1939 – Understanding Your Business Finances with Synergy CFO Solutions’ Tom Griffiths

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1:05With us right now, it's Tom Griffiths. Tom, you are the founder of Synergy CFO Solutions. Your website is synergycfosolutions.co. Tom, thanks for joining us. That's right, Josh. Pleasure to be here. Thank you. Absolutely. I suspect that you are also a CFO, but I'm just speculating. Yeah, that's an accurate speculation. Yeah. CFO to small businesses. Yeah. Well, tell me a bit more about the work that you do and who you serve. Sure. So I guess it all starts with business owners not really knowing or understanding their numbers and then knowing or not knowing what to do next to actually improve their profits and cash flow, keep the business healthy and then grow it and achieve their goals.

1:53so that's what it all comes down to and that's where kind of my role fits into what I do with my clients essentially helping them get clear on the numbers understand what's working and not working and then what's to do next most importantly so that they can improve profits and cash flow to ensure the business stays healthy and then actually achieve their goals so yeah I mean everyone knows how much is in their bank account and that's usually what drives their you know gut feelings of how things are going in the business. And then often based on that, they kind of think they know what's going on in the business.

2:25You know, are we busy with work? Can we make payroll? And have we got lots to do? But that's the mindset that keeps them stuck in a job and stuck in that hamster wheel instead of moving towards having a business that actually runs almost on its own and healthily and produces consistent cash flow and profits. So they're stuck in the business are not working on it. Yeah. What would be some examples of folks that you've worked with where, you know, maybe they looked at the balance and they said, ah, things are good. Or, you know, they said, well, everyone's busy here. So again, business must be good.

3:00But then, you know, once you start drilling down and looking at some of the numbers, you're like, it is good, but it could be better based on the fact that they've spent some time, And, you know, kind of being able to look at reports that they make, you know, which is great. A great CFO is going to present things in a way that everyone can understand. But I'm sure you've had some examples of this where the numbers tell a tale. Yeah, absolutely. So the one that springs to mind, one of my clients, Rhys, he runs a sports events company. and he and his business partner when I first started working with them they said you know everything's great you know the business growing year on year we're really busy we're probably too busy if anything but the problem is that at the end of last year my wife said to me how much money did you make last year because I don't understand and my client Rhys he said I don't know I don't know how much money we made because the amount on the profit and loss or the income statement in the financial reports um pretty it said a nice healthy number but the amount of cash that was actually in the bank account was completely different completely different number um and so what i had to explain was actually cash flow and profits are not the same thing and you can make a profit you can make 100 grand in profit but actually if you haven't got any cash in the bank account because you had to pay for stuff for the following year or you had to pay last year's tax bill you haven't got any cash to pay yourself so profit's lovely but cash is more important um so yeah that's one example um another one could be uh another one of my clients uh Yamuna um so he was they were doing they were doing really well growing really quickly um and they were they were doing about 500 500 grand a month marketing or coaching agency um and they wanted to get to a million and he sort of said right a million a month that is he sort of said right uh I think I just need to carry on doing what I'm doing here and I'll get to a million um and when we looked a bit closer we realized that actually they couldn't get to a million given what they were currently doing in cash flow, because the amount of cash flow that was needed to actually get to a million required actually putting more money in or managing it in a much more sustainable way.

5:10And so that's essentially what I help them with. Yeah. And, you know, lest a founder or a CEO feel badly that they're somehow mismanaging their company or they're being naive or they're being not doing what they're supposed to do. I'm wondering if, Tom, maybe you can absolve a little guilt for us. Yeah, absolutely. I mean, I think it's very rare for a small business to actually be managing their finances, quote unquote, perfectly. I think most business owners, they start their business because they're experts in a craft. And the reason they started the business because they want to focus on their craft the dentist starts the dental practice a builder starts a construction company a plumber starts a plumbing company but often they'll start the business and then a few years down the line they realize that actually they don't know how to manage their cash flow and profits so actually the business is in an unhealthy state and what they've ended up creating for themselves is a very stressful low-paying demanding job and actually very often actually in the case of my my family's he he sort of said to me you know I've been doing this four or five years I've been paying myself the bare minimum I've got very little to show for it and I could have just got the job instead it would have been much less stressful much less risky for my family as well so yeah I I would I would say that firstly and then secondly the the reason most businesses fail and the SBA quotes something like 50 percent about 50 percent of businesses go out of business within five years and the reason they go out of business is because they don't generate enough cash and whatever the the headline reason that the business fails what it comes down to is cash because nobody would close a business that's generating enough cash and so if a business owner shifts their kind of goal posts and shifts their focus to my goal is to keep the business healthy and to improve profits and cash flow and make that the center and the centerpiece around which they design everything else they do in the business, then I think the results will be entirely different.

7:23And that's basically what I help my clients do. Yeah. At what stage should someone start getting pretty serious about bringing in a fractional CFO? Yeah. So the word fractional CFO, it means it can mean different things to different people um so a cfo is basically somebody who guides the owners on how to improve profits and cash flow um so that the owners of the business or the ceo knows what's working not working and they can make the best strategic decisions going forward um you know for bigger companies that means managing the entire finance function as well um in the context of of kind of what i help my clients with i i wouldn't generally manage the finance function i would just focus on that profits and cash flow piece.

8:10So for a business that's making one to four million in revenue, dollars, pounds, euros around that mark, that's basically a good time to have somebody guiding you on this stuff. Beyond that, you can generally look to hire someone in-house and probably full time. And below that, you're probably not quite ready. That being said, you do still need the support. And actually a lot of what I'm hoping to produce over the next few months, probably six, more like six months is that a lot of free content for those people or business owners under that sort of 1 million mark who do need that help and who need to guide them on actually getting up to that 1 to 1 million mark.

8:47Yeah. Is that, you know, to someone that's never hired, you know, someone to come in with that more of that financial leadership position, how does it, like, what does that typically cost? And because I, you know, I would imagine that there's, it's not like a, you know, fractional CFO can just come in and say, okay, well, I'm just going to give you a couple of hours a month. Like there's probably a little bit more work to that than, you know, just an engagement. So minimal. Yeah. So it really depends on what I'm going to be doing for my clients. But I mean, to give you, to give you a range, you're talking probably one to four or one to five thousand a month um that's just a guide you know for some it's going to be less than that uh for some it's going to be more um but what what we make sure of is that whatever my fee is is a very small fraction of the returns that the business owner is going to make and generally speaking there's no contract you can cancel at any time so um nobody's locked into kind of working with us for like three or six months or anything like that it's month to month but yeah the process is generally we would we would do a bit quite a bit of work before meeting with our clients each month we meet them once a month and we would look at what's happened in the business so we look at the numbers for the current month and then we go back to a number of other periods in the past compare the numbers get clear on what's working and not working inside the business make sure that the owner understands what's working and not working inside the business And we break it down into really simple colors, red, amber, green in different sections, depending on the part that's highlighting a problem.

10:37And then we help the business owner come up with objectives and next steps so that they know exactly what to focus on for the next 30 days or so, so that they can make sure the business stays healthy and improve profits and cash flows so that they can get to their long term goals, whether that's setting the business in three years reducing their working time to one day a week in three years whatever it may be everyone's different and the goals differ entirely but we reverse engineer it from where they want to be in one year three or five years all the way back to today and to the next 30 days and by staying really focused and making sure that the owner stays really focused on focusing on the most important thing or things for the next 30 days and repeating that process end month on month, we can make sure that the business either stays on track or gets on track to achieving the longer-term goal for the business owner.

11:26Yeah. Your website is synergycfosolutions.co. You've got some resources here, including some free trainings. Do you mind maybe just sharing a bit about, you know, kind of what you contribute, what you give, and, you know, or a friend that's listening, what they might be able to dig into? Yeah, there are a few bits on there. So there's a free cash flow forecast. So you can download that, use it. It's got instructions on how to use it. I also run webinars once a month. There's a link on the website that you can sign up to the webinar. Or if you think you're not quite ready for either of those yet, there's also a link to a page called the 16 drivers.

12:05And what that outlines is the 16 drivers of revenue, profit and cash flow for any business. It doesn't matter whether you're Uber, Amazon, or a one-person dental practice on a high street. Exactly the same drivers. And so it's a free report. It breaks down exactly how each driver works, how to calculate them, and then more importantly, what to actually do once you know what those drivers are so that you can move everything in the right direction for the business. In particular, yeah, do you mind sharing just a little bit about this? You've got a free training on profit systems. You got a free 13-week cash flow forecast.

12:43Do you mind maybe just sharing just a little bit more about what those are and why someone? And by the way, to our friend listening, very simply, just click and open up your podcast app right now. Go back to your phone or wherever you're listening to this. Click on, there should be like a little eye icon for information. Click around. You want to find show notes because we've got a direct link to your website, Tom. Again, centergcfosolutions.com. And if you scroll down or you click on resources, that's where you'll see these free gifts that you have available. That's it. Yeah. So like I said, so the cash flow forecast, the reason that's on there is because most business owners don't have any kind of cash flow forecast in place.

13:23They don't know what's coming in and going out of their month on a daily basis, weekly basis, monthly basis. They don't, you know, sometimes they might have a bill due in a month or two months. They might be due to receive payment from a client in a week or three weeks. And then they might have last year's tax bill that they need to pay. And so what this does is it takes profit out of the equation and just looks at cash for the business because you need to make sure the business never runs out of cash. If the business runs out of cash, the business is in trouble. And so rule number one in any business is do not run out of cash.

13:56And so this, you know, step number one to improving that is first to get clear on what's happening in terms of cash flow and planning or getting a clear view of what's supposed to happen over the next 13 weeks or so. And you can update this every single week so that you always know what's coming in and going out over the next 13 weeks. And then, yeah, once you've got clear on that, if you see any problems coming up, you can address them rather than just being caught the day before a massive bill's due and realizing you don't have enough cash in the bank account. yeah that's number one that's the cash rate forecast and then there's a free training which basically goes through the title of the training is own a machine not a job and it runs through why it's important to basically change your mindset around how you view your business so instead of viewing it as a vehicle through which you practice your craft which of which you're an expert in view it as something which is the vehicle to help you achieve your goals and whatever your goals are the way you're going to do that is by making more money in your business whether it's in whether you have an impact goal whether you have a financial freedom goal time freedom goal whatever the goal is the way you're going to achieve it is by making more money in your business and so this this training basically helps you kind of change the way you think about your business and then some actionable steps going through those 16 drivers that i mentioned on the other report earlier, how to calculate them and then how to actually implement a simple system so that you can review the numbers every month, get clear on what's working and not working and then know what to do next so that you can improve the numbers.

15:30Love it. Synergy, CFO, solutions.co. Tom Griffiths, you are the founder, the CEO, and I would suspect CFO for your company. But Tom, it's been great having you. Thank you so much for all the insights that you've shared. And again, thanks for so much. Thanks so much for being a guest. Pleasure. Thank you, Josh.

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