is one of our core values for our team, for our clients. Our core values span the clients, the team myself, you know, cause they it's my company. So they're my values. Get on board or get out, I guess. so yeah, Growth is a major one and yeah, I want my team to continually grow and get better at what they do and I want my clients to do the same. So it's awesome that we both have that same value.
[00:44:08] Let me throw on something else on that values thing. you should incorporate your values into your messaging. I see so few people in our industry doing that well. If you think growth mindset is important and it's a core value of yours, and you want to work with people who have a growth mindset, I should be able to look at your newsletter, your Instagram feed and see, like in the last 90 days, how many times have you talked about growth mindset? How many times have you talked about the things that you're doing because of your growth mindset? How many times have you talked about what growth mindset means or the importance of growth mindset? So many times, especially when we're just getting into business. When we think about branding, we're thinking about our logo and our website and our brand colors and the fonts. And I'm here to tell you no one cares, right? Like that's, it's the equivalent to me of like, I could go buy tiger woods golf clubs, and I'm still going to be a horrible golfer because I don't have the fundamentals. If you get out there and you're telling people about what you believe and what you value, what's important to you and why it may be, it should be important to them and have those conversations, that will go so much further in attracting the right people, then any logo or website. And when you talk about those kinds of things, people see you as a thought leader, right? Because right now, what are most people posting on social media, in our industry, they're posting about taxes and 10-99's and taxes that are coming up. And those things are okay. But that's--
[00:45:42] It's the educational piece but you need the thought leadership.
[00:45:45] It's a piece. Right. But that's where we default to, cause that's what we're coming from. We're not normally comfortable talking about the importance of humility as CEOs or we're not talking about the importance of growth or those kinds of things. So I'd really encourage you as you're thinking about your branding and you're just getting your practice off the ground. Yes. Get those values. But I would shout those values loud and proud and talk about them to your audience. Because again, like so many people focus on likability, right? We want to be liked by our audience, but here's the truth people. Your followers that like you, aren't going to buy from you. They're followers that respect you and see you as a leader, they will buy from you and they will buy from you repeatedly. So I would encourage you to think less about just being likable and more about leading.
[00:46:42] Oh, Mic drop.
[00:46:43] Was that good? Was that a mic drop?
[00:46:46] That was a mic drop. So I have a challenge for anyone listening. Cause now that when this episode goes live, we're going to start to see our Instagram cause you and I follow a lot of accountants probably. Right. We're going to start to see our Instagram feeds filling up with more of this: values, thought leadership. I'm putting this challenge out to y'all like, and I want you to tag us both. Right? I'll link both of our handles in the, in the show notes. This is the challenge. If you're not clear on your core values, your challenges to start thinking about it and read that book that you mentioned The Advantage.
[00:47:21] The Advantage by Patrick, Lensioni. The cool thing about Patrick Lensioni, he writes his book and fables, right. So they're like, they're like stories that hit like super powerful messages. So they're easy reads. It's not like reading a typical business book. It's like a story. And then, oh, by the way, there's like an amazing message on leadership or business or something in there. He's one of my favorite authors for sure.
[00:47:43] That's awesome. Thank you for that. There's so much, so much to take away from this episode. Everyone has a lot of homework. So I have a couple questions for you that I wanted to ask, and you kind of alluded to this, but can you tell us what type of clients you typically serve?
[00:48:00] On the fractional CFO side?
[00:48:01] Yeah, on the fractional CFO side.
[00:48:03] Yeah. We work with professional service businesses, so think plumber, electrician, doctors, lawyers that are in the five to typically $30 million revenue range, based in north America that have QuickBooks or foundation accounting software. That's like the high level stuff. And then we get into the values, things. We talked about, the growth mindset, humility, integrity, and professionalism are the three values that we kind of look for. But outside of that, like manufacturing, professional services. And in that, and beyond that, like we were pretty open to work with almost anybody. Now we offer no bookkeeping services. We offer no tax prep. So it's fractional CFO and tax advisory and tax strategy. That's it.
[00:48:52] Okay. So do you partner with a couple selected bookkeepers? Or do they typically come to you with their own bookkeeper? Or team, rather. If they're that large. They should have someone in house.
[00:49:05] So that answer has been an evolution, just like we talked about earlier, you know, you start with a particular client and as you grow and you know, your clients grow too, and so yeah, back in the day we offered bookkeeping services. I despise bookkeeping services. It's super important because you can't do the forward-thinking work. If the books are in shambles. Right. It's very, very important work. It is not work that I like. But we found in the early days that we had to offer bookkeeping because our clients typically didn't have bookkeeping or good bookkeeping. And so what I tried to do at first was say, Hey, go get your books cleaned up and then come back. And zero of them ever came back. And so we decided to offer bookkeeping and we've worked really aggressively to kind of move, I'll call it upstream, to clients that have most of our clients have an accounting department now. They're just not at a point where they can afford a $300,000 a year CFO. But yeah, we did offer bookkeeping for in fact, we've still got two legacy clients that we just love that we still do bookkeeping for. It hurts my heart to think of getting rid of them just because I like working with them so much. But, uh, yeah, no, no. Did I answer your question? I have said a lot of things
[00:50:12] Yeah, absolutely. And anyone listening, I want you to go back, rewind, hit the back button, whatever it's called these days. And listen to how clear Mike was. And you have to be that clear too with yourself so that you can filter people out and it all ties back to your messaging and everything's going to be so much easier when you have dialed in who you're helping.
[00:50:34] Ooo! Can I say something on that?
[00:50:36] Okay. That sounds awesome. Get dialed in on who you serve and what you're going to do and all those things. I don't know if this is the right answer or not. I'll just tell you about my journey. For me, it was really hard to get clear on that until I just got a lot of reps. I read you read books, like Building a Story Brand by Donald Miller and all these other like, oh, I have all this clarity, you know, I got to pay my mortgage. Right. I don't have the, you know, I've got to just take business where I can.
[00:51:08] So I want to make sure that I share with everybody that in the early days, it's okay to be unclear about who you want to serve or the services that you want to offer or the way you want to do it. Because you just don't know today. And I think that's that's all right.
[00:51:26] And so, while it's important to have uncompromising values, I do think that, you know, for the first couple of years, even try businesses in different industries. Like we won't work with publicly traded companies. We won't work with companies that have a board of directors and we won't work with companies that have multiple investors because I learned, I just don't like dealing with all the bureaucracy and the decision-making steps that have to go along with that. I didn't know that until we had a couple of clients that were in that world and I was like, bleh. This is horrible. I like working right with a CEO and making decisions and moving fast.
[00:52:02] So don't think that you've got to have all the answers out of the gate, but what I think is important is that you're deliberate about critically thinking about the clients that you're working with and like, why do I love them? Why did I not love them? And what do I want to try next? And again, don't let it be accidental, but be very intentional and have a lot of critical thought and intentionality around it. And that'll hopefully shorten your learning curve from where mine was. Cause it took me like, I don't know, three or four years before I finally got all that dialed in, but be really intentional and critically think about it.
[00:52:35] Yeah, you're absolutely right. Hopefully since you and I have made some of those mistakes at the beginning, it's it is easier on the other side to say, well, if I had just thought more intentionally about the values of my clients or this, that, and the other thing, but yeah, if you have a mortgage to pay, you're not going to be able to be as selective, but then on the other side of that contrast, you'll get more clarity. So it will come with time. Or you can start thinking about it now, but don't let it hold yourself back in just moving forward. Right. I like to really tell people in those early days, especially because it is very confusing, like who do I accept as a client? And who do I not accept? The best piece of advice I think I can give someone in that situation, if they're not trying to narrow down the industry or the revenue number or anything to just listen to your gut when you meet with that client. And judge based on that.
[00:53:28] I love it. Yeah. Go with it. I mean, your gut will be right more times than it's not. And if, if you can afford to, if it's not an easy, yes, let it be an easy. Again, if you're not worried about feeding your kids or paying rent, and you're just not sure. Just say no. The other thing I'd encourage you too, is you're not getting married to this person. If you get three months into the relationship and it's not working out, it's okay to walk away from the relationship. That's why I love month to month contracts.
[00:54:00] Yeah. Yeah. We don't lock in any of our clients either and I don't think I've ever had to fire someone that early on, but definitely in the first year, because things just become more clear and you're like, ah, you don't have the same values or you're not getting me any of the information I need. I can't even do my job. So, yeah.
[00:54:19] And it's not a representation of failure on your part. A lot of my coaching students feel like they failed when they need to walk away from a client that it's a representation of them as a business owner or as an accountant or as a leader. And it's just not, you know, I think that it takes so much more maturity and intellectual honesty to be able to say that this isn't a win-win and boy, I learned some great lessons and I'm willing to walk away, you know, and I said, you know, do it with dignity and respect. Don't just fire them and ghost on them. But it's not a representation or a reflection of you as a human being, as a leader, as an entrepreneur, be okay with that.
[00:55:01] Yeah, definitely. The hardest thing about being an entrepreneur is having those difficult conversations, whether it's with a client or a team member or whatever. Uh, and yeah, I've been feeling that one lately.
[00:55:17] Okay. What else? What other questions? Is there any more questions?
[00:55:21] Yes. Well, you just kind of alluded to the fact that you have accountant students. So can you talk a little bit about the connected accountant and what your vision is for that, for the foreseeable future?
[00:55:35] Yeah, so three, some odd years ago, we got real frustrated with the clients that we had and the work we were doing. And, uh, long story short, I came to work one day and I told Carlos, Hey, unless you have any major objections, I'm firing all of our clients today. I was like, this is not what we signed up for. I said, do you trust me to blow this thing up and rebuild it in a, in a, in a quick way? And he said, yeah, do it. And, uh, part of my next steps was I looked for a community of people that I could get involved with to learn, like, how do you do this the right way?
[00:56:10] Luckily, coming from corporate America, I had just a boatload of money in the bank. And so I looked for a coach. I looked for a mastermind. I was ready to spend. And there was nothing out there. And I said at that point, I was like, if I figure out how to do this, one of these days, I'm going to put together a community of bookkeepers and accountants and fractional CFOs that want to do it the right way and kind of bring them together. And I'm going to share some of the stuff that I've worked. Because I wish there was someone willing to do that today. And we finally got to that point where I felt like we had enough value to add, and we had enough, we had paid enough tuition on stupid mistakes. So, uh, I decided to start a community called the connected accounts. And like I said, we help bookkeepers, accountants, and fractional CFOs build their businesses.
[00:56:56] Serena does a great job of getting you out of corporate America and getting you into the, the business game. And if you're ready to like, okay, now what, how do I sell my services? How do I price my services? How do I hire and manage a team? If you have those kinds of things, I would love for you to come check out the Connected Accountants. Did that answer your question on what it's all about?
[00:57:18] Yes, that answered the first part of the question. Now, the second part of the question is what's your vision for the connected accountant? Where are you taking it?
[00:57:26] Yeah. So th there's this, especially with books specifically with bookkeeping and fractional CFOs, there's really not anyone out there, in my opinion, that's teaching people how to do it, right. And when you look like we're in the great resignation right now, people are quitting their jobs and going into entrepreneurship. And I think we might be in the golden age of entrepreneurship right now. I think that when I look five years into the future, I think small businesses are about to just explode.
[00:57:58] And like I said earlier, 60% of small businesses fail. And so now more than ever, it's so important that there are people that do what we all do, and we need more of us doing it with excellence. And so I want to kind of cultivate this community of people that are showing each other how to do it well and how to do it right. So that we can be that beacon of light for small businesses that get freaked out and terrified by the numbers, so that we can help them survive and that the great resignation isn't this thing that was the fall of our economy, but it was the thing that was like the Genesis of our next, you know, golden era in the United States.
[00:58:39] So my vision is just creating this, this community of, of hundreds of bookkeepers accounts and fractional CFOs that want to do it the right way and are learning from each other and supporting each other and giving each other resources and referrals and all the amazing things. And all of a sudden, I'd like to hear me go live once a month and talked about stuff like this.
[00:58:55] Yes. So I said at the beginning of the show, I am in that community. It's, it's great. I missed the coaching call this morning cause you know, your end. but It's been great just interacting. It's not on Facebook, which is amazing. It's in Circle, right? Is that what it's called?
[00:59:11] Circle yeah.
[00:59:12] Circle. Uh, how are you liking that so far? It's
[00:59:15] A huge fan of circle. Circle has got some good benefits. Facebook by design is meant to provide distractions for you. They make their money off of ads and so they do everything they can to put ads in front of people and there's notifications and pop-ups. And If you've stripped out all of that stuff, it would be called circle. It's a platform built for community, there's posts and threads and channels and all the things. And I just got accepted into their beta program. So I'm able to actually go live now from inside circle. I don't have to have zoom calls anymore. Um, so, so it's just kind of a it's its own space. So you're kind of free from those distractions.
[00:59:54] So the live broadcast and circle is that separate. That's separate from the monthly coaching call, right?
[01:00:01] Oh, the monthly coaching call will eventually be done through the live thing inside of the circle. It's still very beta right now. It's not ready for prime time. I tested it out yesterday, but yeah, once a month I go live. For example, today we talked about hiring and you know, a lot of us have never hired anybody before. And, and how do you hire people and what do you look for and what goes into the job description? It ended up turning into an almost two-hour call today because I always go over on those calls. Cause I love this stuff. We talk about sales or we talk about hiring next month. We're talking about boundaries. Like this is like a huge thing, especially if you've never owned your own business. How do you set boundaries? How do you maintain boundaries? Cause those are two different skills, set boundaries and maintain boundaries, and then how do you bring it back? If you let a client kind of overextend and you know, those boundaries have been crossed, how do you bring it back in a way that doesn't destroy the relationship? That's what we're going to talk about in February. So that's exciting.
[01:00:57] Awesome. Well, now everyone has a little preview. This should be going live before that, if you want in on that, there will be a link on the show notes to join. Are you running any specials right now for that? Or is it--
[01:01:08] I'm not a special runner. This is the deal always run. It's a dollar for the first month. So you come in, you check it out. There's a bunch of like bonus courses and there's a ton of resources in there, but you come in and try it out for a month. It's a dollar $49 a month or $47 a month or something like that thereafter, and at the end of the month, the first month, if you don't like it, just let me know. I'll give you a dollar back. Um, but we've, we've had, uh, Zero zero. People have left since I started it so far. So I guess, yeah, I guess we're--
[01:01:39] that;s pretty impressive.
[01:01:40] I guess we're doing something right.
[01:01:42] It's a pretty awesome community. So I encourage you to join if you're interested in checking it out, please do so. I think I covered all my questions. Thank you so much for joining me. This has been, I think we're going to have to do a part two.
[01:01:54] We do. Cause we didn't get to cover the number one mistake that I see early stage accounting, financial entrepreneurs making. We didn't even talk about it.
[01:02:04] Oh no. Okay. Well stay tuned for part two.
[01:02:08] Yeah, I had a whole thing. I had a whole soap box. I was ready to go down, but you're right. We're at time. So you'll have to, your audience will have to like make you schedule another call with me.
[01:02:18] All right. Well, Mike, thank you so much for coming on here. I appreciate it. It's always a pleasure to get to meet with you and jam on all of these things. Accounting, CFO stuff, community.
[01:02:32] Yeah. Thank you so much for being here and for doing what you do. I think that the world needs more accountants to get into entrepreneurship because it's, it's hard for so many business owners to understand this stuff. And so the work that your audience is doing, the value that they provide to the economy, this is not hyperbole, I do believe that we are helping the backbone of America. And I also want to kind of just cheerlead your audience for investing the time to listen to podcasts like this, to be part of programs like yours, and to embrace that growth mindset, because it, it just really speaks volumes to their priorities and their commitment to their craft. And so that's awesome. Not everybody's doing that. So I'm clapping for you and cheerleading you over here for dedicating yourself to that and taking those steps. So thank you so much for being here or for letting me be here.
[01:03:23] It's not my podcast, it's yours.
[01:03:26] We're full of the awkwardness today. Well, thank you again and we'll talk soon. Bye