THE THOUGHTFUL ENTREPRENEUR PODCAST
Scaling Your Agency with a Fractional CFO
In a recent episode of The Thoughtful Entrepreneur Show, host Josh Elledge interviewed Michael Wark, a fractional CFO and the founder and CEO of Trimline. Michael specializes in helping agency owners scale their businesses, and during the interview, he shared invaluable insights into the challenges agency owners face, the benefits of hiring a fractional CFO, and actionable advice for those looking to grow their agencies. This blog post will delve into the key themes discussed in the episode, breaking down each tip in detail to provide a comprehensive guide for agency owners.
A fractional CFO is a part-time Chief Financial Officer who provides financial expertise and leadership to businesses that may not need or cannot afford a full-time CFO. This role is particularly beneficial for small to mid-sized businesses, including agencies, that are in the growth phase and need strategic financial guidance. Michael Wark suggests that agency owners typically consider hiring a fractional CFO when they have a team of at least 2-3 people and are generating revenue between $500,000 to $5 million. At this stage, businesses are navigating the “valley of death” in their growth curve, where financial missteps can be particularly costly.
One of the first areas Michael addresses with his clients is their profit margins. Many agencies struggle with pricing their services correctly, leading to thin margins that can hinder growth. Cash flow is another common challenge for growing agencies, and Michael emphasizes the importance of maintaining a healthy cash flow to support growth. As agencies grow, it's crucial to focus on building long-term value. Michael advises agency owners to think beyond immediate profits and consider the overall value of their business. By focusing on key areas such as fixing margins, solving cash flow issues, and building enterprise value, a fractional CFO can provide the financial leadership needed to navigate the challenges of growth.
About Michael Wark:
Michael Wark is a qualified Chartered Accountant with over 19 years of commercial experience.
He is the founder of Trimline which helps small agency owners achieve an exit through strategic support and coaching.
The coaching is anchored in the numbers but expands quickly beyond that to focus on strategy, and unpacking the key pillars of value that you need to be building alongside improving your numbers.
With a deep understanding of best practices for agencies small and large, he guides owners through the growth phase to exit with expertise and care.
About Trimline:
Trimline helps business owners acheive an exit through strategic support and coaching.
You get an experienced leader on your team at a fraction of the cost and time.
Our regular meetings are designed to give you a deeper insight into your numbers, and help you plan for the future.
We are here to build real value in your business, and share our insights into best practices from across our extensive industry experience.
Our guaranteed confidentiality is a critical outlet for founders. It means you can work through sensitive ideas or problems you can’t share with your existing team.
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Links Mentioned in this Episode:
Want to learn more? Check out the Trimline website at https://trimline.co/
Check out Trimline on LinkedIn at https://www.linkedin.com/company/trimline-co/
Check out Michael Wark on LinkedIn at https://au.linkedin.com/in/michael-wark-18627628
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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 comm 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 Michael walk Michael you are a fractional CFO. Love that. And you are the founder and CEO of Trimline. You're found on the web@trimline.com. Michael, thank you so much for joining us.
Speaker 2 (00:01:22) - Thanks, Josh. Great to be here. Excited for the chat.
Speaker 1 (00:01:24) - Yeah. So give us an overview of your work with Trimline and who you serve and what you do as a fractional CFO.
Speaker 2 (00:01:32) - Yeah, it's pretty specific. So my niche is is helping agency owners scale. so obviously I'm sure, you know, agency owners is the umbrella term, but that's marketing firms PR, performance SEO. You know, the whole range of people who are helping people get found on the web. I'm helping them grow their business.
Speaker 1 (00:01:53) - Yeah, well, what stage type agency like? How might someone know that they are at the level that they would be ready to start having a conversation and consider bringing someone in that can provide some of that financial leadership.
Speaker 2 (00:02:11) - generally it's it's a founder with a team already. So they'll, they'll generally have, you know, 2 to 3 people on their team minimum. And they'll be looking to grow that and navigate the business growth curve. so like a rough rule of thumb for revenue levels, generally, I say I kind of help people from around the half a mill scale up to five mil and beyond.
Speaker 2 (00:02:34) - That's kind of the the path or the, the Valley of Death that I'm trying to help people get through. And that's the most challenging part of of scaling with business, especially a service business. So that's kind of what I, what I focus on.
Speaker 1 (00:02:46) - Yeah. That's interesting. So thinking about, the folks that might be on the lower end of that, tell me what value, a fractional CFO would bring. that that may be a little bit more challenging. You know, they likely have someone taking care of their taxes. They likely have a bookkeeper. but but what does for them? A fractional CFO bring to the table?
Speaker 2 (00:03:12) - I think, especially if you're below that half a mill mark, you know, you're doing maybe a couple hundred thousand a year. are the common challenges that I think a fractional CFO could help you with, actually pricing your goods, your product correctly, paying yourself correctly, and setting up the financial systems to help you scale. So you're not going to run out of cash as you grow.
Speaker 2 (00:03:36) - I think you can get away with a lot when you're in those small and nimble stages. And the founder can, you know, reduce their wage if they need to, or they can kind of you can paper over the cracks. But as you try and actually grow a proper business, those things get found out. So I think it's about putting the right things in place before you scale so it doesn't break as you as you start to grow.
Speaker 1 (00:03:59) - You know, I, I've interviewed a lot of fractional CFOs in my time and, you, are, are working with an audience that I think is typically a little earlier stage, which is kind of exciting because I think that we all deserve good, you know, to make good financial decisions. I just think, you know, I think when most of us think of bringing in a fractional CFO, it's it's going to be a significant investment. you know, the engagement typically is going to be very large. And so, kind of deservedly so of that larger investment.
Speaker 1 (00:04:33) - But but what might, you know, for someone that might be at those earlier stages and, you know, it might be hovering or getting close to seven figures, but not quite. what does engagement typically look like at that level?
Speaker 2 (00:04:47) - so it will depend on. Obviously each engagement is tailored depending on their needs. so I've got a obviously I've got two spots in my roster and, and there's the normal standard packages. But I do have, I do reserve a few spots for people who like, I love and I love their business, and I want to help them grow. And we do things like maybe meeting quarterly. So I might do a video async and then do it quarterly. And we can reduce their package in terms of like rough numbers and ideas. The, you know, might a standard might sit around the 2 to 3 grand a month for, for your meeting. but then if you want to not only make quarterly, maybe there's, there's creative ways that people can find a way around that, but that's the kind of starting out price.
Speaker 2 (00:05:29) - It really depends on the agency, you know.
Speaker 1 (00:05:33) - Yeah. You know I'm not in. You know, obviously I don't do fractional CFO work, so I can't say for certain, but I can say that I think that's a huge opportunity, especially if you're working with someone that's pretty growth focused. And obviously if you can come in and if it's nothing else other than just looking at some high level data and providing some guidance just based on a lower level of engagement, that's a great opportunity to get your foot in the door and a growth focused company that's going to be growing anyway and eventually will be needing more and more services. So, very, very exciting.
Speaker 2 (00:06:06) - Yeah. Yeah, absolutely. My business model is made of long term, profitable, mutually respective, relationships. You know, it's not about the quick early sale. It's about actually building relationships for the long term with these founders.
Speaker 1 (00:06:21) - so, Michael, if you were to maybe encapsulate a few of the areas that when you begin engagement with a client that, that are the most common areas that that need some attention.
Speaker 1 (00:06:37) - What what would you say? What buckets would you say that, you find yourself, hearing into.
Speaker 2 (00:06:47) - I wrote an e-book to talk exactly about this, Josh. Number one, when I first walk in the door is to help people fix their margins. That's the number one reason that people will engage me. and that's what I focus on initially in the early stages of our engagement. So get more profitable. Fix your margins. Number two is to solve your cash crunch. So as you navigate the business growth curve, people start running out of cash for various reasons, but really work out how we kind of keep more cash in your business as you grow. And then number three, once they get a little bit more established, is to start to think about building more value and actually thinking about it from like an enterprise value. What makes a valuable business building them out of it, systems and processes, all that kind of stuff.
Speaker 1 (00:07:31) - and so tell me about Trimline as a, as a company and, and what you know, is, is it just you or do you have, ninjas that, that also, are part of your team that, that your clients work with?
Speaker 2 (00:07:47) - Yeah, I've got a couple of, teams in the background operations that help me.
Speaker 2 (00:07:51) - I'm still doing all of the delivery calls, and that's kind of, I guess, my point of difference. I'm a boutique shop, and that means that people will speak to the founder, rather than maybe joining a big accounting practice and getting farmed off from the partner down to someone else who looks after you more regularly. so yeah, I'm still the face and brand of it. I do have partners in other areas, so I work with a strategic network of other people who are really good at what they do. So that's bookkeepers. Tax accountants might be financial planners. I can plug them in and bring them into the conversation as and when we need them. but I'm a big believer that one person isn't the best at all. Disciplines similar that agencies aren't the best at every single discipline and art. so that's kind of the way I build out my team, if you will. It's through partnerships with people I trust who are good at what they do.
Speaker 1 (00:08:45) - Yeah. what's unique about agencies in the CFO world?
Speaker 2 (00:08:51) - I really enjoy working with.
Speaker 2 (00:08:52) - And the reason I nation Agency is because I actually enjoy working with the founders. I work with creative people in the film industry world. When I was accounting in that world for a while. in terms of their do you mean in terms of their challenges, or do you mean in terms of their business model? Yeah.
Speaker 1 (00:09:05) - What? Yeah, yeah. And I'm unique. Like if there are any trends, you're like, oh yeah, agency owners are just notorious for blank or, you know, something that might be a little bit different than, let's say, an E-com or a SaaS company or a, you know, some construction company or something.
Speaker 2 (00:09:22) - Yeah. Look, the one thing that I just showed is generally will have when I walk in the door, that is the challenge probably, is that they're their staff cos they're not getting enough juice out of the lemon with their, with their team. And that is a really, really common one I think agency owners a great people, they're kind, compassionate.
Speaker 2 (00:09:41) - They want to do right by their people. But sometimes there's a tension between that and actually running a profitable business with decent margins. and in order to help them grow and for the business to sustain in the long term, and that balance of maybe implementing time tracking, if that's not in there, things like that is, is a really common one that I see.
Speaker 1 (00:10:03) - Yeah. listen, I'll be very frank. that's something that I know that we've had to address because I love the people. And, and it is easy, I'd say, to, to to have a lot of creep or scope creep. Right. Or, you know, it's like, especially if you're really mindful of providing excellent service. A lot of times that might come with additional hourly, you know, budget. and yeah, I can see that being a common issue. Okay. So how do we solve that, especially if you're dealing with a business a business owner. They're like, but if I cut these hours back, that might impact our deliverables and quality of our service.
Speaker 1 (00:10:47) - And they're nervous about that.
Speaker 2 (00:10:49) - Yeah. It's. You hit the nail on the head. The the scope creep or or just underpricing or over servicing. They're all part of the same profitability challenge. Generally, the way that I try and help people think about this is I make it visible. So actually I understand how much these people are costing you, and that helps make the decision a bit clearer that you need to change, because you can see the dollar value of you're basically paying your staff for unbilled time, and your money is walking out the door through your payroll item. so make it visible. And then I try and do a one in, one out approach. So don't try and increase the prices on all your clients at once. De-risk it. Just find your least profitable client. Once you win a new one, have that conversation. Have that hard conversation with one person and think about it like a roster. Improve your your roster or your team list for the season and and get better one client at a time.
Speaker 1 (00:11:45) - You have a free e-book that that you give away. And I actually just opted in for it so I can get this to my CEO. but tell me about. Yeah, tell me about the e-book that you give away.
Speaker 2 (00:11:57) - it's it's everything that I helped my clients with. There's no fluff in it. I've gotten straight to the point with all of these challenges of helping people fix their margins and solve the cash crunch. and I think it's it's a pretty comprehensive way, if, honestly, everyone that I've either spoken to in person. So I present on this and also share it, everyone says, you know what, I was guilty of at least two of those things you spoke about in there. So they've really, really common people. I've seen a lot of agencies, so I've, I've noticed the patterns and trends amongst them. so I think there's something in there for everyone.
Speaker 1 (00:12:31) - Yeah. Tell me. I mean, who should be downloading it? What's the title? You know, let's really sell it.
Speaker 1 (00:12:38) - Okay.
Speaker 2 (00:12:40) - So it's how to scale your agency to 5 million and beyond. And that's the the whole throughline of the book is to how to how to do that, how to navigate the steps on that business growth curve. and the order I put a lot of thought into the order that the problems come up that you're going to need to solve. so it's it's called riding the waves of business growth, your path to a $5 million company. and and it's about what you got to solve to get to the next level, and then there'll be a new set of problems that present. You need to solve them. you know, it's kind of like Street Fighter, right? You got to finish the first boss, then you work your way up to the next one, and and that's how you kind of stair step your way up the business growth curve.
Speaker 1 (00:13:19) - Yeah. so think of some folks that, that you've worked with and, you know, over the past six, 12 months or so. tell us a story or two of someone that you've worked with and kind of the the before and after is what I'm really hoping for.
Speaker 2 (00:13:34) - Yeah. Look, I've got I've got a new ish client at the moment that we're working on at the like right now, but I think it's a great example of, of this founder who they don't know what they don't know. And they, they almost ticked all of the boxes. So they, they came to me and they were underpaying themselves in their business, so they weren't paying themselves enough. So the whole business model was completely out of whack because they were under charging their services, because they were underpaying themselves. They were profitable, but they weren't paying a market based wage. So that ticked one of the golden rules underpaying yourself and not seeing a true, you know, having a true look at your what your PNL should be. they were also not time tracking, and their team were taking the Mickey and spending time on too many other things. So that was another, you know, another one of taking the box. That was another red flag. Okay. We need to start doing that.
Speaker 2 (00:14:29) - they were underpricing their services to their client. So that was another one that we've got to look at and try and improve. And they also had no visibility over their numbers and their finances. They weren't looking at their reports. They were living kind of week to week, month to month with making payroll and things like that. and on top of that, the founder was too busy putting out fires because the team were underperforming and under-delivering he was getting dragged back into operational problems that the founder couldn't actually work on the business and improve the systems and get themselves out of it. So it's I call it like a founder trap in the book where you're stuck in this rut and you don't know how to get to that next stage of growth because you're so busy just dealing with immediate day to day concerns. And those are some of the common challenges that I see across people. And it starts with getting more profitable, holding your team accountable, slowly increasing your prices and finding that margin. And I try and improve the model as it stands right now with the current number of clients.
Speaker 2 (00:15:28) - And then we start to try and scale. So we try and fix the business model. Then we can add more clients because otherwise you're just adding more clients to an existing problem.
Speaker 1 (00:15:38) - Yeah. do you ever get pushback from clients about, increasing pricing?
Speaker 2 (00:15:43) - Definitely. Yeah, everyone is petrified to do it this year.
Speaker 4 (00:15:48) - And look, in.
Speaker 2 (00:15:49) - Some situations it's not always appropriate. another way I'd risk it right is say, all right, well, let's not increase it until you have another client that you've solved. And so it's if that person leaves, that's fine. You still have the same number of revenue dollars for this month because 1 in 1 out. But that new client will be way more profitable because we priced it correctly. And we're going to hold ourselves accountable. So there's ways you can do it like that where it's not a blast email to everyone increasing it. but generally for, for this particular example they had an increase their prices in over two years. And if you think about what inflation, if you think about what inflation has been doing around the world right now.
Speaker 4 (00:16:27) - Yeah, they've.
Speaker 2 (00:16:28) - Lost seven, 10% just going backwards with that. So you know, they were they were very clear they needed to do that as well. Luckily this client didn't push back on this. They were kind of aware that, you know, we need to fix a bunch of things.
Speaker 1 (00:16:42) - Yeah, yeah. All right. Michael. So, to our friend that's listening here, maybe they were searching for you. They found this podcast episode, and, you know, they've probably been nodding their head a little bit as they've been listening, and I know I have been. It's easy to do. And listen, I think, you know, some of the reasons for these problems I, I think are quite noble, really, but it's not fair. It's not fair to you because if you're stressed out, you're kind of living hand to mouth month after month after month, that that impacts you as a founder. You're not able to come into your business with the clear head that you might because you're stressed about your cash flow.
Speaker 1 (00:17:26) - So I understand the desire to keep your prices fair and to pay your employees really well. But, you know, if there's not enough cushion there, then you know that that impacts people being able to keep working with you, that impacts, you know, your ability to go out and get new business because you're just so stressed and you're taking care of other things. Right. any final thoughts on that before I kind of make sure that folks know where to go from here?
Speaker 2 (00:17:53) - No, you hit the nail on the head. And generally what happens is the founder burns out and they don't ever see an exit of their business, and they don't have realized the value of what they're built. and they'll burn out and look for something else. So I think it's, that's like a really, really critical point. You hit on that, Josh.
Speaker 1 (00:18:10) - Let's keep more agency owners in business, shall we? Your website, Michael, is trimline dot SEO. when somebody goes to your website, what would you recommend to do, by the way, you have some really good videos on your YouTube channel.
Speaker 1 (00:18:25) - I want to, just shout that out as well. so I'd recommend when you go to Trimline, click on, your, your YouTube icon, bring that up. And, there's some really interesting videos and topics that you cover that I think a lot of folks who frequent this podcast may, may find some great value. Aside from that, what else would you recommend they do?
Speaker 2 (00:18:49) - look, honestly, just go check out the book and implement a couple of the things I try and give all of the IP and the value upfront. That's kind of my model. And so if you go to streamline SEO up the top, you'll see an e-book link. Click on that. And I'll be very, very surprised if you don't start nodding your head to at least 1 or 2 of the things in there. It's it's really I've tried to put all the common challenges that I've seen in over five years, working full time with all of my agency clients, and I think it's got something in there that'll that'll help everyone.
Speaker 1 (00:19:17) - I love it. Michael Walk Again, fractional CFO and founder and CEO of Trimline, found on the web at Trimline. Dot CEO Michael, thank you so much for joining us.
Speaker 2 (00:19:28) - Thanks, Josh. It's been fun. Cheers.
Speaker 4 (00:19:29) - My bike.
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