“Umm… So… What exactly am I looking at here?” The entrepreneur sat back in my conference room chair and began biting her red pen. Although wildly intelligent (has multiple degrees and is highly respected in her industry as a long-standing and incredible nurse practitioner) she was definitely a no nonsense kind of woman. Flipping through the 6 page financial package her previous CPA had prepared for her, she continued, “Matt. Honestly, I have no idea what I’m supposed to do with this. He never. EVER. Sat down with me and went over this. If you asked me two questions about any numbers on here, I wouldn’t be able to answer.” 

I could tell she was frustrated. Most intelligent people, when they don’t immediately understand a situation, get this way. With all the entrepreneurs I’ve ever worked with, these are the most common ones. They’re the “I just need to know what I need to know” kind of entrepreneurs. And, when coached the right way, they become even more wildly successful than they ever have been.

I glanced at my notes, fixed my glasses, and looked up at the whiteboard filled with notes. 

We had been discussing her business for around two hours at this point. We had covered everything from her business development strategy, her hiring strategy, her cash flow needs, and were now getting into the financial reports her previous CPA had generated. Reports which he never took the time to actually go over with her or give her any sort of guidance on. He was a “I emailed you the P and L now pay me” type of CPA.

My notes had several action items for us to discuss relative to her financials. I had to be careful, though, as not to talk down to her. I never want to be caught “mansplaining” things.

“When I review financials, I always start at the top. With the revenue.” I began to say. I paused so she could refocus her attention and put the emotions of embarrassment aside. It wasn’t my job to tell her she should have done something different with her old CPA or known any better. Who does? We’re opening a new chapter and this potential client wanted a little more insight into the financial management of her business than just receiving a spreadsheet (her Profit and Loss Statement) and an invoice. I couldn’t blame her.

“When I generate your financial reports,” I paused so she could see that I really wanted to explain my process more than I wanted to mansplain the financials. I continued cautiously as I noticed she was glaring at me over the brim of her Tom Ford glasses. “I include some helpful notes. Notes that tell you trends I see, industry benchmarks, and things of concern.” She returned her attention to her list of action items and began to scribble even more notes. 

“In your revenue, for example, there’s just one line that says revenue. I would want to see all the different lines of revenue that you generate broken down so we can see which revenue lines are generating which portion of your overall revenue. This also helps us see into your business so if you think one particular line of revenue is down or up, you can tell quickly.” I paused again as she reached for her coffee cup which was nearing empty. 

“So, you mean to tell me that’s possible? I can see which line of revenue is generating what percentage of my overall revenue? That sounds really expensive. I don’t want to get new software and need to learn how to do more accounting stuff. I love talking to my clients.” She fixed her glasses and gave me another look. “I certainly didn’t go to nursing school to be a boring accountant.” 

“Actually, my team uses the same software you’re already using and we’d manage the separation of your revenue with access to your billing system. Then, in the next section of your financials, we’d want to separate out all the specific costs of each revenue stream so you can see which ones are profitable. This helps a lot of my clients make educated business decisions.” I paused as she began to take another note.

She looked up and seemed as if she was going to cry. “How is that possible? My old CPA told me that would take tons of time pouring over reports and be so costly it wouldn’t really be worth it. He only ever asked me for my bank statements. He hasn’t even ever been to my office or looked at my billing software.” She took a big breath as if she was finally relieved of a ton of bricks that were on her shoulders. A tear streamed down her cheek. “Matt. All I’ve ever wanted was someone to show me how to do some of this. I don’t want to be an accountant, but I need to know certain things to run my practice. Are you telling me your outsourced CFO Team can do all these things? I mean… this is what I thought running a business would be when I started my practice.”

We continued talking for another hour or so and left the meeting with some specific action items. On the top of her list was circled, “Fire my boring ass CPA and hire Matt’s Team.”

This insight, giving business owners transparency into their own data, is just the beginning of Practicing Sound Corporate and Financial Management. Honestly, it doesn’t have to be cumbersome to business owners, especially those who didn’t go to school for accounting or business, to get detailed information about their business. 

It’s from this insight that business owners can make educated business decisions, forecast their expenses, try marketing campaigns, test new revenue lines, and add complimentary offerings as they see fit. 

Here are some practical tips for all business owners Practicing Sound Corporate and Financial Management:

1. Ask your CPA or Accountant to meet with you. Might seem silly or unnecessary. But there’s a lot that is missed when there’s no face-to-face contact. If they don’t meet with you, maybe that tells you more about the relationship you have than the actual financial review.
2. Ask your CPA or Accountant specific questions about how they created the reports. Did they review any vendor orders? Did they do any sort of job costing or cost segregation related to your various income streams? 
3. Ask yourself if you are being given the advice you actually need to run your business. Getting a PDF emailed to you once in a while from your CPA or Accountant isn’t actually the end of the job. Sure, they can say they reconciled your accounts and created a report. But that should be the beginning of the conversation. The next step is to discuss trends, specifics of business functions, and create action items.
4. Forecast your expenses with your CPA or Accountant. Something as simple as, “I’d like to buy a vehicle, do a marketing campaign, hire an employee, start selling a new product.” See what they say. If there’s no conversation, then maybe it’s time to consider looking for CFO Team to support your blossoming business.

Strategic Voyages Business Consultants is the Outsourced CFO Team for businesses that don’t have a full-time CFO. Our job isn’t just to create fancy reports and spreadsheets. We want to work with our clients to understand the future of their business; where it’s headed. Not just account for what’s already happened but provide the type of advice you need so you can begin practicing sound corporate and financial management.

We’ve recently picked up several clients who have full-time bookkeepers and want us to review their work. That’s great! This gives the business owner the confidence needed to make business decisions and not live in a world second guessing the work of another professional.