Yes or No to Fractional CFO? (answer: it depends)

**[00:00:00]** Hello everyone. My name is Armando Perez-Carreno and welcome to the Web Talk Show. Today with us is Nate Littlewood from Future Ready CFO. How are you Nate? I'm very well, thank you. Appreciate you having me here and excited for our conversation today. Yeah, I'm excited as well. Nate, can you tell us for our audience a little bit about Future Ready CFO and how you got there? Yeah, absolutely. So, Future Ready CFO is a fractional CFO consulting business. Uh the word fractional basically just means that I work across a number of different brands or businesses. Uh and the main reason for that is I work with earlystage startups and quite frankly none of them are large enough yet to really need or justify having a full-time CFO. Um so I work with these founders one-on-one. Um helping them with finance and strategy related topics. Um, I got into this, uh, and I've been doing it for about 2 years or so now. I guess a quick backstory is, uh, immediately prior to this, I was the, uh, lead mentor for a New York City-based accelerator program called Food Future Co. U, uh, which I did for a year or two. Uh, it was really through that, if I can be honest, that I had my eyes opened up to the whole world of mentoring and advising and working with other startups and founders. I hadn't done a whole lot of it up until that point. Um, but prior to that, I spent about six or seven years working on my own e-commerce business in a co-founder and CEO capacity, which taught me so much about business life, entrepreneurship. It was, you know, a roller coaster of a ride, but an absolute crash course in, you know, how to build and and run a business. Um, prior to all that, I spent about the first decade or so of my career working on Wall Street at an investment bank. And that's actually what took me from Australia to Canada for a couple years and most recently uh down here to the **[00:02:00]** US. So yeah, I guess all in all about a decade or so working in big finance on Wall Street and then a subsequent decade working in and around the ecom startup space from a few different angles. Excellent. So, do you think the Wall Street experience that you had helped you understand a little bit of what happens behind the scenes of these larger companies when looking at it from an entrepreneur's angle? Kind of. I mean, I I understand the question. I guess there's a couple of adjustments that I' I'd make between the dots that you're trying to connect there. First thing to point out is that working on Wall Street with, you know, big companies, these are like way bigger companies. I mean, these are like, you know, hundreds of millions or billion dollar type companies with uh thousands and thousands of employees. And that's just in a completely different stratosphere to the type of founders and businesses that I'm working with today. Right? So, most of my clients today are doing, you know, seven figures of revenue. They're a founder business, usually managing a team of say two to maybe 10 people. Um, and so we're operating in a, you know, a very, very different world, a very, very different type of business. But I guess there's two big things that I learned working on Wall Street which have been very helpful to what I'm doing today. The first is just financial literacy. like I understand um the relationship between certain financial metrics and ratios and what that means in terms of a business and business performance where it might be struggling. The other thing is that I had a huge amount of practice at basically ingesting large amounts of financial information in a short period of time and then needing to tell a story about that. Cuz what would happen with these public companies is they put out earnings reports and they publish, you know, their 2025 results or their March **[00:04:00]** quarter 2026 earnings report, right? I have to ingest that, understand it, read all the commentary, and then, you know, a few hours later, publish a research report that explains exactly what's going on with this company, publish my new financial forecast, publish a new valuation estimate for the business. And, you know, sometimes I'd be there until 3:00 or 4:00 a.m. in the morning um putting these things together. And you know, when it's 2:30 and you just want to get home and you don't want to be sitting at your computer anymore, you get pretty practiced at, you know, pulling these things together quickly. So, I had um yeah, a lot of experience with just taking in lots of information, digesting it, figuring out what it means, and then sharing my thoughts on and conclusions on it pretty quickly. Yeah. the one of the things you just said about the literacy of how this data moves around and and how the the finances work within these larger companies regardless of them being so different. There's terminology that's very important for the bottom line that a lot of small business or entrepreneurs don't know until they get hit in the face with it. Right? So, they start they start working, they have an idea, they start going and and unless they read some relatively recent books and things that are a little more open into how stuff really works, I found a lot of people that that just wing it and they're just just going and seeing what what sticks and what works. But the even terms like like CAC, right? Like they they there's people who who still just hear that even being an entrepreneur and they're like what? No, I I like I just I just sell this is my product and I sell it and but they they don't they don't really uh think in terms of rorowass and or other things. Yeah. And and sometimes I feel and and I **[00:06:00]** might be completely off here, but the fact that you had experience with the larger companies can help you sort of understand the rest of it so that it then makes sense when you get not to that scale but to some sort of scale in the entrepreneurial world. Does that make sense at all or or not? Yeah. Well, I guess to riff off what you you were just saying a little bit, um I think it's important for business owners and and founders to recognize that whether or not they like it, finance is kind of the language of the business world. Now, if you've got a type of business where you're going to be able to be completely self-sufficient and you're not going to need anyone else's help and you have no need for outside capital and you don't need to be engaging with other people to support support you in your endeavors, then you know, maybe you're off the hook a little bit because you can just talk to yourself and you don't need to interact with others to to get their support. But if you're running the type of business that is in any way going to need the support of lenders, equity investors, agencies, you know, people who, you know, trying to help you build whatever it is that you're working on, then you need to have some level of finance fluence because you need to be able to, you know, talk this language so that you can communicate with one another and um, you know, work towards common goals. It was actually this this insight um that I had while I was doing the the mentoring that kind of sparked what I'm doing now with the fractional CFO consulting. So I was as a as I mentioned like a mentor or adviser to these companies and we'd see them every week and the founders would come to these sessions with me and a couple of other mentors and we'd be talking about **[00:08:00]** some marketing operations problem you know whatever it was that was front of mind for them and we'd inevitably get to the point towards the end of the conversation where it's time to talk about solutions and next steps right we've you know unpacked this problem what are we going to do from here and I would commonly ask these folks, okay, tell me a little bit about your finances. Like, what sort of solution can we afford here? Am I looking for a $500 solution? Can you afford a $5,000 solution? Or is there budget for maybe a $50,000 solution? And time and time again, I would just get these blank faces like and these these very very talented founders who understood their product, understood their problem. They're incredibly passionate and motivated, you know, brilliant people, but they couldn't answer the most basic questions about their financials and tell me how much they could actually afford for a solution. And I was like, this is just such a shame that you have these people who, you know, wanting to do the right thing, but they're isolated from and disconnected from necessarily getting the help and support they they need because they do not speak this language of finance. And to be honest, that was kind of a big part of what led me into doing what I'm now doing and realizing that, you know, my background in this space and knowledge of entrepreneurship and startups that maybe there was something there. And that was kind of uh, you know, the the beginnings of the exploration of into what has now become future ready CFO. I guess that makes a lot of sense. the understanding of some of this financial terminology sometimes just levels the playing field I think for some of these these founders and entrepreneurs who again might be doing well but if they don't know how the numbers **[00:10:00]** work and they don't have someone like you helping them understand what the numbers actually mean what you're getting at the end. We're talking about the other episode about like when somebody raises capital, what how much you actually get at the end and all the expenses that come along with it and and a bunch of other stuff. And and there's so much that people don't don't know. They just see that first number. And so the same goes for sales coming in, especially if it's new business. They they might just be thinking, "Oh, great. This number I'm covered. I'm going to do very well, etc. I'm going to be able to scale." But if they don't understand or have that literacy or someone someone like yourself to help in that CFO role, then then they might not be making smart decisions going forward that can actually help that business survive and thrive. Mhm. Yeah. No, you're absolutely right. And I I think I could talk about this for hours, but one of the um one of the big reasons for the phenomenon that you just described, I put it down to a concept called cognitive dissonance, which is where us humans find it really, really difficult to hold two conflicting narratives in our head at the same time. It's a bit like saying you can't walk around and say, "Hey, I'm a good person." but also know that you're a shoplifter and you know you kill baby puppies for example like no like you can't be a good person and also kill puppies like you're a terrible person if you do that and where where I'm going with this is that a lot of founders like to hold this narrative around you know their business their product and they want to tell their family and friends hey I got this amazing thing that I'm doing and you know this cool product or service and I'm out there in the world doing all this all this you know amazing stuff The problem is when the financial statements can sometimes tell a slightly different story and the financial statements might be saying at the same time, well, yeah, you're telling all **[00:12:00]** your friends, your family and friends that this is amazing, but according to these numbers here, you kind of suck right now. And because there's these two different very conflicting narratives, a lot of business owners will choose to isolate one of them and ignore one of them. And that's often the financial statements. Now, the problem is that when we do that, the financial statements are going to continue to exist whether or not you pay attention to them, right? They're happening. Those numbers are being printed every day, you know, week and month. So, what I work with a lot of my clients on and what I'm trying to get them to to realize and and and see is that by forming a more productive and healthier relationship with these financial statements and understanding how to leverage and utilize them to your advantage, we can stop being overwhelmed by them. We can stop seeing them as confronting and something that uncomfortable and we can actually, you know, start to see them and utilize them as a strategic ally and they can illuminate the parts of our business that are healthy. They can also illuminate the parts of the business that are not so healthy. But you know what? Once you have that clarity and you can see what are the things that are going well and what are the parts that are not, it becomes a lot easier for you to focus your time and attention effectively because we now no long need to longer, you know, no, sorry, I'm mixing my words here. We no longer need to run around doing a million different things and busy work. We can just prioritize the things that are not working properly or the things that need to be optimized. And the financial statements give us a huge amount of context and guidance on to what those parts of the business are. So use your financials wisely. It helps you understand and get clarity on what is or isn't working. I will argue that that actually makes your life easier and less stressful as a business owner and operator because you no longer need to **[00:14:00]** do everything. You can just prioritize the stuff that's broken or not working properly. That's so true. If you don't know, you have this thing hanging over you where it's you don't you feel the pressure of it, but you don't see it clearly. So, you don't know what to fix. Like, you're seeing it. You just know there's leaks. Like, if we're talking the the water and pipes analogy, you see there's water everywhere, but you don't know where to stop start stopping those leaks, right? when if you had clarity like having one of those cameras that looks inside the wall, you could see like, oh, if I just stop that one, everything else stops. Exactly. Yeah. So, that's an excellent point. I I feel that not only in terms of are you spending too much, right? It's also how to grow because in some terms you might be doing 80% of your work with things that don't really move the needle and then these 20% of items if you actually worked on those exclusively would give you 80% more right according to PTO but but t typically it it sort of works that way there's going to be those those specific things that you should spend your time on. So how do people gain this sort of insight once they have a CFO or a fractional CFO? Is there how the process is it like the a deep dive into all the financials and an exploratory phase? How does that work? Yeah. So let's talk a little bit about the different phases that a founder is likely to move through. First, um, I have a framework that involves four of these phases. The first I call the denial phase, and a lot of people start here. And during the denial phase, a founder or business owner will commonly just flat out refuse to engage with **[00:16:00]** their finances. It's like, I don't want to look at this stuff. Don't want to talk about it. Like, make this problem go away. It's very difficult to um you know have productive conversations when we're stuck at that phase. But what happens uh for a lot of people, not all, but for a lot of people after that is that they experience some form of what I call the overwhelm phase. This commonly happens when we try to look at our our finances um without the appropriate level of support and assistance. And so we dive in, we look at all these numbers, there's a thousand different things going on. And it's like, eh, get me out of here. Like, I tried. Too confusing. And, you know, we may even revert back to the denial phase after that. The third phase is what I call the intrigue phase. And this is where we start to kind of look over the fence and go, "Huh, you know, there's some interesting things over there. I don't fully understand it all yet, but I probably should because it seems like there's something I could learn there." The fourth and final phase is what I call the enlightenment phase. And this is where really the penny starts to drop. And this is where we have our aha moments. And we start to kind of see things and appreciate things about our business which maybe were previously invisible to us or that we didn't realize. Needless to say, what I'm trying to do with all of my clients is get them to that fourth enlightenment phase. And that's the point where we can start to see and appreciate and understand that this is a strategic ally and something that can actually might make our life easier as a business owner and operator. Uh in terms of engaging someone like me, I mean all fractional CFOs are going to be a little bit different. The way I personally do it is that I start with a paid audit or review. So, for a onetime fee, I basically spend a week with your financial statements. I describe it to people as it's a little bit like taking your business to the doctor for a **[00:18:00]** checkup. So, I'll plug it in. I'll ingest all the information. I'll run some benchmarks, analyze what's going on, and then we'll get back together a week later, and I'll run you through that analysis. Um, this is a really I mean, I'm just, you know, talking business owner to business owner here. I I really appreciate this process because it allows me to understand the client's business and so that I can quote them more accurately. It's helpful for my sales process because I can identify and draw attention to problems in the business that I can potentially, you know, include as part of my proposal. Um, it's also helpful for just screening. And you know, if someone's not going to pay a couple of grand for this order, then they're probably not going to be a good fit for an ongoing retainer relationship afterwards. Um, if people don't want to pay for this service, though, uh, I do have a whole lot of free content. I've got free templates. I've got a YouTube channel. I've got, you know, oodles and oodles of content flowing, uh, floating around on the website, a lot of which you can get is if you just submit an email address. Um, so a big part of what I do and why I'm doing this is to help founders with financial fluency. I have a lot of respect and appreciation for founders and entrepreneurs and I want to do what I can to empower them and reduce the chances that their businesses fail because they don't understand this stuff. So um and you know hopefully if some of these people who can't afford the services today um maybe a couple of years one down the road once the businesses have grown a bit hopefully they'll be front of mind for you know the time or place when they ready to uh bring someone on to give them more help. So that's how I personally tackle it but um I'm sure there there are many other approaches out there. I think that's a great approach. There's there's always a traditional approach of **[00:20:00]** you have a website and people fill out a form and and they get a guide and and it's that's just that's all they know about the brand, right? Or they get a mailing thing or they watch a commercial and then they get the thing to do like the traditional way, right? But I think the way you're doing it is how it should be done because you're building rapport with people. you're educating um you are showing them what they can do, where they could be without necessarily paying you a dime, which is great. I I really enjoy working with providers that do that because I can see what they're doing. I can see their expertise and if I'm constantly seeing like you were saying then they're going to be top of mind whenever I need that particular thing that they do or that particular widget that they sell. You're proving before Mhm. actually asking, doing the ask, which is great. And for some people, they might not be ready to do it just because they are don't feel safe yet. It's not necessarily the money. It's just they're like, well, I don't I don't know that I want to trust someone to get my financials, right? But once they understand by seeing content, by learning with you, then then they might open up and say, "Yeah, I think it's worth a conversation." And then the audit and all that. And it's very similar to what we do. We do a similar audit for all the AI stuff in a company and then figure out what their pain points are, sorry, where they're actually suffering. Because you could always go and pitch in something, but if it's not really what they need, then why? I I think as business owners, I totally agree with you, you're in it to help other business owners grow. Mhm. Right. With the tools that you can help them grow with. So that's that's an excellent approach. I'm I'm happy you do that. And you have **[00:22:00]** a show, right? I do. I have uh my own podcast called Profits on Purpose, which is, you know, part marketing, part sales, but um yeah, I'm I'm trying to keep pretty busy in terms of the the marketing collateral and just trying to build a brand really um get my name out there and uh get in front of as many people as I can. That's especially in 2026, that's the way to do it. And this is also for every entrepreneur and business owner out there. Doesn't matter the size. If you're not doing this sort of stuff yourself, then your competitors are. You need to get out there. You need to create content. You need to have content on the web. Not only your website, but actual content, podcasts, um, blog articles, videos, whatever you want. Because remember, everyone's going and searching in AI now. They're asking CHPT. They're asking perplexity. They're asking Gemini and Claude. And all these tools are using Twitter and Reddit and YouTube and LinkedIn and that's where they're getting their sources. So it's no longer just a let me have a fantastic website out there. It's it's having everything around it so that these LLMs actually suggest you to people. Mhm. Yep. Yep. when I see company because I I work with all sizes of companies but mostly in the small to mediumsiz company. I still see many companies that are seven figure companies that don't have CFOs like you were saying at the beginning and many cases it's just because the CEO or the owner the founder just wears many hats. Mhm. But I think it's there's a lot of misconceptions there as well, right? I think many people don't really know if they've never been in a company that has a CFO and seen the value that a CFO provides. We don't we don't necessarily **[00:24:00]** know like why is there a CFO? Like why why didn't this other person don't I have my accountant? Like what's the difference? Right. So could you elaborate a little on on what what that position actually means for a company for someone who who has never really understood the point of a CFO? Sure. Uh I'm going to address that with a few different frameworks. And I guess the the point of sharing these frameworks is just to provide your listeners with some tools to think through whether or not they might actually get benefit from a CFO because the reality is that not all business owners will. So the first first uh concept we need to understand here is that I really only think that a CFO makes sense if your business is post product market fit. Product product market fit. It's kind of a bit of an elusive term in the startup world, but it essentially means that you've got a product, people want it, and you know how to sell it, and you are having some degree of success and traction in doing all of these things. If you are a business that has not achieved product market fit and you're still figuring out what the product or service is or you're still figuring out how to sell it, there is no amount of CFOing that is going to be able to fix, you know, a business model that doesn't work or a product that someone doesn't want to buy. And I would argue that every single scent that you have and every hour available in your day should be dedicated towards optimizing for and finding product market fit. So do not even consider paying someone for CFO type advice until you are beyond that point. The next uh the the next thing that I would love for folks to think about is to to to think about themselves as a **[00:26:00]** business owner and operator a little bit like an investment manager or a fund manager in a way. Now what I mean by that is your job as the CEO and founder of this business is basically to source inputs largely you know human inputs and capital inputs or or money inputs and you're making decisions about where and how to invest those those inputs. So, some examples of places that you might source money as a business owner, you could get debt. You could have equity investors. You could get money from making sales from, you know, selling stuff to customers. It's a great place to get money. You could also get money out of inventory, accounts receivable, accounts payable, grants. Like, there's potentially dozens of, you know, uh, places that you can source capital and and resources from. At the same time, you have a whole lot of decisions about what to do with that capital, right? You could buy inventory, you could hire people, you could run ads, you could build a production facility, uh you could invest in R&D for a new product. And I have seen examples of founders and businesses where they have a very large number of choices on each of these axes. There's also examples of businesses that have a very few number of choices on these axes. And I would argue that the more complicated your decisions are in terms of both sourcing the capital and also what you're going to do with the capital, the more value you're going to get from working with a fractional CFO. One of my earliest clients was actually a uh woman who owned a beauty brand and and had a salon. And so she had kind of an e-commerce arm to the business, but also a services arm to the business. And she was trying to grow both of them. Growing e-commerce meant getting a 3PL and a co-manufacturer because at the time we met she was doing all of the assembly herself. Growing the services arm of the business would have meant renting more space, getting more employees, figuring out how to manage this bigger facility. And she had some really complicated decisions about where **[00:28:00]** and how to grow the business. And she was also dealing with a lot of choices about where to source capital from. And although she was doing less than, you know, well less than a million dollars at the time, she had pretty good margins, pretty good profitability. And, you know, I was able to help her and at least I felt that I was able to add a lot of value and bring a lot of clarity to some of these complicated decisions that she was grappling with. At the same time, I crossed paths with a founder um maybe a year or so ago who wanted some help building a financial model for a capital raise that he was working on. Um, now for this guy, he had a very, very simple product catalog. I think he really only had two SKs. Um, he was doing like $15 million a year, which was insane for two SK, but his business was basically him plus three or four freelancers. Now, when we looked at the the number of choices and options that he had in terms of where he was going to get capital from and what he was going to do with it, he was getting capital from profitable sales to customers, right? And he knew that every new sale was profitable because he' done the math on that. When he got that capital, he also knew pretty much exactly what he was going to do with it as well. He was going to buy more inventory and more ads. And this this founder, although he was significantly bigger business than the first one, you know, it was doing like 20 or 30 times more revenue, he just didn't have the same need for a CFO because the range of choices in front of him was so much simpler in terms of where he was getting capital from and what he was going to do with it. So I would encourage people to think through that and think about the range and complexity of the options you have. The final thing to to keep in mind here and something that I you know chat with a lot of uh founders or potential clients about is be honest about your **[00:30:00]** zone of genius and the things that you are genuinely good at. If finance and numbers and spreadsheets like are your jam and you're happy doing some basic math on cash flow projections or you're comfortable putting together a spreadsheet to you know calculate your unit economics, maybe you can get a little bit further with just diying this and you don't need to pay someone for help. But if you're the sort of person who struggles with this and you know spreadsheets give you chills and you can add more value to your own business doing other things be it designing products talking to customers ads creative whatever else but if there's some other aspect of your business where you can add a huge amount of value then you spending your time doing this finance stuff represents an opportunity cost right and even if it's only you know 10 or 15 hours a month that you're spending this. This is 10 or 15 hours a month that you could be spending doing init pursuing grow you know initiatives that would actually grow the company. So part of bringing on any consultant or anyone to help you involves an honest reflection on you know where and how are you actually adding value into your own business. acknowledge the areas where you're not or you can't or you're not good at it and thinking think about offloading them whether that's you know web development, AI, finance, marketing, you know, whatever it is but just be honest with yourself about where you do and don't don't add value. That's an excellent point. It doesn't really matter the size of the business in in reality. Well, a certain level it does, but in many cases it is based on the actual needs and and what that arbitrage is going to be if if you actually bring someone in. Are are you doing it such that you're getting more value or just because you want to check a box and say, I've got a CFO, but really it's not it's not actually giving you anything if if you're already covering your tracks in that way. **[00:32:00]** That's super interesting. I recently I I think maybe the last couple of years I've seen the fractional part more both in the CFO but also in the CTO and some other seale roles we start seeing that that fractional um kind of situation or arrangement which seems very practical especially like you were saying at the beginning for business owners who who might not be as large of a company where where they have so many employees that it makes sense to have just direct CFO. Where where do we figure out apart from whether we are sort of good with finances or or completely dislike them, right? Where do we figure out if we actually need someone to look into our finances? Maybe not as a permanent role, but what would be some telltale signs to look out for as an entrepreneur to say, "Oh, hold on. I need someone to look at this with outside clarity and tell me where if I'm heading towards a wall or something." Yeah. Yeah. Great question. Um, and I suspect if you asked some other CFOs about this, you would probably get somewhat different answers. So, I'm just going to reflect on my universe and my world. And before I do that, it's important to give some context on where my customers are typically at in their growth journey. I mentioned the concept of product market fit earlier and unsurprisingly like the people that I tend to engage with one of the first things I'm looking for is like are we postp productduct market fit like is this business actually you know got **[00:34:00]** something that people want are we starting to see real traction and in the e-commerce and consumer goods space that usually means that we're doing at least 2 or 3 million in revenue. the the next step that uh these businesses are trying to take though and the journey that they're on is that they're not yet what we'll call a real or you know fully built out business. Okay, so we don't have a complete organizational chart. They don't have a full marketing team. They haven't figure out figured out operations and supply chain yet. So they're looking at the tools. They're looking at technology. They're looking at the team members and people. Should we in-house this? should we hire an agency or a consultant? And they're making all of these sorts of decisions. So, as a CFO, I kind of specialize in helping people or brands and founders cross that chasm. It's part of the growth journey that I particularly like because it's very diverse number of challenges and problems and I find that interesting. Um, in terms of the problems and how people know that someone like me could be helpful, I see I guess a couple of um common problems emerge during my initial client discovery calls. Number one is there's often some level of discontent with financial outcomes being achieved and this could materialize in the founders are not paying themselves enough. They're not paying themselves consistently because they can't project cash flow accurately and therefore you know last minute hey there's this huge purchase order can't afford to pay myself this month. Oh well guess I'll live on credit card you know for the month. uh or they are perhaps doing, you know, millions of dollars of revenue, but they're not seeing any of it accumulate in the bank balance at the the bank account at the end of each month and they're kind of looking around thinking WTF, man. Like, what's the point in me working so hard, making all these millions of dollars of revenue if **[00:36:00]** I'm not getting to take any home, right? So, that would be category one, some level of of discontent around financial outcomes. The other very very common problem that emerges and I I don't think a lot of founders have a great self-awareness of this but uh they become aware of it fairly quickly after we start working together is around priorities. So during my onboarding process, I I have a process where, you know, I'm trying to tease out like what are you working on? Like what are the things that are you you're trying to do at the moment? And we'll actually we actually have a a a notion board where we create a bit of a list. So I'll see Tik Tok shop, I'll say we want to hire a new agency, we want to hire this operations person, we want to open up a new sales channel, like whatever else. There's usually dozens of these different priorities. And at some point during this conversation, I have to say to the founder, listen, I'm sorry, but when I hear you tell me that you've got 20 or 30 different priorities, what I actually hear is that you've got none, and we don't really know yet which of these things we need to do in order to achieve the financial outcomes that you told me you want to achieve. So really what I'm trying to do is help them put together a plan or a strategy that will take a select number of these projects and give them the greatest probability possible of achieving the financial goals that they told me that they want to achieve which could be paying themsel, it could be an exit, could be building a lifestyle business, whatever it is like every founder is a bit different. So really what a CFO does and what you know I I the way I interact with most of my founders is I help them with decision-m support. I am the guy that brings the finances. I'm the guy that brings the numbers. I'm the guy that brings the data. They bring the knowledge of the customer, the **[00:38:00]** product, the problem that they're solving. Then we collaborate and navigate our way through difficult decisions about, hey, should we open this sales channel? Should we hire this person? Like whatever it is that they're they're contemplating. Again, going back to my analogy um earlier about the number and complexity of decisions that you have. Um I specialize in making those decisions easy and bringing data and numbers to them to illuminate a clear path forward. essentially super important. A lot of times as entrepreneurs we will have ideas and really get excited about these ideas. Maybe we heard about Tik Tok shop live shopping. Maybe we heard about this other trend. Maybe you heard about that other thing. And our minds just get a boost and you get excited. You want to start building. want to start doing and then maybe you have two or three of those and you don't really know which one to go at and if you don't have the data to back up which is the right one, you might be doing something just for that high of doing that fun thing that you found versus what will actually move the needle. So, it's really helpful the help that you provide, the assistance that you provide with getting the numbers and the data to back up which of those should be prioritized so that it actually makes a difference. Yep. Yep. That that concept that you just touched on, by the way, is something that I experienced personally when I was building my own e-commerce business. So, I I know what it's like to be in a kid in a candy store and playing around with all these marketing widgets and the new flashy toys. It took me a long time to realize it, but I actually think for a period there, **[00:40:00]** I had a form of dopamine addiction from all of this learning and figuring stuff out that I was doing. Every day was a new challenge, a new tool, a new thing that you could learn and educate yourself on. And um one of the things about entrepreneurs and founders is that they love learning. Um you have to be kind of a self-educator, a self-starter. And I think it's a very very common trait that they love the dopamine hit that you get from figuring out new difficult things. But what I uh came to realize eventually in my own entrepreneurial journey is although you know I was on this big sugar high I wasn't actually making that much progress in this era of my journey and I it you know after a while this got kind of painful and then I you know started to take a step back and think a little bit more about working on the business and myself rather than just keeping myself busy with all these shiny objects And that experience and what I learned from it and how I you know ultimately learned to be a better leader and CEO like some of the frameworks that I applied in my own business are have actually now become part of the toolkit that I'm using with my CFO client clients cuz I can see it when a founders on a sugar high and playing with all these shiny objects and a lot of the time they just need you know someone to to tell them hey this is not working we need to do something different. And I know I know this is fun, but unfortunately in business, a lot of the a lot of the riches just come from doing the boring stuff well. And you know, we just need to order inventory at the right time. We just need to be disciplined with our overheads. We need to make sure we're not spending too much for customer acquisition. Just do this boring stuff well and the financial outcomes will, you know, largely take care of themselves. That's excellent. I've seen it many **[00:42:00]** times and I think we've all depending on your entrepreneurial journey, but you get to a point where we've all had it happen, right? And you've learned from it, but there's still always and new every day there's new entrepreneurs that have not had that experience and that learning. And so having someone whether it's a CFO, fractional CFO, or even a group of peers that you talk to or interact that are also entrepreneurs that might be a little bit ahead of you in the entrepreneurial journey. and be able to have that called out I think is very healthy for for anyone listening who's an entrepreneur because you'll it's funny you start talking to people who have built businesses and the advice they give you is many times common sense but it's just things that that already happened to them and that will most likely happen to you as well and it's just a matter of talking about it so that you say maybe you don't make those same mistakes and and get to to get to the goal faster, if that makes sense. Yep. Exactly. There's a there's a thing that you mentioned a moment ago that I that I think is is also very important for people to grasp, which is sometimes you have a company that is doing very well in income. Mhm. And for for those who are not business owners, who never run a business, this might not make a lot of sense yet. And for those who are just starting out, and and again, this also might sound like, "What are you talking about?" because I' I've heard this these complaints before, but you could have a business that's doing $50,000 a month, $100,000 a month, and not be taking anything home. Mhm. Like you just said, because of **[00:44:00]** everything else downstream. And it's a hard spot to be in because you feel if you're in that position, just like someone feels when they didn't get a paycheck or they're just starting out and they didn't get any clients, you feel the same amount of pressure and sometimes even more because you probably by that point have a lot of debt to service or you have a lot of purchase orders to be fulfilled or like there's a lot of downstream effect. So you have to work even harder to raise that such that you it doesn't collapse like a house of cards. So what do you say to someone who is in that position? What what should if they don't have access to a CFO yet or a fractional CFO and they want to to sort of go over that hump? That's the first thing they should look at so that so that they can start moving away from that. Yep. Yep. Good question. Uh if I am going to get to your your direct answer, but a couple of things I want to mention before we do. You touched on revenue, which is the the you know top line of an income statement, and you also mentioned net income, which is commonly referred to as the bottom line. And that's essentially what uh is left over after you've taken all the expenses and costs away from from your your revenue. Now that income compared to revenue is sometimes called a net income margin or net income, you know, ratio, I guess. Um but it's essentially a measure of how efficiently we are solving our customers problems, right? Someone wants, you know, someone wants a a check shirt or a plaid shirt, someone wants a microphone, someone wants some food. Like, it's our job to then deliver that product or service. And if we can do it efficiently, then we **[00:46:00]** have low costs. And if we have low costs, we'll be left with more margin at the bottom. Now, the reason that businesses exist as businesses or corporations is to generate a profit. It's part of the charter of the the it's the reason they exist. If a business does not have as part of its charter and mission, then it probably shouldn't if it doesn't have this as part of the mission, then it probably shouldn't be called a business, right? It could be a club. It could be a, you know, philanthropic organization. It could be called a nonprofit. Um, it could be called a special interest group. There's a lot of other ways that people can, you know, congregate around shared interests. Um, but if we're not caring about profitability, then we shouldn't really treat it as or call it a business. Now, to to your point, you know, what's the first step and how do we start thinking about this? I think a really really important first step is to address what I call the context vacuum. And this is a very very uh common reason why people struggle to get past the first one or two stages of that you know four stages to enlightenment framework before is that we don't really know what good or bad looks like for our industry. Right? So we could say okay I'm spending 15% of my revenue on marketing costs. Is that a lot? I don't know. What are you selling? Who are you selling it to? We need to compare it to some other companies like yours to understand. Or I'm spending 25% of my revenue on indirect costs, labor, and overheads. Is that a lot? I don't know. Depends what other businesses like you are doing. Right. There's um and there's a lot of different ways that revenue can flow through a financial statement. And there's a lot of different, you know, ways that we can convert revenue into **[00:48:00]** profitability. at the end of the day. Uh but a critically important part of you know developing this financial awareness is addressing this context vacuum and that's just contingent upon or or or relies on benchmarks. You know we need to know what good and bad looks like in our industry and this is often a really difficult thing for business owners to do because finances are often a bit of a personal topic. If you put, you know, 10 business owners in a room, they're usually quite happy to show each other, you know, what their Google Ads account or their Meta Ads account looks like, but you ask 10 business owners to put their profit and loss on the table and share it so that everyone else can see it. Um, they're probably not going to do it, right? Like they they don't want to get that uh personal with the the data sharing. So, it's difficult to do. Um, it's obviously something that I try to facilitate through my business. I have, you know, various data sources that I use to understand what good and bad looks like. Um, if someone is wanting to have a go at this themselves, then just jump on Google, do some online research, start looking for industry benchmark reports, you know, um, research studies. There are plenty of organizations out there that publish this sort of information. Um, often service provider type organizations will publish this sort of data as kind of a lead magnet. So, you know, you got to sign up, you can download their whatever 20page PDF, you'll get a whole lot of data about your industry and they get your email address and, you know, they'll probably try to sell you a product afterwards, but whatever. So, yeah, just have a look around. try to get some data um on what you know your cost of goods sold should look like for your industry, what should overheads be, you know, what cash conversion cycles look like for an industry like yours. And once you have that, you are going to find it a lot easier to make sense of your own finances because it will become a lot clearer what is good, bad, or otherwise **[00:50:00]** within your own company. Wow, that's excellent advice, Nate. I I think people just just those specific things that you mentioned right now at the end ask Google or an LLM like tell it your industry tell about your business and then have it give you that research back and that's a great starting point to start comparing and seeing what what what some of those averages are Nate if people want to learn more about what you do and also about future ready CFO where would be the best place for them to find more information? Yeah. two places I'd recommend. Firstly, the website which is future readycoo.com. Um, in terms of socials, I'm most active on LinkedIn. Uh, my name again is Nate Littlewood. Um, should be pretty easy to find, but I'm posting on there usually a few times a week and, uh, happy to connect with folks through there. Um, or just follow along for the, you know, free content and resources that I share. Excellent. Well, thanks a lot for coming on the show, Nate, and everyone who's listening. If you haven't, please like and subscribe so you are aware of every new episode that we release with amazing people like Nate here. And make sure you also find Nate on LinkedIn so you can get all his valuable content and connect there as well. Thanks everyone and we'll see you in the next one. Thanks, Nate.