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THE 5 MINUTE FRACTIONAL CFO

070: Alex Hormozi is WRONG

Feb 02, 2024

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070: Alex Hormozi is WRONG

Feb 02, 2024

Read time: 3:49 minutes  

In today's edition, I'll reveal three reasons Alex Hormozi's "give it away first" model doesn't work for fractional CFOs and offer three alternatives that work much better.

If you're unfamiliar with Alex Hormozi, he's one of the biggest influencers in entrepreneurship today. He's written two best-selling books, $100M Leads and $100M Offers, and has nearly 2,000,000 YouTube subscribers.

👉 He's a big deal, and he's super smart.
👉 He also has a lot of 0s and commas in his net worth.
👉 He's doing something right.

One of Alex's business development ideas is the idea that you should give away something super valuable as a lead magnet to get new clients.

The premise is simple.
When you give away something valuable, the prospective client thinks:

"Wow! If the FREE thing you gave me was THIS GOOD, then I can only imagine how good the thing is that you actually charge for! Take. My. Money."

Business flows in, and life is good.

Naturally, many fractional CFOs see the hype and wonder if they should offer to give away a month of fractional CFO services for free to demonstrate their immense value.

Could THIS be the marketing magic that unlocks a steady stream of new fractional CFO clients?

Not so fast, kimosabe.

While this sounds great in theory, it doesn't work for fractional CFO services. Not only does it not work, it actually sets you up for long-term struggles.

There are three primary reasons it doesn't work.

#1 Time and Cost

In Alex's examples, he talks about giving away things like a 10-minute massage and then upselling packs of more massages. Total time investment is about 10 minutes and $15 of labor.

The math works.

But the idea falls apart quickly when you consider giving away a month of fractional CFO services. Just think about how much time it takes to do onboarding alone - much less the financial analysis, forecasts, or projections.

You're easily in it for 10-20 hours at a cost of approximately a lot of money.

It just doesn't work.

#2 Price Anchoring

One of the most overlooked downsides to offering high-value services for free (or even at a reduced price) is price anchoring.

I wrote this blog, in which I explain why you get bad referrals when you offer price discounts to clients in exchange for referrals.

The same concept applies here.

When you offer your services for free or even at a reduced price, the client anchors your value at the lower price they initially paid.

When it's time to pay up for the next month, they tend to nope out.

And that isn't limited to just expensive fractional CFO services.

In Alex's example of giving away massages, he even suggests that as much as 90% of buyers WON'T take the massage package upsell after the free massage.

That works when you're slinging massages at a $50/hr labor burden.

Not so much for fractional CFO services.

#3 He's Not Suggesting What You Might Think Anyway!

At first glance, it might appear that Alex is suggesting you give away a month of your fractional CFO services.

He's not.

What Alex ACTUALLY suggests is that:

✅ You should give away SOMETHING
✅ It should have a standalone value

Is a ten-minute massage valuable without purchasing anything else later?

Absolutely.

In contrast, let's say you gave away a report explaining that your back hurts because you need a massage. The reader would think, "Yeah, no kidding. I already knew that. This is junk."

You already know this to be true. Think about the number of newsletters businesses send out that offer 0 value. This is a feeble attempt at giving away something for nothing. They then try to get you to buy. Are you ever inclined to actually purchase?

Probably not.

So what can a fractional CFO offer that is both time and cost-sensible and offers standalone value?

Here are a few ideas you might consider:

#1 Financial Health Assessments

This is something my firm is exploring right now.

The assessment would cover a range of areas, from the quality of accounting to owner's comp to performance against industry standards. We might include five areas in total.

Each section would explain what we reviewed, why it's important, our findings, and some recommendations for improvement.

We might even include a fancy scoring system with cool colors.

For this to work, we'd have to create a high-quality, fast, efficient, streamlined process.

It might just be a banger of a lead generator.

#2 Video Content

There aren't enough people in our industry creating quality video content about financial strategy.

It's a total shame.

The good news is that there's almost no competition in the space!

And if you're willing to niche down and create quality video content for, say, CPG businesses that operate on Shopify, that's true blue ocean territory!

#3 Workshops and Seminars

If you're willing to go full bold, consider offering a free Zoom workshop. If you're all in, do it in person.

The workshop should teach the audience something valuable.

When they leave, they should have solved a specific problem or, at the minimum, understand how to solve it.

Please don't use this as an opportunity to tell a Zoom room full of people why they should hire a fractional CFO. Your job is to add value.

Serve well first.
Sales will follow.

Giving away a month of fractional CFO services for lead generation is probably a bad idea.

But there are countless other ways to generate standalone offers that create big value for your ideal clients.

Which one is right for you?

I don't know.

Try out a few, see what resonates, and enjoy the sales that follow.

Your Coach,
Michael

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

  1. 1:1 Coaching with Michael King -Get hands-on support and fast track your firm’s growth by working directly with me. 

  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 Fractional CFO firm (including live Q&A). Plus you'll get access to our private community of nearly 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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