Revenue can make a business owner feel like the company is winning, even while cash, margin, and operational drag are quietly telling a different story. In this episode, Craig Andrews talks with Fred Kosnac about why growth without financial context can create blind spots, especially for owners who are moving fast and trying to make decisions from incomplete numbers.
Fred pushes back on the idea that a CFO is just the “chief no officer” or a glorified accountant. The best financial leaders help owners understand what the numbers mean, how they connect to the company’s goals, and how to make investments, hires, and growth decisions without putting the business at risk.
Craig and Fred dig into the gap between historical reporting and forward-looking leadership. Fred explains why numbers alone do not tell the full story, how context changes the meaning of revenue and profitability, and why a business owner needs someone who can translate financial statements into decisions that actually move the company forward.
They also explore what happens when growth exposes hidden problems, from delayed billing to margin pressure to cash constraints. Fred shares how Crystal Oak CFOs & Advisors helps owners build a clearer rhythm around sales, margins, profitability, cash, budgets, and forecasts so growth becomes more sustainable instead of more stressful.
Want to learn more about Fred Kosnac's work? Check out his website at https://www.crystaloakcfo.com/.
Connect with Fred Kosnac on LinkedIn at https://www.linkedin.com/in/fred-kosnac-cpa/.
You can also reach Fred directly at fred@crystaloakcfo.com.
Think you'd be a great guest on the show? Apply at https://podcast.allies4me.com/podcast-guest/.
Want to learn more about Craig Andrews' work at allies4me? Check out his website at https://allies4me.com/.
Key Points
- 00:09:43 - Fred explains why strong CFOs are not “chief no officers.” Their job is to help owners make the numbers work in a way that supports the business.
- 00:11:08 - A CFO’s strategic value starts with the owner’s one-year, five-year, and ten-year goals, then works backward to protect cash and growth.
- 00:12:14 - Numbers tell a story, but not the full story. Fred explains why context around revenue, margins, vendors, and operations changes what the financials mean.
- 00:18:51 - Fred shares an example where profitability was being trapped by a billing issue, showing how finance can uncover hidden operating problems.
- 00:20:15 - Revenue growth can hide rising costs, margin problems, and capital strain. Fred explains why growth needs guardrails.
- 00:23:47 - A strong fractional CFO cadence turns financial statements into practical monthly conversations about sales, margins, profitability, cash, and next decisions.
Transcript
[00:00:17 - 00:00:20] Today, I want to welcome Fred Kosnac.
[00:00:20 - 00:00:28] He is the president and founder of Crystal Oak CFOs & Advisors.
[00:00:28 - 00:00:36] He helps business owners unlock cash, improve profitability and makes smarter financial decisions.
[00:00:36 - 00:00:44] He has more than 15 years experience as a CFO, controller and CPA. He brings sharp financial
[00:00:44 - 00:00:51] insight and real world operating experience to the table. And one thing that I do know as many
[00:00:51 - 00:01:00] businesses don't know their numbers or at least the numbers that are important. These folks like Fred
[00:01:01 - 00:01:08] help you run your business better and more profitably. Fred, welcome. Hi Craig,
[00:01:08 - 00:01:13] thanks for having me. Appreciate it. Now, I've been looking forward to it. We met probably
[00:01:13 - 00:01:21] what four or five months ago. Yeah, and I thoroughly enjoyed every conversation that we've had.
[00:01:22 - 00:01:28] And it's glad to have you on. I'm glad to have you on Leaders & Legacies.
[00:01:30 - 00:01:35] You grew up in Staten Island and now you live in Long Island.
[00:01:36 - 00:01:41] Yeah, yeah. So it's kind of the opposite of how people usually grow up and move.
[00:01:41 - 00:01:48] Because the typical progression is my parents grow up in Brooklyn. Then they move to Staten Island.
[00:01:48 - 00:01:52] Then everybody grows up in Staten Island and you don't stay in Staten Island. You move to
[00:01:52 - 00:01:58] Central Jersey. And then I got pulled the other way because I met my girlfriend now wife
[00:01:58 - 00:02:03] and she's from Long Island. So she was like, well, if you move to Jersey, that's a little too far.
[00:02:03 - 00:02:08] Things are going to work out. So I'm like, okay, I'll move the other way. So we've lived in
[00:02:09 - 00:02:13] Queens together for a few years. And then once we got married, then we bought a house in Long Island.
[00:02:13 - 00:02:18] So she kept pulling me a little further east. Yeah. Well, we were talking in the green room a
[00:02:18 - 00:02:25] little bit about the mafia presence. Do you still sense their presence there? Big time in Queens and
[00:02:25 - 00:02:31] Brooklyn, right? Yeah, a little bit. I mean, honestly, I didn't notice too too much there.
[00:02:31 - 00:02:35] I know it's Staten Island. You definitely gave me a contact with people growing up who, you know,
[00:02:35 - 00:02:42] their families are connected and things like that. I mean, I had a friend who is family
[00:02:42 - 00:02:48] bought this big house. It used to be, I think, my class cell Anno's house. And then they were
[00:02:48 - 00:02:55] doing a bunch of work on the house at one point, renovations and stuff. And they found a body
[00:02:55 - 00:02:59] or some remains or something in one of the walls. And they had to just stop everything and it was
[00:02:59 - 00:03:04] all over the news. And you know, that was, that was pretty wild. So you still still have stuff like
[00:03:04 - 00:03:11] that happened time, time to time. Yeah. Wow. I think the thing that surprised me the most was
[00:03:11 - 00:03:19] you said you, you also lived in South Africa. Yeah. Yeah. For one summer. So it was, you know,
[00:03:19 - 00:03:27] one of the benefits of public accounting. As you may have seen, so we had a, um,
[00:03:27 - 00:03:33] a succumbent program. And they would bring people within affiliate firm, bring people up for
[00:03:33 - 00:03:39] busy season to work and help out. And then the summer, they would, you would have a few people
[00:03:39 - 00:03:45] that would send down there. And you know, went, went down the opportunity came up. I put my name in
[00:03:45 - 00:03:50] and they accepted me because I used at a previous firm, I used the same auto software that they use.
[00:03:51 - 00:03:55] So they were like, oh, he knows this. He doesn't have to learn a new system. You know, bring him down.
[00:03:55 - 00:04:01] And, um, is my first time traveling out of the country. So that was, uh, scary, but also was a
[00:04:01 - 00:04:09] place that I always wanted to go because of, uh, cage diving. Um, so I'd seen, you know, I run
[00:04:09 - 00:04:13] up seeing on the Discovery Channel air jaws and all those days of the great whites that, you
[00:04:13 - 00:04:18] know, they breach out of water and it's incredible. And all this, it's like, that's what I want to see.
[00:04:18 - 00:04:23] I mean, I want to get gathered and really experienced that for myself. And so were you in Cape Town?
[00:04:23 - 00:04:29] Is that where you were working? I was. Yeah. Yeah. So we spent, uh, you know, as me and a co-worker of mine,
[00:04:30 - 00:04:35] we both went down and we spent, we spent a week in a co-worker national park. So that's on the east
[00:04:35 - 00:04:40] side, um, doing Safari. And then we, and then we spent the rest of the time in Cape Town working,
[00:04:40 - 00:04:45] working at an office there. And, um, yeah, beautiful city. If anybody ever has a chance to go,
[00:04:45 - 00:04:51] I really enjoyed it there. Yeah, I've seen the videos like right down, right there at the Cape,
[00:04:52 - 00:04:57] and the great whites just leaping out of the water like dolphins or something. I mean, it's crazy.
[00:04:58 - 00:05:02] Yeah. Yeah. You know, I kind of expected that to be like every time they got out of the water.
[00:05:02 - 00:05:06] And then it's, it's okay. This is like the one, you know, maybe once a day, you get one that has
[00:05:06 - 00:05:10] like the really nice jump and all that. But it was still, it was still a really cool, um, you know,
[00:05:10 - 00:05:16] experienced, uh, you always go ahead. Where are they chasing? When they're jumping out of water,
[00:05:16 - 00:05:20] where they're chasing? Oh, they're chasing the seals. Um, so they have the, the Cape Seals, um,
[00:05:21 - 00:05:26] they're coming back and forth from the, the main area where it happens is Seal Island. And, um,
[00:05:26 - 00:05:30] it's the name of the Cape off the top of my head. But, you know, as they're,
[00:05:30 - 00:05:32] as the seals leave the island, they're coming back,
[00:05:33 - 00:05:36] especially it's two at a time and they're alternating, they're jumps to try and confuse the sharks,
[00:05:36 - 00:05:41] but they're, you know, they're all lurking. And what makes that area unique is, I guess,
[00:05:41 - 00:05:47] the topography underneath the water dips a lot before it gets to the, to the actual island.
[00:05:47 - 00:05:52] So the sharks have learned, okay, well, if we go deep underneath and then we come straight up,
[00:05:52 - 00:05:57] it's more of a surprise attack. And even if they don't get the seal with their mouths,
[00:05:58 - 00:06:03] they stun it enough that, you know, it takes a while for it to get, get its wits back and
[00:06:03 - 00:06:07] the sharky come in for the, you know, for the second shot and, you know, get the kill shot. Um,
[00:06:07 - 00:06:12] so it's, it's pretty incredible. It's, it's not a lot of places where they, where they jump like that.
[00:06:13 - 00:06:17] Yeah. You know, I've only observed South Africa from a distance, but see,
[00:06:17 - 00:06:23] for me, it's kind of a fascinating country. Obviously you have the British
[00:06:23 - 00:06:31] influence that uses words like seconement and, um, but then the Dutch have a heavy influence and
[00:06:31 - 00:06:37] just, it's weird. It's, it doesn't seem like your average former British colony.
[00:06:38 - 00:06:42] Yeah. Yeah. It's very, very unique because you have that, that blend of like the Dutch,
[00:06:42 - 00:06:46] the British, I mean, maybe some German influence in there too. And then, and then of course,
[00:06:46 - 00:06:52] all the indigenous tribes over the years. So it's, it's really a mix of, if they have, I think,
[00:06:52 - 00:06:57] like nine different, uh, official languages for the country or something like that. You have,
[00:06:57 - 00:07:02] there's opacons, there's kosa, there's, that's the one with the, you know, if you hear them talking
[00:07:02 - 00:07:06] to have like the clicks for some of the noises, some of the sound, which is, was wild to listen to.
[00:07:07 - 00:07:12] And I tried to pick up some of the words, but I spoke very, very poorly. And opacons is also a very
[00:07:12 - 00:07:19] tough language because it's kind of like a, kind of a, a unique form of Dutch, I guess.
[00:07:21 - 00:07:27] So yeah, two, two months there, I only picked up a few words. I'm ashamed to say, but, uh,
[00:07:28 - 00:07:32] yeah, I know it's a really interesting mix of cultures and language and all that.
[00:07:34 - 00:07:38] Wow. And did you verify that the toilets do indeed flush backwards?
[00:07:39 - 00:07:44] Yeah, you know what, they do. They're on the, the Southern hemisphere there. So they,
[00:07:44 - 00:07:48] they go the other way. And yeah, that was, that was cool to see, actually, because it was one of those,
[00:07:48 - 00:07:55] I mean, I didn't believe it till I, uh, until I saw it myself. Wow. That's cool. That's cool.
[00:07:56 - 00:08:03] Well, now you, uh, instead of watching the sharks, you, uh, you make the numbers straight.
[00:08:04 - 00:08:13] That's right. Yeah. So what's that mean? And, you know, kind of my perception, you know, so I've
[00:08:13 - 00:08:22] worked in industry and we always had a CFO. And, um, and since then I, um, one of my stories with
[00:08:22 - 00:08:29] the CEO, this was a startup that I co-founded. And I went off and negotiated a quarter million
[00:08:29 - 00:08:35] dollars of capital equipment and I bought it for about 200,000. So I saved, you know, pretty big
[00:08:35 - 00:08:45] chunk. And I went to tell my CFO this. And she said, go ask for more. And, uh, and that
[00:08:45 - 00:08:49] conflict of, I told her, as I'm not going to do that, I said, the way I negotiated this was I,
[00:08:49 - 00:08:54] I told them, here's my shopping list. Here's my number. If you hit this number, we're done with
[00:08:54 - 00:08:59] negotiations. And she's like, no, I still go ask for more. I'm like, I'm not going to do that.
[00:09:00 - 00:09:07] Uh, that would require a go back on my word. Um, and so, you know, I think there's a lot of
[00:09:07 - 00:09:14] confusion at the same time I've worked with other CFOs that were just really amazing more in the
[00:09:14 - 00:09:20] Jack Welsh mindset of, I'll give you all the money you want. If you tell me what, you know,
[00:09:20 - 00:09:28] what the business will get for it. And so I don't know. If, if, if I've seen that level of confusion,
[00:09:28 - 00:09:35] I imagine a lot of, you know, business owners, SMB business owners probably have a confused view
[00:09:35 - 00:09:43] of what a fractional CFO does. Yeah. Yeah. No, it's true. I mean, there's, there's, there's definitely some,
[00:09:44 - 00:09:50] local stigma, but, you know, misconceptions of, you know, I've heard the term chief no officer.
[00:09:50 - 00:09:57] He used a few times for CFOs. And, but I think I think the best ones are the ones who are
[00:09:58 - 00:10:03] trying to figure out, okay, well, not, not just telling you no or say, get it for cheaper, but
[00:10:03 - 00:10:09] how do we make these numbers work in a way that that makes sense for the business? So, you know,
[00:10:09 - 00:10:13] in your example, for, for purchasing the equipment, it's, okay, how do we make the case that,
[00:10:14 - 00:10:19] you know, this, this equipment will, will generate, you know, X amount of revenues or receive
[00:10:19 - 00:10:25] as X amount in dollars. And that will outweigh the cost of the actual equipment. Um, you know, and,
[00:10:25 - 00:10:29] and then I think, I don't know, I think it's the CFO job to really figure out how to make that work
[00:10:29 - 00:10:34] as opposed to just shooting it down. Well, for us, it was table stakes. The equipment we were
[00:10:34 - 00:10:38] buying, if we were going to be in the business we were in, we had to have that equipment. It wasn't
[00:10:38 - 00:10:48] optional. It's kind of important, then, yeah. Yeah. Um, but, I mean, it's hard. CFO is a strategic role,
[00:10:48 - 00:10:54] right? Yeah. Yeah. I think, I think there's, again, a little bit of misconception where people
[00:10:54 - 00:11:00] think of it as, some people think of it as, you know, you're, you're a glorified treasurer and,
[00:11:00 - 00:11:04] and expense producer and then other people think you're, you're a chief accounting person.
[00:11:05 - 00:11:08] There's some of that layered in there, but I mean, at the end of the day, that's, that the biggest
[00:11:08 - 00:11:13] value is, is the strategic part of it where, you know, you're really partnering with the CEOs
[00:11:13 - 00:11:18] and the business owners and saying, okay, how do we, you know, what's, what's your vision for the next,
[00:11:19 - 00:11:25] you know, one year, five years, 10 years, ultimately. Um, and how do we get there and we work
[00:11:25 - 00:11:30] backwards and support the, support the owners and the CEOs to say, all right, you want to go,
[00:11:30 - 00:11:34] you want to get to this point, how do we get there and how do we get there without you running out
[00:11:34 - 00:11:43] of money most importantly? Yeah. And what's that process look like? Well, it's, it's, I think at first,
[00:11:43 - 00:11:49] you, you have to be on the same page with them. Um, and some of that comes down to, you know,
[00:11:49 - 00:11:55] their style, um, personalities, but also just being aligned with what, what the ultimate goal
[00:11:55 - 00:12:01] was for the company. And then I've been there. What I, what's a big like to do is I'll sit down with
[00:12:01 - 00:12:06] them. I'll go do the financial statements, ask a million questions. Um, I have an audit background.
[00:12:06 - 00:12:11] So that's what I'm used to doing is asking a lot of questions and, you know, at least now it's,
[00:12:11 - 00:12:14] it's a little more collaborative as opposed to what I was an auditor because that's not everybody's
[00:12:14 - 00:12:21] paper person. Um, and really trying to understand the business because, you know, the numbers are great
[00:12:21 - 00:12:27] and, and they tell a story, but they don't tell the full story. You need the, the context of, um,
[00:12:28 - 00:12:34] you know, your revenues hide and your, uh, but what's your profitability like? And, um,
[00:12:34 - 00:12:39] your profits are X, but why, why are they X, you know, are you leaving money on the table? Maybe it's
[00:12:39 - 00:12:45] a situation where, um, you know, you have a good relationship with a vendor and you have the price
[00:12:45 - 00:12:49] that you have and you're like, well, I could probably get a better price from a different vendor,
[00:12:49 - 00:12:53] but maybe the quality is not as good or you value that relationship because there's other things
[00:12:53 - 00:12:58] outside of it that better brought in. Um, so there's some of the things that we try to understand
[00:12:58 - 00:13:06] and then, and then try to build some, um, you know, regular cadence of, um, reports and budgets
[00:13:06 - 00:13:10] and that kind of thing and forecast obviously build that in. Um, and then just, again,
[00:13:10 - 00:13:15] making it in a way that aligns with the goals of the company, short, both short term and long term.
[00:13:15 - 00:13:24] Yeah. Well, and, you know, one thing that hit me, um, you know, I used to really scrub the formula
[00:13:24 - 00:13:31] for gross margin, or gross profit, gross profit, gross margin, I'd always scrub the, uh,
[00:13:31 - 00:13:35] and part of it's because I'm, I come from an engineering background, I guarantee if you ask,
[00:13:36 - 00:13:43] if you went out and asked 100, um, engineers, hey, we have this metric called gross margin.
[00:13:43 - 00:13:51] How would you calculate it? At least 95, if not all 100 would come back and they would say profit
[00:13:51 - 00:13:58] ever cost. And it took me a while to really drill in because it's a simple formula, but it took me
[00:13:58 - 00:14:06] a while to accept notes, it's profit ever price. And the thing that I realized was, you know,
[00:14:06 - 00:14:10] engineers, and it was like, how can we both be numbers people and see this so differently?
[00:14:11 - 00:14:15] And I realized engineers have the view where they're looking forward saying, if you do this,
[00:14:15 - 00:14:22] this will be the future. And so that's why they do it. That's really why they would get wrong,
[00:14:22 - 00:14:28] whereas I realized that like, accountants are historians and they explain what sort of a happened.
[00:14:31 - 00:14:36] And if I'm hearing you right, you're doing both. You're explaining what's our, what has already
[00:14:36 - 00:14:40] happened, but here's what's going to happen and here's how we get you there.
[00:14:41 - 00:14:45] Yeah, no, that's exactly right. Yeah, I mean, it, and it counts to your great job. I mean,
[00:14:45 - 00:14:51] I'm a CPA, so I get it. Yeah, and that historical perspective is really important because you
[00:14:51 - 00:14:56] got to understand what's, what has happened already. So you can understand where things are headed.
[00:14:57 - 00:15:02] And it's part of the job of the CFO is really bridging the gap between the two and then,
[00:15:02 - 00:15:06] and then of course, translating those numbers to something that makes sense to the owner as well.
[00:15:07 - 00:15:10] You know, if you have somebody who's, I know, I know some great accountants in their
[00:15:10 - 00:15:14] fantastic what they do, but if they're, they're trying to explain it to a, to a business owner,
[00:15:14 - 00:15:19] it's like, you know, it's like one's talking and Latin and the other one's talking and I don't know
[00:15:19 - 00:15:25] and in Mandarin. So there's definitely a lot less than translation that way.
[00:15:26 - 00:15:29] Well, and I would think, especially if you're dealing with entrepreneurs,
[00:15:30 - 00:15:34] these are people that just wake up in the morning and they're always looking forward.
[00:15:35 - 00:15:39] Yes. And they're talking to somebody who only talks history.
[00:15:40 - 00:15:45] I can see a lot of attention in that. You know, could tell me what's already happened.
[00:15:45 - 00:15:49] I know what's happening. We're screwed financially. You know, let's talk about the future.
[00:15:49 - 00:15:54] And so I could see that being a natural clash if they're just dealing with straight accountants.
[00:15:55 - 00:16:03] Yeah, for sure because they need somebody who's, who's able to look forward and say, okay,
[00:16:03 - 00:16:08] well, I understand this is the situation now, but how do we, you know, how do we craft that path forward
[00:16:08 - 00:16:13] to get to, you know, but maybe, especially if it's an early stage company and, you know, they're
[00:16:13 - 00:16:17] trying to get towards the path to profitability and you know, how do we get there? How do we,
[00:16:17 - 00:16:21] you know, you're running break even analysis and they're, you know, what, what volume do we need to
[00:16:21 - 00:16:27] get to, you know, to get to hit our numbers and to our targets and that sort of thing.
[00:16:28 - 00:16:32] That's something that not, you know, some accounts are good at, but, you know, a lot of them just
[00:16:32 - 00:16:37] buy their job function. They're, they're passed with reporting what's already happened. So, you know,
[00:16:38 - 00:16:44] you know, they, they're not, their brains aren't tuned into necessarily the forward thinking part of it.
[00:16:45 - 00:16:48] Yeah. And that's what I love about. Sorry, good.
[00:16:48 - 00:16:55] Well, I remember a frustration I had and, and, and in hindsight, it was all my fault. I was
[00:16:55 - 00:17:00] asking the wrong person a question. And I was asking my bookkeeper. I said, well, I want to know
[00:17:00 - 00:17:06] how much it costs for me to hire someone. And she just never could answer that for me.
[00:17:08 - 00:17:13] But that was something that was important for me to know. Because if I could figure out how much
[00:17:13 - 00:17:19] it costs for me to hire someone and then tie it to how much revenue do I expect them to,
[00:17:19 - 00:17:24] you know, produce, is this going to be a positive activity or a negative activity for me?
[00:17:25 - 00:17:31] Yeah, exactly. So, funny to say that because I had a situation with the client of my where they were,
[00:17:31 - 00:17:35] that was, that, the, that question was, all right, well, I need to hire people, but I don't know how,
[00:17:35 - 00:17:40] and, you know, I don't know who I can afford, how many people, and, you know, that sort of times
[00:17:40 - 00:17:47] of profitability, one of the terms for it, but if you have other needs for it too, where, you know,
[00:17:47 - 00:17:51] you hire somebody for a position and it will take them time to ramp up their, what they're doing.
[00:17:51 - 00:17:57] In that case, it was project managers, so as, you know, if I bring in a project manager,
[00:17:57 - 00:18:02] how much am I paying them, how much, how much can they handle, how much business can I bring in,
[00:18:02 - 00:18:06] and what's that time between, and do I have enough cushion to be able to, to be able to bridge that
[00:18:06 - 00:18:13] with gap? And, you know, we looked into it and, and, you know, as I was looking at the numbers,
[00:18:14 - 00:18:17] you know, some other things came up and I was like, oh, well, you know, for example, there,
[00:18:18 - 00:18:22] you know, it's like, you have, you have a $20 million company, you have about two million
[00:18:22 - 00:18:27] in receivables, so, you know, you have about 10% of your sales for the year, that's, that's not
[00:18:27 - 00:18:32] collected, and, you know, looked at it was like, this is stuff that was, should have been built in,
[00:18:32 - 00:18:38] in June, and it wasn't built till December, and he didn't collect it until February, so like,
[00:18:38 - 00:18:42] what's, what's going on here, and then, you know, more conversations, and then it turned out,
[00:18:42 - 00:18:47] okay, well, we have an issue with our, with our reconciliation, when we complete projects,
[00:18:47 - 00:18:50] and that delays the billion process for a number of months, so it's like, okay, well, now,
[00:18:51 - 00:18:57] let's fix the billing issue, because once we do, you're going to move that, that, that profit of
[00:18:57 - 00:19:03] $2 million into the current year, now you can afford to pay, you know, a number of project managers
[00:19:03 - 00:19:11] at once, and have, have that, you know, have, have that runway to be able to ramp them up and,
[00:19:11 - 00:19:15] and bring in business, and, and oh, by the way, also, you'll be able to, as I know,
[00:19:15 - 00:19:19] you'll be able to pay yourself a little bit more, because, you know, there was some frustrations
[00:19:19 - 00:19:22] there that they weren't able to pay themselves, but they wanted, and they were getting
[00:19:22 - 00:19:25] frustrated, because they were spending a lot of time in the business, and not getting that much
[00:19:25 - 00:19:29] out of it, so we kind of, we're able to solve a few things I want to, it all stem from the
[00:19:29 - 00:19:34] conversation of, hey, I don't, I don't know if I have enough money to hire people, but why
[00:19:34 - 00:19:43] want to grow? Yeah, you know, another formula that I saw years ago that was fascinating, and when
[00:19:43 - 00:19:50] it was originally presented, I was like, well, this seems silly, and it was a formula for maximum
[00:19:50 - 00:19:59] sustainable growth, and the reason it seemed silly was, who cares what the formula says, if,
[00:19:59 - 00:20:05] if I'm going to, if I have this opportunity to like double my revenue, I'm probably going to double
[00:20:05 - 00:20:15] my revenue. Why is that formula important? Well, I'd say it's important, because you're growing
[00:20:15 - 00:20:22] your revenue great, but at a certain point, you have to think about, you know, scaling concerns,
[00:20:23 - 00:20:28] so, you know, you're doubling your revenue, but are you tripling your costs in the way to doing that?
[00:20:28 - 00:20:34] And do you have access to capital to support that as well? So there's a lot of other factors
[00:20:34 - 00:20:46] that go into it that I think as, as founders are kind of racing to increase the revenue
[00:20:46 - 00:20:50] in that top line, they can lose sight of some of those other things, and that's, that's why it's
[00:20:50 - 00:20:54] important to make sure you're measuring things, and, you know, have somebody who's the kind of,
[00:20:54 - 00:20:58] kind of the voice to reason, not necessarily pump the brakes, but just to kind of be able to put
[00:20:58 - 00:21:01] some guardrails on things and say, hey, you know, it's some things we need to look at for, we can't just
[00:21:02 - 00:21:06] put on blinders and say, okay, it's all revenue all the time because, you know, everything
[00:21:06 - 00:21:12] else could fall apart in that pursuit. What are some of the things, what are some of the
[00:21:12 - 00:21:16] fallacies in thought? What are things that would break if I'm just focused on revenue?
[00:21:18 - 00:21:25] Yeah, I mean, it could be margins, you know, if you're trying to bring in, you know, whether it's
[00:21:25 - 00:21:33] product or services, you know, costs have a way of sneaking up on you, as things are going,
[00:21:33 - 00:21:38] and if you're not also doing things like re-evaluating your your vendor agreements or
[00:21:39 - 00:21:44] where you're sourcing things from, you know, maybe something works great at, you know, when you were,
[00:21:46 - 00:21:52] you were sourcing things domestically at, I don't know, 1 million of revenue, and now that you're
[00:21:52 - 00:21:57] only up to 5 million revenue, that's, you know, it's, it's more expensive because you're, you're in
[00:21:57 - 00:22:02] the US as opposed to, you know, if you're sourcing it overseas or something like that, where you can
[00:22:03 - 00:22:09] really start to, you really start to scale up and boost your, what's your profitability so you can
[00:22:09 - 00:22:19] reinvest into other things? Yeah, yeah. Well, that's, that's cool. You know, the one thing that's
[00:22:19 - 00:22:27] really clear to me is, every business owner, if, if you're a business and you're growing,
[00:22:28 - 00:22:34] you need somebody, you know, somebody phone this CFO role, whether it's full-time or part-time.
[00:22:36 - 00:22:42] What, what does the typical engagement look like? Yeah, so typical engagement,
[00:22:43 - 00:22:49] for, for a fraction like myself is you kind of get on board, you'd have the initial conversations
[00:22:49 - 00:22:54] with the owners, say, okay, where do we want to go? You make sure you're aligned from a long-term
[00:22:54 - 00:22:59] perspective, and then you're, you're reviewing their financial statements, you're looking at their,
[00:23:00 - 00:23:05] I'm taking a look at their, like their profitability, what they're both in the gross margins and
[00:23:05 - 00:23:12] then that profit. You know, I'm looking at what their cash position is. Are they generating enough cash
[00:23:12 - 00:23:19] months a month than year to year? And, and then just try to dive deep into, into those numbers,
[00:23:20 - 00:23:25] to assess any, any leakages or things, or issues that, that might come up. So, like what, you know,
[00:23:25 - 00:23:33] on that other point, was the, was the receivables issue that they had. And then from there,
[00:23:33 - 00:23:38] saying, okay, well, you know, now, now we know some, some ways to move forward and we know some
[00:23:38 - 00:23:47] things to tackle. And, you know, I think that's kind of the first part of it. And then from there,
[00:23:47 - 00:23:51] we, we build in, we build in our reports and budgets, and then we say, okay, much a month,
[00:23:51 - 00:23:56] we're going to have our meetings, we're going over, we go over high-level, because I don't want to
[00:23:56 - 00:24:00] in a date or with the, with the budget details that they don't really need to know, but, you know,
[00:24:00 - 00:24:04] giving them kind of the click notes of, okay, this is what we need. You know, it's is, you know,
[00:24:04 - 00:24:07] this is your snapshot of your sales, your margins, your profitability, your cash.
[00:24:08 - 00:24:13] We use that to drive the conversation for what's going to go on for the next month.
[00:24:15 - 00:24:19] And, you know, there's a lot of other little goals that happen within there, whether it's, okay,
[00:24:20 - 00:24:24] we need to, you know, in this time, we're going to hire somebody or we're going to, you know,
[00:24:24 - 00:24:29] look at some, you know, look at some of our expenditures and see how we can cut things or tweak things
[00:24:29 - 00:24:35] or making more efficient. And then it just becomes like an ongoing dialogue, honestly, from there,
[00:24:36 - 00:24:43] where, as things come up, whether it's, you know, investing some capital in, in, you know,
[00:24:43 - 00:24:49] with equipment or signing a lease or hiring people or different things of that nature, it's,
[00:24:50 - 00:24:59] you know, that that's what I really enjoy is like having that, that partnership, because I mean,
[00:24:59 - 00:25:03] being, being more of that strategic partner for the, for the owners is great. I love that part.
[00:25:04 - 00:25:10] Excellent. Well, Fred, this has been amazing. How can folks reach it?
[00:25:12 - 00:25:21] Yeah, so my CrystalOakCFO.com is my website. You can also find me on LinkedIn. I try to post
[00:25:21 - 00:25:29] somewhat regularly, you know, when I can. And then my email is Fred at crystaloakcfo.com,
[00:25:29 - 00:25:34] so people can feel free to email me there also. And, you know, always, always willing to have
[00:25:34 - 00:25:38] conversations with people and, you know, see where things go and see how I can help, because there's
[00:25:38 - 00:25:47] always some way that, you know, it can provide value if I can, and I love doing it. So, yeah?
[00:25:48 - 00:25:51] Excellent. Well, I appreciate you coming on Leaders & Legacies.
[00:25:52 - 00:25:56] Yeah, thanks, thanks again for having me, Craig. Really appreciate it. This is a great talking to you,
[00:25:57 - 00:25:58] and yeah, it looks forward to talking again soon.
