EP 29: Do You Need a Virtual CFO?

KC Chohan  1:59  
Thank you so much for having me on.

Ed Mysogland  2:01  
I didn't do that introduction, justice. So if you don't mind, can you go back and give us a little history about how you came to gather CFO?

KC Chohan  2:11  
Yeah, absolutely. So if you can imagine a kid growing up in the countryside of England, there's lots of beautiful green fields, rolling hills, excuse me, running around playing in the mud on the grass with my dogs. Basically, it was me as a kid, I was very hopelessly curious. I had a desire to grow, which kind of led me into business. And a big interest in solving big problems. I love solving big problems, and really pushing people and things to the limits to see where how far we could progress. From there, I ended up getting a degree in business and finance because I thought there were two grid skills to help build businesses, not really thinking that I would go and start my own accounting firm. From there I from university, I went straight into bookkeeping, which kind of gives me a visceral cringe every time I talk about it, because it's a little bit boring. And it's not really a good fit with my personality. But I had a job offer straight out of university. So it was too difficult for me to turn that down at the time. But I quickly realized that those that had a lot more to offer than just the basic bookkeeping, but I did want to stay in that finance accounting business area. So it was it was really apparent to me that that wasn't aligned with my unique disposition and personality. And one of the things I really believed strongly in is that to be successful, you need to be in a place where you thrive. So so that then led me on further in my career. I'm much more of an outgoing person than I am an introvert. So the idea of becoming an entrepreneur is something that kind of just fit well with me. So yeah, so then, so unlike most of the people from my university days, they mainly move to London or Dubai and but we're basically in investment banking or finance. I moved back to my hometown and started this job and quickly changed and worked then got a job with flosser, which is where I set the majority of my learners. So philosophers fantastic, it's a big fortune 500 company, I did eight years, relocated two times and then eventually out here to where I am today in Los Angeles. After those eight years and nearly a decade of working with with flow surf, I really had enough of the corporate lifestyle was nearly a decade worth of doing mundane flows, cash flow analysis, forecasting, budgeting, building better systems and processes. So it was a good Time for me to leave. And then by the time I left loss of actually, they were doing 4.7 billion in annual sales with a B. So yeah, there was, there was a lot of money there. And, but to be totally honest with you, I got very bored of corporate America. And their focus was, was maximizing everything rather than optimizing first. So it was all about perception or the results. And that really didn't sit too well with me. And more about delivering results over perception. So that's why I kind of went from the big corporate background into the startup world, I was done working with smaller million dollar companies as their CFO and CFO, or to really make a bigger impact. So at this point, I started seeing some great results, because I was able to be more hands on with the marketing people, the operations people, and kind of bring the whole team together, and help everyone understand the finance element, so we could move in the same direction. So this is where I really started the idea of together CFO. After working for a few startups, I started getting asked a lot of questions, but people quickly realized I'm pretty good at this CFO thing, and that there was a huge opportunity to add value to small business owners. So we started off helping startups initially. And then as we transitioned over the last few years, we now help companies that are doing around a million to 2 million as a minimum. But again, that does include hyper growth companies. So even if you're on the lower end of that are below that, if your desire is to really grow and really hyper perform, then that we do consider that as well. But ultimately speaking, we, we help people better understand the numbers and metrics so that they can control our business that they're in whichever direction that is, whether it's a sale an acquisition, or whether it just wants to keep all of a healthy business to generational wealth.

Ed Mysogland  7:10  
You make mention of the CFO service, and one of the things I guess I always want to know is what makes a good CFO.

KC Chohan  7:17  
So one of the things that we pride ourselves on is being able to explain the numbers to non financial people, and not have their eyes glaze over. Now, that might sound like a small thing. But

Ed Mysogland  7:30  
that's a huge thing, going into

KC Chohan  7:33  
many CFOs, and you will probably be very bored. The majority, not all of them. But the majority of CFOs are a little bit old school traditional, and they don't really deliver the information in a way that's enticing to the end user. So we kind of present our parts in an apple esque fashion, we spend a lot of money on UX design to make sure that our reports make sense. People can understand them, even if they are non financial people. And that ultimately, you can make better decisions to grow the business. So I think a lot of it boils down to communication, and really knowing who that end user of the information is.

Ed Mysogland  8:17  
Well, you know, one of the things that we started talking about before I hit record was working with someone virtual is a difficult proposition. And it it always is it regardless of what it is because I think especially in the in the world of the baby boomer, it's hard, if you can't touch and feel and see that person that causes me a little bit of anxiety and and even even with the platforms, you know, the zooms out there and the go to meetings, it still it still causes, you know, some some challenges. And with you working in accounting, I would assume that it's it's even more amplified. So my question has more to do with how do you make this painless and comfortable for the business owner to use it? Because I know when people outsource, you know, they wish they had done it a long time ago.

KC Chohan  9:08  
Yeah, so we actually have a very robust system to help. With that. I would say 90% of our clients are actually virtual and remote. And we only have 10%. That's local. And that means local to a CFO. So we have a network of CFOs. So the way we kind of differentiate ourselves from other firms is we have a kickoff meeting to start off with, we learn about you, you learn about us, we go over some tools and processes. And then before we get into any engagement with anyone we perform a CFO roadmap, a deep dive sort of speak, where we're really going into the business, we're understanding what is happening, what isn't happening, what the goals are, so we can see where the gaps are really. And then we we create a presentation or a report for the business owners on the lead. Is your team. And we go over that. So in that report and documentation, we're really connecting with the people. We're understanding what their needs are, do they like to see reports that are printed and bound and given to them physically? Are they happy reading reports on a laptop? Do they want reports to be delivered in person as a presentation? So we're kind of, we're building up that relationship as we do that first step of work. And then once we've got to that stage, we are then at a better place in a better position to accurately say, Hey, this is what we think needs doing right now. This is what potentially needs done going forward. And getting their feedback on that. So it's very much we learned to date people before we married them.

Ed Mysogland  10:48  
Yeah. You know, the reason I started this podcast was, you know, I wanted to help people understand what, how to create, preserve, and then ultimately transfer value. And so in that framework, I mean, how do business owners think about business value as they're working with you? Or are you coaching them into you know what, at some point, you're going to be out of here? And I don't know when that is, but you should probably start thinking about the value and exit strategies, do you? I mean, do you get into that? Or are you just, you know what, let's talk about growth. And we'll worry about exit later? No, no,

KC Chohan  11:26  
we definitely get into that early stage, it's all part of the goal setting. So for us, it's very, very important to understand what the client's goals are. So obviously, everyone's goals are all different, but to understand if a client is looking to expand our cell, or just keep a business for generational wealth, or fix a business if it's not performing too well. So once we have a clear understanding of those goals, we then dig into the numbers. And we make different decisions based on those goals. So it's, it's a key part of of knowing what the owner of the business actually wants to do so because you would take a different strategy if someone wanted to merge or acquire another company versus selling their own companies, two completely different financial strategies. So we need to have that in mind front and center from the off so that we can engineer the business in the right direction.

Ed Mysogland  12:25  
Well, how hard is it to pivot in that scenario? So I'm looking at growing through acquisition? Conversely, I'm looking at organic growth. I mean, is that a is that an easy pivot? I guess how much runway do you need in order to effectively help that business do what they wish to do?

KC Chohan  12:43  
It's all about timing attention, if you you will grow where you put your attention. And when you put your focus. So if the focus is then split 5050, or if you really want them to have an acquisition or a merger, that's where you put your attention, then we can attract that and we can line up getting ready for that. But more importantly, getting ready to where were you getting the most value out of your business? Because you put a lot of hard time and blood sweat and tears into growing the business, it would be? It wouldn't do it justice to not sell it for the right value it was really worth just because you didn't have the numbers set up in the right way. So in order to really answer your question, it's not difficult to pivot. It's just a matter of putting more time and attention into that area.

Ed Mysogland  13:31  
Well, I'll tell you one of the hardest things and you and you brought it up, but it's, it's the attention and a business owner were so many different hats. You know, when you start your process and you and you begin working with the business are how do you how do you transition from? This is not about X's and O's. Now we need to talk about allocation of time, and how collectively we're gonna grow together. How do you do that? Because I know every guest that I've had on this podcast has expressed the same thing that it's easier for a business owner to write a check than it is to give the attention. So I mean, how are you doing it?

KC Chohan  14:08  
Yeah, it's the hardest part is to get the attention of business owner because understandably, they have hundreds of fires to be putting out all at the same time. The way we do it is looking at the scoreboard, we have a set dedicated time, whether that's weekly, bimonthly or monthly to sit down and really get that one on one time with the business owner. And if the business owner can't commit to that, then they're not a good fit for us. We're very selective on who we bring in. And that's, again goes back to our initial process of the CFO roadmap and then the report because a lot of that roadmap that usually takes between three and four weeks to complete. And we're always asking for a lot of information and a lot of back and forth. So during that process, we can pretty much see very quickly if at is going to be a good client for us to move forward or not based on that responsiveness, and that attention to detail. And if we don't feel that we're getting enough of that, then we wouldn't want to work with that person. So it's kind of a pre filter for us.

Ed Mysogland  15:16  
Sure. In the research I did, prior to the to the interview, I mean, you're, you're known about helping companies grow. So what kind of tips that the audience can easily implement to help them grow.

KC Chohan  15:32  
But first one is have a very good scorecard. So if you have a really good scorecard, and this is numbers, metrics, and whatever other good indicated information, there is to make better decisions. If you have a solid scorecard in your business and you're in, you're reviewing it weekly, that's one really strong, basic principle to help you get ahead of potential issues. So that's one of the things we implement straightaway. or improve on if people already have a basic scorecard, we go in, and we really dig into what a good metrics to be looking at what indicated metrics rather than just, oh, my sales went up on my sales went down, but to really get into what are the drivers that are driving those activities. And then another one would be right people, right seats, so you might have a really, really good member of staff, but he just might be in the wrong department, or in the wrong area. Now, changing that member around or letting that member go, is a very difficult decision. But in the long term, it's going to be the best decision for the company. We have a lot of pushback when we get to this one. But ultimately, right people, right seats is a fundamental, if you don't have a right team around you, you're not able to scale to that next level, and you're not able to kind of get the full value out of your business. And then the third one I would say is systems and processes. If you have solid systems in place and processes that your staff can follow, then that just gives ultimate clarity. And regardless of if you have staff turnover, people are sick, someone could come in, pick up the procedure and follow it through. That's, that's when you get into an ideal set.

Ed Mysogland  17:26  
Yeah, so it sounds an awful lot like EOS. I mean, the based off the book traction. I mean, we're and we have a private equity group here in Indianapolis that actually acquired the EOS franchise, so to speak. And so, you know, Indianapolis is a hotbed of, you know, EOS implementers. So, it's interesting, because I'm hearing that a lot. And I think, I think you're right, and and do you come alongside the EOS implementer? Or are you in and I should probably say, you know, most EOS folks are probably self implementing, do you come alongside them? Or do you work with other EOS implementers to work together, you work the financials, they work on the implementation of, of system and process, it's

KC Chohan  18:15  
definitely side by side, we get involved in the implementation or the execution of that we just we just fundamentally believe in in the framework, I think it has a lot of power. And it makes a lot of sense. So in terms of the financial metrics side of it, it's exactly what we do. And that phrase in such a powerful way that put other tools on top of that with the vision tools, the VT RS and, and things of that nature, which is all perfectly fine. But when we get down to the real meat and potatoes of it, which is the numbers, what are we doing to drive those numbers, a lot of the things it all, it all circles back to two real things, systems and processes as one and having the right people, if it doesn't have those two fundamentals, it's going to be very difficult to scale. So if they're in place, then you can then put the scorecards on top of the financial metrics on top and kind of staff, a really powerful company that

Ed Mysogland  19:15  
I know you've worked with lots of business owners, and, you know, over the course of of working with them, have you seen any habits that the business owner has had that are practices that they do that that attributed to an increase in business value?

KC Chohan  19:33  
Yeah, I think the first one is making decisions. The most successful business owners that I've worked with all make decisions very quickly. They get enough information where they have a level of comfort, but they act fast. They're not dwelling around waiting weeks to make a decision because time just goes by way too quickly these days. So that would be a big one. Another one is my instead meditation is getting into a daily ritual kind of personal development, making sure you start in the day well, and a lot of a lot of the CEOs and myself included, I do a Tony Robbins 15 breathing ritual at the start of every day just to kind of get me in the right frame of mind to take on the day, I find that very valuable. So yeah, those are kind of the main two. But ultimately, if you surround yourself with a strong team, and you have leaders around you that are bringing you different perspectives, but also solutions that helps

Ed Mysogland  20:35  
you we're talking about meditation, do you use a particular app,

KC Chohan  20:39  
there's a there's a lot of ones, headspace is a good one. But I just go on to YouTube, really, and type in Tony Robbins. Breathing ritual.

Ed Mysogland  20:49  
So I'm a headspace guy. So I, I know what you're talking about. And I agree with you. And the I also agree with that. And it came from my mother, you know, if you just make your decision, you have a 50% chance of being right. And it's true. So we should why prolong the decision? So yeah, I'm, I'm with you there. So when we look at using your service, and, and a business owner is able to extract this role from themselves? What have you observed how a business owner was able to do that, because I think that's that's always where the friction is, is is number one, relinquishing control. And then number two being, okay, passing, it's not going to be as painful as as you think to offload this responsibility from you two together, CFO, any thoughts on on how that happens? Or tipped,

KC Chohan  21:44  
it takes a certain level of trust, before you can delegate the numbers out, it's such a, it's such an intimate part of any business. So we definitely understand that. And we're very sensitive around that. So we have to build up a level of trust. And sure, the CEO that we can really add value, and that working together is in his best interest, because we are specialists in this. And we do this all day, every day and have done for many years, and had a lot of success at it too. So it's, it's kind of, they need to have the self awareness first, that they can't do everything. And part of our initial kind of onboard into takes takes into account where we pretty much need to hear that the CEO says in their own words, I need help, I can't do this all myself. And once we get to that frame of mind and that stage, where they're happy to say, okay, this person actually does really acknowledge that they can't do all of this, they want to scale this business from a half a million dollars up to a $4 million company, then you need to bring in a team to do that. So once we're in that stage, in that frame of mind, it makes our our lives a lot easier.

Ed Mysogland  22:57  
Well, the funny thing is, and we plow into it all the time is is okay, so you're going to have to, let's just say you're going to have to pay $20,000 a year for this. And there's a disconnect between the amount of money that they're paying, versus the the amplified value in doing so they don't they they would much rather and what's it called cognitive bias, where I would much rather keep what I have. Because it's known and it may be the wrong decision, then go out into the, into the unknown. But I wish all business owners would understand just how integral the the integrity of their financial statements are in the process of valuing as well as selling a company. So and I'm certain you've probably been part of some sales. I mean, what are some of the due diligence items or areas that the business owner just needs to focus on? In order to be successful in order to sell?

KC Chohan  23:57  
Yeah, so just check the first part of that question. The simple areas are no people don't understand that if you see if that's just a company doing 10% margin, you save $10,000 So you increase the profit by $10,000 in that company, that saves the company having to go make $100,000 worth of sales. And when you put it in that context, business owners don't often see it that way. It's like how much extra effort would you have to do to create another $100,000 worth of sales are if a skilled person can go through your p&l and cut out $10,000 worth of excess expenditure?

Ed Mysogland  24:39  
Right. And we see the same thing I mean, unfortunately, when I when I give some bad value news to a prospective owner their immediate inclination is I need to go increase revenue in order to close the value gap. From my standpoint, it's it's no that we let's fix the engine first and Then we'll add the gas. And boy, I wish every business owner could understand just, you know, their expense is so much more important than than the revenue and not the saying it's not important but but fix the engine first. And I think that's where you come in.

KC Chohan  25:16  
Yeah. And it's what I said earlier as well, where it's results over perception and optimizing before maximizing. So we very much look at the ways we can improve, get the analytic con saying, but the low hanging fruit in place and kind of Polish things up, and then we can hit the scale, scale up and kind of get the true value out of the business after that.

Ed Mysogland  25:40  
So what the business hours you're working with, are you seeing them more as lifestyle business owners or legacy builders,

KC Chohan  25:45  
we have a mixture of everything, which is why it's very important for us an early stage to identify which pockets where the goals are, for each individual business, no two businesses are the same, and no real business owner has, has exactly the same needs. So we very much tailor what we do for each one of our clients.

Ed Mysogland  26:07  
Out of curiosity, how does a business owner that's focused on lifestyle different than someone that's focused on on legacy,

KC Chohan  26:14  
so if a legacy business owners just looking to kind of continue on in the same vein and form that the business has been for many, many years, there's not really a lot of, once we've optimized it, and tweaked it and got it really performing? Well, there's not a lot more within a push in terms of, hey, let's look at an acquisition, let's look at a merger, let's buy this, let's expand. Let's increase everything in terms of the revenues and kind of building a new factory or whatever that expansion looks like. Whereas if someone's in the business for lifestyle, and they want to, they want to maintain and create a certain level, that could change quite quickly in terms of their lifestyle needs, they might just want to buy a private jet. So now all of a sudden, we've got to figure out a way to make the company be able to fund a five or $10 million jet. Okay, so what are we going to do to get this increase in cash flow and profitability without harming the company, so we'd be a lot more agile with the lifestyle people. And we have, one of the things that we specialize in, excuse me, is, is taxation setups, and trusts and formations. So we work very similarly to the likes of Bill Gates, Warren Buffett, Tony Robbins, and the Rothschilds. And the list goes on pretty much all the most influential and powerful people in America, they all have a very complex setup of trusts and formations. And for the clients that need that service, we offer that as well. So that's one way where we specifically helped people create generational wealth, all legal on both wall and it just limits the amount of tax that they have to pay.

Ed Mysogland  28:11  
Well, I want to be sensitive to time. So I've got a couple more questions. And the first one is outside of having a good scorecard and having the right people in the right seats, what would have the most immediate impact on a business

KC Chohan  28:26  
in terms of salary, not just in terms of understanding what's going on in it?

Ed Mysogland  28:30  
Either or, I mean, because I think one facilitates the other

KC Chohan  28:34  
one, it's knowing your numbers and having them correct. So fundamental, all of the things that we spoke about is making sure the books are correct and accurate. And in order, because the worst thing that can happen is if someone's doing due diligence on your company, and they realize that there's some discrepancies with the numbers, because then that loses the trust from the offset, and it's going to make the transaction drag out a lot longer, and more than likely, you will not get the value that you expected.

Ed Mysogland  29:05  
So what's the best way we can connect with you,

KC Chohan  29:07  
you can reach me at my website, which is together cfo.com. Or you can shoot me an email directly, which is just Casey, the two letters Casey at together cfo.com. I actually have a little special surprise for all your listeners, if they go to three steps to profit.com. I've got a free ebook there for for all of the listeners.

Ed Mysogland  29:30  
Well, that's awesome. Well, thank you. So Casey, thanks so much for being so generous with your time and experience. I mean, I really, truly appreciate it and I know our audience appreciates you helping business owners maximize their value. So for all you listening, you know to learn more about Casey go to together cfo.com And I'll have everything in the show notes, especially the downloadable eBook about three steps to profit. So Casey, thanks so much for been so generous with your time and experience. You know this, this is an important topic on especially when we're working with financials and the success of the business. So I appreciate your time and like I said, to learn more about Casey go to together, CFO. And Casey, thanks. Thank you so much for being a defender of business value.

KC Chohan  30:18  
New welcome. Thank you for having me on. This was

Ed Mysogland  30:21  
another episode of the defenders of business value podcast for more episodes packed with strategies to increase the value of your business, visit defenders at business value.com For shownotes transcripts in free tools to start you on your journey. Subscribe now, so you don't miss any future episodes. Hoped you enjoyed my conversation with Casey Casey. Casey brings an awful lot to the table. He has done a lot and he has seen a lot. So before you go, I suggest you go over to defenders a business value. We have all the links to everything we've discussed in the show notes. And I hope you go there because he has a free PDF download for you. And while you're there, sign up for the weekly newsletter, the legacy exit newsletter. If we can help in any way certainly reach out to me. My email is Ed at defenders of business value.com I'll be happy to do what I can to help. Thanks and have a good week.