In the last edition, I told you your priority list is likely out of order, and I said that if you've never defined your scope of work, that's your "item one".

So let's do "item one" now. 😀

Here's a test you can run on any firm owner:
Ask what he/she delivers to their clients every month, then time the answer.

The good ones take about twenty seconds.

"Monthly CFO report, walked through on a strategy call. Bi-weekly check-in call. Additional support as needed. That's it."  (or whatever their scope is).

The stuck ones take like 4 minutes to come up with an answer. And somewhere in the first 30 seconds or so, you'll hear this:

"Well, it kinda depends on the client."

...and there it is.

"It kinda depends" is not a scope of work.
If anything, it's a confession that you never got your scope defined.

And it's a very very easy thing to say until you try to build a firm around it.

I ran my firm, Civil CFO, on "it depends" for years.

I thought that was just how things were done. Client needs something and I figure out how to give it to them. It felt like great customer service. It felt like the thing that was going to set us apart from every other firm out there!

What it actually did was put me on hard mode for about 6 years.

Your Scope Isn't a Sales Document. It's the Thing Every Other Decision Hinges Off Of.

Most firm owners treat scope of work as a paragraph in the proposal.

Something you write once, sound smart in, and never look at again.

It's not that.

Your scope of work is the input to your pricing, your hiring, your capacity planning, your processes, your automations, and (hopefully) your boundaries. Every one of those decisions reaches back and asks the same question: what exactly are we delivering? If there isn't a clear answer, you end up making it up on the spot and you make it up differently every time.

Here are 3 things that break until an actual scope exists...

1. Your Capacity Math Is a Fantasy

One Fractional CFO can carry somewhere around 8 to 12 clients. That's what most firm owners report and it's roughly what we see.

But that number assumes the work is roughly the same every month.

Loosen the scope and watch it fall from 12 to 8 to 6.

I've watched Fractional CFOs drown well short of that, not because they were slow, but because every client was a different job and with different deliverables on a different day.

Here's why that matters more than it sounds like it does.

Most firms pay their Fractional CFOs a percentage of the book they carry. So capacity isn't really a margin question. Your margin per client holds up fine whether she's carrying 12 or 6. 

But the for real real problem is what happens to the CFO.

At 12 clients she has a career. At 6, she's earning half as much for the same 40 hours, because the work per client doubled while the fee stayed exactly where it was.

She will eventually do that math. 

And when she does, you no longer have a capacity problem. You have an open seat in the hardest role in this business to fill, and a client roster that has to go somewhere in the meantime.

Now run it forward. Every seat in your firm produces a certain amount of revenue. Cut what one CFO can carry and you cut revenue per seat by the same amount, which means hitting your number takes twice as many people. Twice the recruiting, twice the onboarding, twice the ramp time, twice the people management, twice the odds that one of them doesn't work out, twice the suck.

No thanks.

Here's what makes this one sneaky: it never shows up looking like scope. It shows up as "we can't find good Fractional CFOs, and the ones we find don't stay."

Inevitably, that leads you to thinking that you have a hiring or recruiting problem.

So you go fix your recruiting.

(Spoiler alert: your recruiting was never the thing.)

2. Your Hiring Is a Coin Flip

Try writing the job posting.

What experience are you looking for? Depends what the person is going to do. What software? Depends on the client. What does a strong resume look like for this role? Great question, boss!

So you hire on gut feel, which sometimes works. Then day one arrives and it's time to onboard them and you hit the proverbial brick wall: how do you actually onboard them?

You can't hand over a process that doesn't exist. So you hand over a client and some version of "take good care of them!" and now you have two people improvising instead of one.

Congratulations! You have doubled your improvisation capacity.

This is also why so many firm owners struggle with hiring. They're hiring into a hole and no candidate on earth is good enough to fill a hole with a completely unknown depth. 

3. Your Clients and Your Team Are Both Low-Key Annoyed With You

Client A gets a 13-week cash flow forecast. Client B doesn't, because you were slammed the month you onboarded her and it never got added.

Client B is paying the same as Client A.

Client B will eventually find out.

Meanwhile your team is getting jerked all over the place. They signed up to do one job and they're doing four, and the fourth one changes every month depending on which client yelled loudest. They can't get good at anything because nothing repeats.

Here's the most brutal part. Neither group tells you (until it's too late).

The clients don't complain. They just slowly stop feeling like this is worth what they're paying, and one day you get an email that starts with "we've really valued our time together, but..."

Oof.

The team doesn't complain either. They just stay quiet until one day they get a recruiter call or an offer to work somewhere else and then they take it.

I know how this story ends because I did it to myself. More than once. I burnt out and I burnt my team out with me. Our clients got frustrated because our deliverables were inconsistent, and my team got frustrated because they were getting yanked in six directions. I spent a long time thinking those were two separate problems with two separate fixes.

They were the same exact problem.

Your Challenge This Week

Open a blank doc. 

Write down the exact list of deliverables every client gets every month. Not what you're capable of doing. Not what you'd do if they asked. What every single client receives, every single month, without exception.

Then pull up your three largest clients and compare that page against what they're getting right now.

Count the differences.

That number is your capacity problem, your pricing problem, and your hiring problem, all wearing different hats and standing on each other's shoulders in a trench coat.

And if you sit down to write the page and find you can't fill it out?

That's your answer.

You don't have a scope of work.

You have "it depends."

Your coach,
Michael