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THE 5 MINUTE FRACTIONAL CFO

053: How No Goals Cost Us $60k

Jul 21, 2023

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053: How No Goals Cost Us $60k

Jul 21, 2023

 

Read time: 2:21 minutes  

Earlier this week, I lost a $60,000 client and it was completely avoidable.

This past Monday morning at 9:15am I get a text from a client. "Hey. Need to chat. Have time to jump on a call this morning?"

This looks (and feels) a whole lot like the text you might get when  dating. "Hey. We need to talk."

In both cases, you know immediately what it means and what the outcome is going to be.

Not a great way to kick off a Monday morning.

I spent the next few hours digging in to figure out where things had gone wrong with the client.

The missing connection between strategies, tactics, business goals, and personal goals.

For context, the client is a $3.5MM services business. They operate in an industry with traditionally tight margins. Tight margins means tight cash.  Every dollar matters.

This is doubly important when there's significant debt on the balance sheet. Cash outflows in service of debt can be damning. 

Even if the slightest thing goes wrong in operations (revenue, COGS/COS, or G&A), the business could tumble.

This is where our client existed. Yikes.

This isn't a good place to be as a business owner.

Always stressed.
Worried about making payroll.
Not able to pay himself enough.
Money going out just as fast as it comes in.
The work stress becomes stresses at home.
The family starts to feel it.
Relationships suffer.
Sleep is lost.
Not good.

But no worries! All is not lost for the client. 

Cash flows were tight but not a dumpster fire. A few tweaks could mean all the difference. 

We laid out the plan: 

• Get a bump of $20k/month in sales
• Nix 2 specific ad strategies that aren't paying off
• Drop 3 people from payroll that were bad fits for the team
• Going forward, we'd rent new equipment (vs purchasing via financing)

The plan was solid and the action items were clear. 

We told the client exactly what to do - and that's where it all fell apart.

We gave them the bullet point list of what needed to happen, when it needed to happen by, and who needed to do what.

But at no point did we connect the dots between the action items and the outcomes each would provide. And I don't just mean P&L and cash flow forecast outcomes (which we didn't do anyway). 

We didn't tell the stories. For example, we didn't explain how the extra $20k in revenue would mean an extra $5k net. And how that extra $5k could go towards the extra distributions his family needed (baby due in 60 days). 

So all he heard was:

πŸ‘‰ $20k in extra revenue = I have to work more
πŸ‘‰ Nix ad strategies = Spend time I don't have managing ads
πŸ‘‰ Drop 3 people = Confront a problem I've been avoiding which adds even more stress
πŸ‘‰ Rent equipment vs buying = Signal to my ego that I suck because I can't afford to buy

From his perspective, we didn't give him solutions. We gave him a list of more things to stress over. 

The client is a great human. He's a hard worker, he's open minded, and he wants to grow. But he's stressed beyond belief.

I'm certain that if we had told the story about how the tactics solve his problems, this story would look a lot different.

Remember: 
Your clients have to clearly understand what's in it for them or they won't take action. If they don't take action you won't have impact. 

Eventually, you won't have a client either.

Your coach,
Michael 

 

 

Whenever you are ready, here are 3 ways I can help you:

  1. Join us at The CFO Accelerator Live in Dallas, TX from May 15-17. 2024 andΒ learn how to get more clients, increase your pricing, and close more sales! Get your ticket here.
  2. The Inner Circle - every month my team and I go live and share the most impactful lessons we've learned in our journey to start, scale, and optimize our own CFO firm (including live Q&A). Plus you'll get access to our private community of overΒ 200 Fractional CFOs.
  3. If you'd like more amazing (and free!) content about starting, scaling, or optimizing your Fractional CFO firm check out The CFO Report.

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