THE THOUGHTFUL ENTREPRENEUR PODCAST
Understanding the Importance of Financial Management
In a recent episode of “The Thoughtful Entrepreneur Show,” host Josh sat down with Tom Griffiths, the founder and CEO of Synergy CFO Solutions, to delve into the critical role of financial management in small businesses. Tom's expertise in helping business owners understand their numbers, improve profits, and manage cash flow is invaluable for anyone looking to achieve long-term business success. This blog post will break down the key insights from their conversation, offering actionable advice and detailed explanations to guide you in optimizing your financial performance.
Many business owners gauge their success by looking at their bank account balances or growth metrics. However, Tom Griffiths emphasizes that these indicators can be misleading. A healthy bank balance does not necessarily mean a business is profitable or has a stable cash flow. Tom suggests that businesses generating $1 to $4 million in revenue are typically ready for the level of financial guidance a fractional CFO can provide. This is the stage where financial complexity increases, and professional expertise becomes crucial. Evaluate your current financial management practices and identify gaps. If you find that financial tasks are becoming overwhelming or you're not making informed decisions, it might be time to bring in a fractional CFO.
Synergy CFO Solutions offers a range of free resources on their website, including a cash flow forecast, webinars, and a report on the 16 drivers of revenue, profit, and cash flow. These resources are designed to help business owners gain clarity on their financial situation and make informed decisions. Take advantage of the free cash flow forecast tool to get a better understanding of your cash flow situation. Participate in webinars to learn from experts and gain new insights into financial management. For more insights and to access these valuable resources, visit [Synergy CFO Solutions](https://www.synergycfosolutions.com).
About Tom Griffiths:
He founded Synergy CFO Solutions because he realized how many small business owners need a financial guide to help them have a growing, successful business.
Due to his financial background following the first eight years of his career in banking, he can look at a business and spot the underlying reasons why a business is not profitable and has poor cash flow.
He understand both sides of a business (the financial side and the business ownership side). More importantly, he know how to fix it so that the business can grow and become more profitable.
About Synergy CFO Solutions:
Helps small business owners have a growing and more profitable business so they can achieve their personal and professional goals.
The goal is simple: to help clients go from feeling overwhelmed, stressed about the finances, wondering “where did all the money go”, to feeling confident, knowing that they're running their business like a CEO, with the numbers driving sound decision making.
Done through a unique yet simple process, taking on the role of ‘financial guide’, meeting the business owner on a regular basis. The process identifies the key drivers of the business, which are then used to help make decisions to grow profit and cash flow, in turn allowing the owner to achieve their goals.
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Links Mentioned in this Episode:
Want to learn more? Check out Synergy CFO Solutions website at
https://synergycfosolutions.co/
Check out Synergy CFO Solutions on LinkedIn at
https://uk.linkedin.com/company/synergycfosolutions
Check out Tom Griffiths on LinkedIn at
https://uk.linkedin.com/in/tomgriffiths8
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Transcript
Speaker 1 (00:00:05) - Hey there, thoughtful listener. Are you looking for introductions to partners, investors, influencers and clients? Well, I've had private conversations with over 2000 leaders asking them where their best business comes from. I've got a free video you can watch with no opt in required, where I'll share the exact steps necessary to be 100% inbound in your industry over the next 6 to 8 months, with no spam, no ads, and no sales. What I teach has worked for me for over 15 years, and has helped me create eight figures in revenue for my own companies. Just head to up my influence. Com and watch my free class on how to create endless high ticket sales appointments. Also, don't forget the thoughtful entrepreneur is always looking for great guests. Go to up my influence. Com and click on podcast. I'd love to have you. With us right now it's Tom Griffiths. Tom, you are the founder of synergy CFO solutions. Your website is synergy CFO solutions CEO. Tom, thanks for joining us.
Speaker 2 (00:01:20) - That's right. Josh. Pleasure to be here.
Speaker 1 (00:01:21) - Thank you. Absolutely. I suspect that you are also a CFO, but I'm just speculating.
Speaker 2 (00:01:27) - Yeah, that's an accurate speculation. Yeah. CFO of small businesses. Yeah.
Speaker 1 (00:01:32) - Well, tell me a bit more about the work that you do and who you serve.
Speaker 2 (00:01:36) - Sure. so I guess 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. so 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 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.
Speaker 2 (00:02:15) - 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, you 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 and not working on it.
Speaker 1 (00:02:47) - 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, things are good. or you know, they said, well, everyone's busy here. So again, business must be good. But 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, you know, kind of being able to look at reports they make, you know, which is great, a great CFO is going to present things in a way that everyone can understand.
Speaker 1 (00:03:21) - but I'm sure you've had some examples of this where the numbers tell a tale.
Speaker 2 (00:03:26) - Yeah, absolutely. So the one that springs to mind, one of my one of my clients, Reese, he runs a sports, a sports events company. and he and his business partner, when I first started working with him and they said, you know, everything's great. You know, the business is 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 Reese, 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, is had a nice, healthy number, but the amount of cash that was actually in the bank account was completely different. Completely different number. and so what I had to explain was actually cash flow and profits and not the same thing.
Speaker 2 (00:04:14) - And you can make a profit and 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. so yeah, that's one example. another one could be another one of my clients, Yamuna. so he was, they were doing they were doing really well, growing really quickly. and they were, they were doing about 500, 500 grand a month marketing or coaching agency. and they wanted to get to a million and he sort of said, right, a million a month. He sort of said, right, I think I just need to carry on doing what I'm doing here, and I'll get to a million. and when we looked a bit closer, we realised that actually they couldn't they couldn't get to a million, given what they were currently doing in cash flow.
Speaker 2 (00:05:02) - 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. and so that's essentially what I help them with.
Speaker 1 (00:05:13) - 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, you know, not doing what they're supposed to do, I'm wondering if, Tom, maybe you can absolve a little guilt for us.
Speaker 2 (00:05:37) - I yeah, absolutely. I mean, I think it's very rare for a small business to actually be managing their, 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 a 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 realise that actually they don't know how to manage their cashflow and profits.
Speaker 2 (00:06:09) - 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 client Reece, he, he sort of said to me, you know, I've been doing this for 4 or 5 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%, about 50% 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 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.
Speaker 2 (00:07:03) - and so if a business owner shifts their kind of goalposts 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, you know, the centerpiece around which they design everything else they do in the business, then I think the results will be entirely different. And that's that's basically what I help my clients to.
Speaker 1 (00:07:26) - Yeah. at what stage should someone start getting pretty serious about, bringing in a fractional CFO?
Speaker 2 (00:07:36) - Yeah. So the word fractional CFO, it means it can mean different things to different people. So a CFO is basically somebody who guides the owners on how to improve profits and cash flow. so that the owners of the business or the CEO knows what's working or not working and they can make the best strategic decisions going forward. you know, for for bigger companies, that means managing the entire finance function as well. in the context of, of kind of what I help my clients with, I, I wouldn't generally manage the finance function.
Speaker 2 (00:08:07) - I would just focus on that profits and cash flow piece. so for a business that's making 1 to 4 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, 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 4 million mark.
Speaker 1 (00:08:47) - Yeah. Is that, well, 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, a fractional CFO can just come in and say, okay, well, I'm just going to give you a couple of hours a month.
Speaker 1 (00:09:12) - like, there's probably a little bit more work to that, than, you know, just a, an engagement. So minimal.
Speaker 2 (00:09:20) - 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 1 to 4 or 1 to 5000 a month. that's just a guide. You know, for some, it's going to be less than that. for some, it's going to be more. but what what we make sure of is that whatever my fears 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, nobody's locked in to kind of working with us for like 3 or 6 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.
Speaker 2 (00:10:07) - We meet them once a month. 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 colours, red and green, in different sections, depending on, you know, the part that's highlighting a problem. and then we help the business owner come up with objectives and next steps so that they know exactly what to focus on the next for the next 30 days or so, so that they can make sure the business stays healthy and improve profits and cash flow so that they can get to their long term goals, whether that's selling 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, 3 or 5 years, all the way back to today until the next 30 days.
Speaker 2 (00:11:07) - And by staying really focused on 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 and month on month, we can make sure that the business either stays on track or gets on track to achieving the long term goal for the business owner.
Speaker 1 (00:11:26) - Yeah. your website is synergy CFO Solutions 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, and, you know, a friend that's listening, what they might be able to dig into.
Speaker 2 (00:11:45) - Yeah, there are a few bits on there. So that'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 on the website that you can, that you can sign up to that webinar or if you think you're not quite ready for either of those or those yet, there's also a link to a page, called The 16 Drivers.
Speaker 2 (00:12:05) - And what that outlines is the 16 drivers of revenue, profit and cash flow for any business, doesn't matter whether you're Uber, Amazon or a one person business, one person dental practice on a high street, exactly the same drivers. And so it's a it's a free report. It breaks down exactly, 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.
Speaker 1 (00:12:33) - 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 cashflow forecast. Do 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.
Speaker 1 (00:12:58) - You want to find show notes because we've got a direct link, to your website. Tom. again synergy CFO solutions.com. And if you scroll down or you click on resources, that's where you'll see these, these free gifts that you have available.
Speaker 2 (00:13:13) - 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. I 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, a build you 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 flow of 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.
Speaker 2 (00:13:52) - and so rule number one in any business is do not run out of cash. And so this, you know, step number one to improving that is to get clear on what's happening in terms of cash flow and planning or getting a clear, 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 all 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 if you see any problems coming up, you can address them rather than just being caught the day before a massive bills due and realizing you don't have enough cash in the bank account.
Speaker 3 (00:14:24) - Yeah, that's number one.
Speaker 2 (00:14:25) - That's the cash flow forecast. And then there's a free training. which basically goes through the types of the training is on 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.
Speaker 2 (00:14:52) - And whatever your goals are, the way you're going to do that is by making more money in your business, whether it's 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 or not working, and then know what to do next so that you can improve. Improve the numbers.
Speaker 1 (00:15:30) - Love 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.
Speaker 1 (00:15:48) - Thanks so much for being a guest.
Speaker 2 (00:15:49) - Pleasure. Thank you. Josh.
Speaker 1 (00:15:57) - Thanks for listening to The Thoughtful Entrepreneur Show. If you are a thoughtful business owner or professional who would like to be on this daily program, please visit up my influence. Com and click on podcast. We believe that every person has a message that can positively impact the world. We love our community who listens and shares our program every day. Together we are empowering one another as thoughtful leaders. And as I mentioned at the beginning of this program, if you're looking for introductions to partners, investors, influencers, and clients, I have had private conversations with over 2000 leaders asking them where their best business comes from. I've got a free video that you can watch right now with no opt in or email required, where I'm going to share the exact steps necessary to be 100% inbound in your industry over the next 6 to 8 months, with no spam, no ads, and no sales. What I teach has worked for me for more than 15 years and has helped me create eight figures in revenue for my own companies.
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