How to Become a ‘Successful’ Outsourced CFO
As outsourced CFOs, our primary function is to help our clients be successful (however they define success).
But, how do you define success? How do you know if you’re successful?
If you’re like most people (especially entrepreneurial-type people), the level of success you feel is probably related to one thing: how much control you have.
Specifically…
How much control you have over your time.
How much control you have over how much you make.
Having control over your time means that you decide when you work. You’re no longer at the mercy of tax filing deadlines. You’re no longer at the mercy of waiting on clients to provide you with documents. You’re no longer at the mercy of the quarterly ‘close’.
Having control over how much you make means that you dictate your pricing. You’re no longer letting your competitors dictate your pricing. You’re no longer letting your clients ‘price shop’ you. You’re no longer hoping you’ll retain tax clients (considering you probably haven’t had any communication with them since last tax season…).
So, how do you get control? How do you, as an outsourced CFO, become ‘successful’?
Here’s a few tips to do just that:
Tip #1: Determine Your Goals
Tip #2: Determine Your Gap
Tip #3: Have a System for Bridging the Gap
Tip #4: Niche. And, Then Niche Further.
Tip #1: Determine Your Goals
The first step in being in control over how much you make is determining how much you want to make.
As an outsourced CFO, there are really just four drivers that drive your revenue:
- Total Leads: The number of leads your practice receives each month
- Conversion Rate: The percent of those leads that converts to a paying client
- Retention Rate: The percent of your clients that you can retain each month
- Average Client Fee: The amount you’re charging clients each month
So, to determine your goals, set ‘targets’ for each of these four drivers.
You’ll be surprised how easy it can be to get to a $250k CFO practice. For example, let’s say that you set the following targets for the year:
- Total Leads: 78 for the year
- Conversion Rate: 25% of all leads converting to a client
- Retention Rate: 90% of your clients retained to next month
- Average Client Fee: $1,500 per client per month
At month twelve, you’ll have the following targets:
- Revenue Target for Month Twelve: $21,000
- If you extrapolate month twelve, your annual “run rate” target is: $250,000
You’ll be surprised how easy it is to dramatically increase your revenue by slowly, but surely, improving each of these four drivers.
For example, if we changed the average client fee to $2,000, your annual run rate target would jump to $336,000. And, that’s changing just one driver!
Tip #2: Determine Your Gap
The “gap” is simply the difference between your goals and where you are now.
If you want $200k in revenue, but you’re at $70k in revenue… you have a $130k gap.
Now that you’ve set goals, the next step to determine your gap is to determine where you are now.
Simply determine where you are currently for the four drivers of revenue:
- Total Leads
- Conversion Rate
- Retention Rate
- Average Client Fee
You’ll probably find that you have a bigger ‘gap’ in one or two drivers than the others. For example, if you’re doing well on ‘conversion rate’ but not doing well on ‘retention rate’ problem then you know which ‘driver’ needs improving in order to close the gap.
So, instead of working on all four drivers, you’ll now know which drivers to concentrate on.
Tip #3: Have a System for Bridging the Gap
Once you determine which ‘drivers’ you need to work on (in order to close the gap), you need to have systems to actually help you work on the drivers.
We are big believers of systems. A system is simply a process that will allow you to scale your practice. (Otherwise, whenever you take on a new CFO client it will feel like a part-time job).
We (at The CFO Project) have created systems for each of the four drivers:
- Total Leads > Lead Generation System
- Conversion Rate > Lead Converting System
- Retention Rate > CFO Service System
- Average Client Fee > CFO Service System
You need a system for generating leads on a consistent basis. You also need a system for converting leads (or upselling your existing accounting clients). Finally, you need a system for delivering a high-quality CFO service each month.
This is precisely what we do in The CFO Project. We teach a lead generation system, a lead converting system, and a CFO service system (we call it the One Clear Path).
Tip #4: Niche. And, Then Niche Further.
As the saying goes “the riches are in the niches”. Why?
If you try to appeal to everyone you will, in essence, appeal to no one.
As outsourced CFOs, your future clients are (probably) not looking for you. Most business owners don’t wake up thinking, “I’m going to hire a CFO today”.
They don’t really know what a CFO does (many think a CFO is the head accountant). Much less, they don’t think their business even needs (or can afford) a CFO. They think “Coca-Cola” needs a CFO…not their $4mm construction business.
However, if you can go to a specific group of, let’s say, ‘roofing construction’ business owners and say, “I help roofing construction business owners have a growing and more profitable business” that will be way more impactful then simply saying “I help any business…”.
(As an aside, you’re probably thinking “But what if I’m not an expert in a niche like roofing”. That’s okay. You are (or should become) an expert in business and financial strategy. You’re simply picking a niche so that you can better appeal to business owners.)
So, let me ask you, on a scale of 1 (no control) to 10 (I’m Jeff Bezos), how much control do you have now?
What would it take to increase that number by just 1?
What do you need to do to ‘become a successful CFO’?
This post is written by Adam Lean, co-founder of TheCFOProject.org. Have any feedback or suggestions? Send an email to adam@thecfoproject.com.
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