I try to book calls with the accountants on our site as much as I can because as a company being operated by 3 non-accountants, I’d say it’s pretty important to keep in touch with your customer base! I just got off a call with a new accountant on our site,
Alejandro. I love Alejandro! This was supposed to be a 15-30 minute conversation, but it was just about 2 hours. Alejandro took me to school! I told him I was solo traveling this summer and it turns out he’s a pro in this area, so we ended up spending the first 15+ minutes with Alejandro telling me everything he does to be the best solo traveler. Some people cold email for business, Alejandro will cold DM you while he’s traveling to network and make friends. But most impactful to Sam’s List, he shared some interesting thoughts around a Fractional CFO. I’ve always looked at Fractional CFO as a buzzword, but it’s actually a cheat code. I’m gonna try my best to share with you what Alejandro shared with me– examples and everything.
What is a Fractional CFO?- Tipalti’s definition:A fractional CFO is a part-time Chief Financial Officer typically hired by startups on a contractual basis to share their expertise in finance, strategic planning and other CFO-related activities.
- My definition: The person you hire for a specific problem(s).
The Role of a Fractional CFOTurns out, a lot of founders confuse the roles of Fractional CFOs, accountants, and bookkeepers. While bookkeepers handle day to day transactions and accountants validate these at year-end, a Fractional CFO offers strategic advisory services that go beyond the numbers. A Fractional CFO brings flexibility and expertise to your company without the full time cost, which is a huge benefit for most, but it’s not actually the best advantage. Alejandro recommends considering a Fractional CFO first because you may be looking to hire a full time CFO because you have a problem that you want to solve right now, but that problem may be gone in 3-6 months and now you’re stuck with an expensive executive on your team.
The Fractional CFO role is ideal for specific projects like capital raises or fixing systemic financial issues. For example, one of Alejandro’s clients was struggling to scale revenue despite having a good customer base. That’s everyone right? 👀 Instead of just creating a budget, he dived deeper to find out why the company wasn’t growing revenue from existing customers. By asking the right questions, he discovered that the company’s pricing structure was so far off from where it should be, costing them more to deliver services than they were charging. More specifically, their Enterprise clients were the dead weight to the company's growth in revenue!
How did this happen?Well the CEO really wanted to have this specific company as a client so he gave them a pretty friends and family discount because it would be good business for the company. Turns out that wasn’t really the right way to go. And on top of that, the entire pricing structure varied across the board, practically everyone was charged a different rate. I’m glad to know we’re all struggling with how to properly price our products! (ha) What’s wild is that, when Alejandro initially joined, the CEO of this company was actually looking to double his sales team because he was convinced that was the right solution in order to scale revenue like he wanted. Now, through a series of questions, they’ve now saved a few hundred thousand dollars by not increasing overhead costs by hiring a full time CFO and a bunch of sales people.
(Yes, Alejandro ended up helping them figure out their pricing)It’s not just about the cost savings but about unlocking efficiencies and driving growth. Whether it’s resolving billing issues, managing capital raises, or optimizing revenue, a Fractional CFO can provide the guidance and structure to take your business to new heights.
In Alejandro’s words, a Fractional CFO should leave the company in a better place than it was. I don’t need a Fractional CFO right now, but let me tell you, I know when I need to call one now! But if you need a Fractional CFO, I’d be happy to introduce you to
Alejandroor one of the other Fractional CFO’s on Sam’s List! That’s the 3 minute version of my 2 hour conversation with Alejandro. -Kimi
