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[00:00:00] David Tramontana: A CFO, if you’re the business owner, should be the passenger in the car seat, and business owner entrepreneurs driving the car, they say where they want to go. The CFO can create a financial GPS that says, “Here’s three different options on how to get there, pros and cons of each different path, and we’re gonna build you a dashboard along the way to give you some key performance indicators to stay on track to hit your destination.”
[00:00:32] Lee Brumbaugh: Hello everyone. My name is Lee Brumbaugh. Welcome to another episode of Sales Against the Odds. Very excited to have you in today. We are joined by David Tramontana, who serves as the area president for FocusCFO, also as their president and integrator, got to know David very well and how he’s helped build this company and really is able to turn FocusCFO into a nationally known company that’s delivering, uh, a lot of strategy around the finance side, development side, all different areas that they help.
[00:01:04] Lee Brumbaugh: David, thank you so much for joining us today.
[00:01:07] David Tramontana: Oh Lee, thanks for having me. Thrilled to be here.
[00:01:09] Lee Brumbaugh: Yeah. Well, Dave, just to get us started, for those of those, I know as a fractional VP of sales, I often have to explain what I did in that advisor capacity. Talk to us a little bit about what is a fractional CFO and what are the biggest areas kind of your company helps fix at the onset?
[00:01:27] David Tramontana: So I’m gonna actually use an analogy to answer that. Um, then I can give you a couple specifics. The analogy I like to use because I wish I had heard it in my prior life. For 20 years I was building a business as an entrepreneur, and when they recruited me to join FocusCFOI always say I wish I knew then what I know now.
[00:01:42] David Tramontana: ’cause I would’ve hired a fractional CFO to help me when we were scaling our business. I mean, the difference between, a bookkeeper, staff, accountants and controllers is they’re always recording what happened in the past and producing accurate, timely financials. So we described that if you’re driving a car, they look in the rear view mirror to report history last month, last quarter, or last year.
[00:02:01] David Tramontana: A CFO if you’re the business owner, should be the passenger in the car seat. And business owner entrepreneurs driving the car, they say where they want to go. The CFO can create a financial GPS that says, here’s three different options on how to get there, pros and cons of each different path. And we’re gonna build you a dashboard along the way to give you some key performance indicators to stay on track to hit your destination.
[00:02:20] David Tramontana: Had I known that I would’ve done things differently, you know, 15, 20 years ago. so the things like we see, I mean, a lot of times it’s accurate, timely. Financials. but what’s more important than closing out the past because a lot of businesses have troubles with their accounting staff looking in the rear view mirror is a challenge, and we can’t forecast if we don’t have that. So number one is like helping mentor their accounting department and coach them up. Number two is cash forecasting. especially in a growing business or a business where has changing margins to understand the 13 week cash flow. And then, strategic decisions makings about like, Hey, we want to grow and expand.
[00:02:53] David Tramontana: Like how do we add sales reps? when do we add overhead? How do we add new locations? So it’s the growth objectives. And that third and final area would be transitioning planning. You know, whether it be an internal transition to family or potential third party transition. But it’s, it’s usually the monthly timely, accurate financials, good data to make strategic decisions.
[00:03:12] David Tramontana: And then number three, succession and transition planning.
[00:03:16] Lee Brumbaugh: So when you’re looking at the growth initiative, obviously a lot of business owners trying stay focused kinda on the revenue growth and the sales side. And I love that’s, I love that analogy of, of looking forward, right? ’cause you do typically finance, you’re thinking reactive, but I know so much of what you do is, is not that.
[00:03:31] Lee Brumbaugh: What are some of the areas where you’re working with the business owner? You’re talking about that kind of growth initiative bucket and where they need to invest. Whether it be sales marketing to get those resources or you where they have the most hesitation. how do you bridge that gap?
[00:03:43] Lee Brumbaugh: how do you make sure you model, like, this is where we are now, this is where we head. So what are some of the areas you see that biggest hesitation and how do you get them unstuck in those different areas?
[00:03:53] David Tramontana: it’s forecasting is the short answer, and it’ll give you more of a better explanation. I’ll even use my old business as an example. No, I was in healthcare for, um, 20 plus years, and when the Affordable Care Act was passed, our gross margin was changing in the business. So the difference between sales and the cost of goods or cost of services.
[00:04:12] David Tramontana: So our customers were going from traditional government payers to insurance companies, and as that mix changed, the gross margin was shrinking and we’re still pursuing more and more and more, but not forecasting those. The future based upon those shrinking margins and that that snuck up and bid us, really hard.
[00:04:28] David Tramontana: about two years into the, those changes, compare that to FocusCFOI joined here as an integrator. Three months into the, the new role as a president here, COVID happens, the world shut down, or at least America shut down for two weeks. we lost 20% of our revenue overnight. Brad, our founder, had built a great model, um, to run our business good forecast model.
[00:04:50] David Tramontana: So we were able to see, okay, 20% of our revenue’s gone. What does that do to our gross profit and with our fixed overhead, what’s the amount of cash we have left for how long and when do we need to start making tough decisions about. Overhead if things don’t pick back up. So think about a growing business.
[00:05:06] David Tramontana: To your question, it’s like understanding the variability. Like it’s when to add staff, and a lot of times it’s on the operation sides because the owners will wanna do more and more and they maybe don’t feel comfortable. Investing in more headcount until they see more cash in the bank. And that’s a very lagging indicator.
[00:05:22] David Tramontana: You know, you need a leading indicator. So like you need to be able to project the sales. What are we getting a return on the sales person, the investment in sales and marketing. And when that’s being achieved and you see you’re on the right track. You need to make the overhead in investments early because by the time it takes to hire the right talent, train them up and get them in place to service the additional volume, even if it’s inventory, it’s even more.
[00:05:43] David Tramontana: What about supply chain issues? So it’s the forward looking forecasting to understand growth. And a lot of time if you’re waiting for CAT to have the money to pay for the growth, you’re far too late and you’re gonna hamstring yourself.
[00:05:54] Lee Brumbaugh: you’re not forward looking at that point. You’re being reactive. I, I come from the healthcare world as well, and I remember going, being with a company that went through competitive bid, and there is a such thing as bad revenue, right? Like there is, you know, when you look at margin and, and healthy, how do you work with clients?
[00:06:08] Lee Brumbaugh: And especially for, for those of us we’re sellers, right? So I’m an outsource VP of sales. I just wanna sell, sell, sell. how do you work with kind of that sales team hand in hand determine what is healthy revenue? Where do we pursue the right focus? Like how does that interaction between the finance side of what you do and the sales side come together?
[00:06:27] David Tramontana: we want our clients to understand profitability by product and Profitability by customer. because I, I would add a third category to what you said. There’s good sales, there’s bad sales. And then there’s also strategic sales. And that third category might mean we will take a loss on something or a break even on something because we expect it to lead to good sales.
[00:06:46] David Tramontana: and there’s different terms, different sales organizations will use for that. But if you’re servicing customers that, and whether it’s a. A manufacturing business and you’ve got a lot of inventory or retail business, or if it’s a service business. Either way, if you’re not knowing the profitability by customer and you have got customers that you’re losing money on, I’ve seen clients of ours where they actually are able to identify those, say goodbye, transition off the bad clients and be more profitable with less revenue.
[00:07:13] David Tramontana: Because they’re actually losing at the gross margin level with the high cost customers and they position ’em to another business that’s maybe better suited to serve that type of customer and they can focus more on their core business. The strategic customers are the ones where, you know, candidly, you gotta prove yourself potentially.
[00:07:28] David Tramontana: so maybe you go in and you set the price load in order to, to show your quality and commitment to service and so forth. in my healthcare business, we would take referrals from certain organizations ’cause we knew we had to demonstrate for low margin. Payers, but knew that if we did enough of that, well we’d get the good business too.
[00:07:45] David Tramontana: So there’s many strategic opportunities where you gotta prove yourself. And the CFO again can help model that out, and then also give some guidelines or guardrails so we don’t continue to take too much bad business and like, Hey, we’re beyond trying to prove ourselves here.
[00:07:59] Lee Brumbaugh: Yeah, I, I like that, especially that strategic side, because I’ve had those conversations with business owners and they’ll say, no, this is a client that we probably should fire, but they’ll hang onto that client, but then they won’t be competitive. For that, that client that really could grow and take the next level if it fits their ICP, right?
[00:08:14] Lee Brumbaugh: Their ideal customer profile. Everything lines up. You’ve just gotta earn it and build over that trust first. How do you get them, what are some of the criteria you’re looking at? Is it just growth potential? Is it that fits the ICP? Like for those listing they’re trying to picture in their head?
[00:08:28] Lee Brumbaugh: Can you paint me a picture, kinda what that strategic customer kind of would look like?
[00:08:32] David Tramontana: our ideal customer at FocusCFO are businesses between 2 million and 50 million. Most of ’em are probably between 2 million and 30 million of revenue. And candidly, a lot of the clients, the entrepreneur has gotten the business to a certain point.
[00:08:45] David Tramontana: We’re being brought in because they’re having challenges with growth or profitability. And then. the cost of goods, the gross margin. The two most important things a CFO can do is help a business understand their gross margin accurately and their cash flow. so if the business isn’t identifying the gross margin accurately, how are you paying your sales people appropriately and how are you getting the right customers and winning that business?
[00:09:06] David Tramontana: So we got really need to understand the cost of sales and the cost of goods sold, um, to get an accurate gross margin so that we know that we’re pursuing the right type of business.
[00:09:16] Lee Brumbaugh: so, when you’re walking into a business for the first time, that’s kinda how you understand the quality of revenue early, right? And kind of map out. Where they target. from when you’re walking in and somebody’s sitting in that sales seat, ’cause again, they’re gonna want to sell to everybody and sometimes you’ve gotta fire that bad client.
[00:09:31] Lee Brumbaugh: how have you and your company played a role in positioning really that growth strategy to which clients? How, how far in the weeds do you get there? Walk us through that a little bit,
[00:09:40] David Tramontana: you referenced, uh, quality of revenue. So I’ll, I’ll expand upon that. ’cause the gross margin’s a critical component of that. if you understand the gross margin, that’ll help you bucket the clients into those categories of good business, bad business, or strategic business. Okay. One way.
[00:09:54] David Tramontana: So it, because the strategic business might lead to long-term recurring revenue. when you’re looking at quality revenue, I think of three, three words. There’s like one time customers. Reoccurring and recurring reoccurring will be the customers, like a retail store maybe. You know, I live close to Kroger’s in Cincinnati where I’m base is the world headquarters.
[00:10:14] David Tramontana: So we got a Kroger in every little suburb. so they have a lot of recurring customers ’cause we go back to that grocery store. But, you know, if a new high end one comes up, I might go same drive. I might try to diversify a little bit. But still there’s, it’s not, it’s not like the guy who came and,
[00:10:28] David Tramontana: Did our sidewalk in front of the house, you know that that’s one time and I’m hoping I got need another one for 10 or 15 years, right? So you got project revenue that’s a quality. If it’s just one time revenue, you got recurring, which is customers that come back a lot. but then you’ve got the Spotify customer, everybody who’s got the subscription service or even a service agreement, you know, like my Chimney suite business that comes back every single year to clean our chimneys.
[00:10:50] David Tramontana: So, I mean. those that are having you on a maintenance program, that’s a high quality of revenue. Even if the gross margin’s a little bit lower on that recurring stuff, sometimes it’s higher. Depends on the type of business in the industry and the SaaS businesses, it’s typically really well. But if you’ve got sticky customers that have service agreements, high quality of revenue, right?
[00:11:08] David Tramontana: So I look at those three categories for the quality of revenue, but then you also wanna understand the gross margin, Some people will say it’s a bad customer, bad, you know, business. We don’t wanna take those types of, customers or resorting back to the healthcare analogy, those types of patients.
[00:11:23] David Tramontana: But if, if you are providing long-term services that are profitable. It might make good sets. So you gotta balance all three of those things in both categories. You know, understand the gross margin by client and then like, are we getting recurring revenue? So like, we’ll sacrifice a little bit of gross margin if we know we’re gonna have, you know, a client year after year.
[00:11:45] Lee Brumbaugh: Yeah, it’s interesting. We, we, the same theme keeps to whether it’s sales or pricing or, I had a Casey Brown who is a, pricing expert who was on one of our last podcasts and she was talking about same thing of how you look at your customers for price increases. You know, and how you quantify that out, it really usually buckets into three to four type qualities.
[00:12:04] Lee Brumbaugh: But it’s so interesting ’cause so many clients I work with in the SMB space, you know, they think a customer’s a customer and it’s everything from headaches to gross margin. And at the end of the day, if it doesn’t fit the gross margin you’re looking for, you can make an increase, you can make a price increase, you can do things differently.
[00:12:19] Lee Brumbaugh: But you could need to be nimble. That’s the great thing about the SMB space. You can be nimble to your customers. That should be, I think what I’m hearing clearly is that should be an ongoing exercise that you’re constantly participating in. Right.
[00:12:30] David Tramontana: Yeah, a hundred percent. that’s that dashboard of the KPIs. We need to understand the quality of revenue we’re changing in because it, again, you don’t wanna be where I was in 2012 and the this landscape shifting, your product mix shifting, and all of a sudden the fixed overhead you have in place based upon a certain gross margin budgeted isn’t there anymore because your mix shifted it to a lower gross margin business.
[00:12:51] Lee Brumbaugh: Makes sense. So if I’m a business owner and I’m looking at this and, and right now I’m thinking I’m, I’m increasing my revenue, but I’m not seeing it tie. To the, the bottom line, right? And let’s say I want to grow, I’m making a, an EBITDA of x, I wanna grow that by 20% next year. Where do you, where do you typically start?
[00:13:07] Lee Brumbaugh: Like if I’m a $5 million company, I used to be 3 million, but I’m still taking home, I’m that owner that’s listening today. My paycheck, what I’m taking home to my family is still the same. Where do you kind of start, where are some of the low hanging fruits that you typically see for that type of situation?
[00:13:22] David Tramontana: if you really wanna identify low hanging fruits first. I mean, it’s gonna be gross margin and fixed overhead, kind of the two areas we go. you can honest, quickly tell, you know, what’s the FTE account? I’m thinking of a service business,
[00:13:33] David Tramontana: has the overhead structure materially changed? I think I had a good example of that. we had, um, a customer, it was more of an on the expense side that’s so relevant. they switched where they’re, producing an education training event from one venue to another, and they, Increased the quantity of people going through their training.
[00:13:51] David Tramontana: so they thought the cost went up because the, the headcount went up, it did not go up. It, it went up proportionally with that, but it went up disproportionately ’cause it went to a more expensive venue. So, like, understanding the cost drivers, when you see, you know, a chartered account item move significantly.
[00:14:05] David Tramontana: Is it going up because we’re doing more volume, which could be a good thing, more volume’s a good thing, but if it’s going up for other reasons, that’s not. So understanding what’s causing the shift in fixed overhead. But again, I go back to gross margin as the CFO’s responsibility. If you went from 3 million or 5 million to 3 million, you gotta understand like is the gross margin the same in those scenarios or has the customer type shifted And if it’s the same gross margin?
[00:14:30] David Tramontana: You’ve gone backwards. Well then the fixed overhead hasn’t shrunk accordingly, or vice versa, if it’s a growth scenario, if you’ve gone from three to five, maybe the fixed overhead increased and maybe they were too supportive. I’ve seen both types of clients. More often than not, they’re more conservative and not making the investments on time.
[00:14:47] David Tramontana: But there are the ones who, you know, invest heavily and don’t get enough growth to fund it. So it can be either one of those.
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[00:15:23] Lee Brumbaugh: you’ve mentioned, we’ve talked a lot of, of keep coming up, of forward thinking, forward looking. Right? And you’ve mentioned like a dashboard and the, the car analogy. what’s a good dashboard look like for an SMB company? Like are they seeing it’s a weekly pulse check, like what’s a good, what’s a good handle and what a good dashboard looks like that they would try and model.
[00:15:40] Lee Brumbaugh: to
[00:15:41] David Tramontana: there’s leading and lagging indicators, and as a CFO organization, we love to talk about leading indicators. Um, I find most of our clients really like both. so the lagging indicators may be. You know, what were sales last week or you know, how many new customers. So, I mean, there’s a comfort level the one has built from getting the business from where they started it to where they are today.
[00:16:02] David Tramontana: So a good dashboard’s probably gonna have a mix of some lagging indicators that are good. You know, walking around numbers that the owner wants to know, number of customers, number of locations, number of employees, number of new hires, et cetera. But the leading indicators are a little bit of a mind shift.
[00:16:15] David Tramontana: It’s like, what do you need to drive profitable growth? so I’ll tell you as the integrator at FocusCFO we look at the number of CFO interviews every week. Every week, I wanna know how many CFOs we interviewed, because I wanna bring on 40 new CFOs this year. So we need to have 10 interviews every week interviews.
[00:16:28] David Tramontana: So not like how many people signed, an agreement to review our opportunity here, but we’re actually measuring it all the way back to how many interviews the recruiter has. So, in the home care business that I used to be in, it was admissions. Admissions isn’t mean your cost or your revenue.
[00:16:43] David Tramontana: It’s like how many new patients are under our care this week? what kind of drives the revenue and then, you know, you can build all kinds of, leading indicators if you start getting creative with your team. You just gotta understand the industry. And, uh, that’s where our CFOs really like to walk around and get to know the business.
[00:16:59] David Tramontana: And we want to meet with not just the accounting team, but the sales team and the operations team to understand how the business works and what are the things. That lead to where we want to go and try to build those into the KPIs.
[00:17:11] Lee Brumbaugh: Obviously from a sales perspective, we’re trying to do the same thing, especially in those lead indicators. And so many times we’ll work with a business owner and they say, well, it’s not perfect and I wanna wait till it’s final. And like if you don’t have a pulse, then what are, what are we doing?
[00:17:22] Lee Brumbaugh: We’re trying to get ahead of. You know, we’re running a sales meeting to get ahead of you. Even if you’re looking at very top of the funnel, kind of what’s coming in, how many opportunities. Like, that’s okay. You can look more top of the funnel. If it gives you a pulse, that mean it’s the end all be all.
[00:17:35] Lee Brumbaugh: You’re still gonna say, how many deals did we close? Did we hit our revenue targets, et cetera. But there’s nothing wrong with, with something that’s looking at top of the funnel, even if it’s not perfect, it just gives you, again, that that weekly pulse check of, do we need to make a correction or not? I mean, that’s the biggest thing.
[00:17:49] Lee Brumbaugh: Yeah, a hundred percent. And you know, and then on the sales side, I mean, you guys as an organization trained this really well, but I mean, it’s, what’s the, that funnel of activity on the business development, you know, that might be a sales call and then it might be a, discovery meeting or.
[00:18:01] David Tramontana: A pitch or close or presentation, you gotta track all of those activities so that if you know your business development and or maybe you have marketing, maybe the organization’s getting leads from the internet and you get a lot of web marketing, somehow you need to track that business development funnel to see if you’re executing consistently.
[00:18:18] David Tramontana: so we love to have some of those, um, leading indicators as well to see what, how the sales funnel’s converting.
[00:18:23] Lee Brumbaugh: well, and that’s a great thing about the tools. ’cause again, we talk so much of everybody’s the buzzword of. CRMs and those types of things but at the end of the day, CRM, there is to drive your sales engine. And one of the ways you can do it so well is if you’ve got seven to eight different stages, you can say in the discovery stage, we used to sit in the discovery stage for 21 days.
[00:18:43] Lee Brumbaugh: Now it’s up to 28 days. Like, what’s happening? What’s changing? And how do we close that funnel? Again, all of what we’re trying to do in CRM is either better follow up with customers to provide value. Or be able to get data that we can use to adjust in our sales process. We’re doing those two things.
[00:18:56] Lee Brumbaugh: We’re usually pretty in pretty good shape.
[00:18:58] Lee Brumbaugh: So
[00:18:59] David Tramontana: that’s great.
[00:19:00] Lee Brumbaugh: one of the things that you mentioned that I hadn’t thought of much at the beginning when you gave your onset, you talked about a little bit about how you help business owners shift for even how you’re tying into the personal goals to the business. Like give us some perspective of, of how you come alongside that owner to say, here’s how, here’s where you are from your business.
[00:19:19] Lee Brumbaugh: But here’s where you want to head, not only from a business perspective, from an exit perspective, from a personal financial perspective. How do you tie it together? Helping them generate not only their game plan for their business, but their game plan for their family.
[00:19:32] David Tramontana: you know, obviously we we’re working with, um, entrepreneurs that are. 22 to 72. So there’s many different entrepreneurs at different stages of their lives. and some are just trying to put food on the table and others are thinking about, you know, getting out. So everything in between.
[00:19:45] David Tramontana: but for me, when I, when I have my area president hat on and I’m working with a business owner. I’m, I usually start the conversational and I wanna understand where you’ve been, where you’re at, and where you’re trying to go. And during the course of that initial meeting, when we talk about where you’re trying to go, that’s usually, the initial meeting, we’re talking about the future.
[00:20:00] David Tramontana: Like, is it a sale? Like, I mean, what if you can do anything you want, even though you’re only 25 years old and do you think you want to do this I had a prospect recently who was in his. Mid to early thirties and knew he wanted to be out by 45 because of the ages children were gonna be at that time, knew he wasn’t gonna retire, but wanted the stress of this.
[00:20:18] David Tramontana: And then would do something else and would figure it out. So even that was like really important to note at the initial discovery meeting, even though we’re, in that case we’re 10 years plus away. It’s not like we’re planning the exit, but understanding the personal goals will help us coach the business owner.
[00:20:33] David Tramontana: as a fractional CFO, we’re coming in usually a day, a week, sometimes a little more, sometimes a little less. Um, and a lot of the clients, especially I’ll say under 10 million of revenue, don’t have a true leadership team. It’s the founder and their band of you know, helpers, right?
[00:20:51] David Tramontana: so to build a business with value, you know, we like to sit in the finance leadership chair. We’re also working with them. They need an operational lead and a sales lead, and to build their business that’s sustainable and transferable. These are key elements. ’cause a lot of the small businesses are owner dependent.
[00:21:07] David Tramontana: And if the business is owner dependent, there’s not gonna be a lot of value created. Somebody’s gonna buy your asset someday, but you’re not really building significant value. So these are. broader than finance things, but I mean, part of what we wanna do as a CFO is create value in the business.
[00:21:21] David Tramontana: So a lot of the things our topics we coach our clients on are much broader than just finance. It’s like, no, you need to build a healthy leadership team to have value in your business.
[00:21:30] Lee Brumbaugh: it’s interesting so many times, you know, the thing in the finance side, well, it’s, I gotta get my P&L and my ducks in a row from a, from an accounting standpoint to, to help with a multiplier. But just like sales, it’s do you have a repeatable process? If, if somebody comes in and they remove you, that’s the biggest thing.
[00:21:45] Lee Brumbaugh: $5 million business they’re gonna get concerned about is when Lee or David disappears. What really happens to the business And the more we can prepare them, either on the finance side, sales side, or both to have structure, process, rigor around that. And if you’re not there too, then how do we do value creation to make sure whether it’s pivoting to a new marketplace, ICP or a different area, that you’ve gotta do that.
[00:22:06] Lee Brumbaugh: ’cause they’ve gotta understand where they want to exit that company and how they get there and that roadmap. And it sounds like you, you do a lot of due diligence in providing that, so that’s great.
[00:22:15] David Tramontana: it’s holding up the mely ’cause like the founder has a lot of, um, pride in what they’ve built because, you know, they’re the chief rainmaker. so a great. Opportunity we’ve had with, with your organization is when we can help that business owner say, okay, you can continue to be the rainmaker, but if you’re trying to get out in five years, Um, you need to have a sales leader with salespeople.
[00:22:36] David Tramontana: and that’s usually not a business owner’s strength. I mean, a lot of times they’re more into like, you know, going out and getting the clients themselves. Maybe they’re technical operations persons, but if they’re business development, they don’t necessarily want to build a sales team. So. You know, getting the systems and processes in place was gonna add significant value.
[00:22:53] David Tramontana: So that’s where we’ve kind of coached the owners. It’s like, okay, have your pride in what you’ve built. Go hunt to whales that you want to be, but let’s build a consistent, reliable pattern of sales that’s predictable. ’cause that’s actually gonna make your business more valuable than just having us, the whale hunter.
[00:23:09] Lee Brumbaugh: Yeah, absolutely. So lemme ask you to put your, take your, uh, the integrator hat off, put the area president hat on. You’re, you’re working with your client in the trenches. What do you see, like, just, just on the, the evolution of like, so you’re working with the $5 million SMB company. And it’s, you’ve got five of those and they all just come into your lap and you’re starting to, you or your team are starting to work with them.
[00:23:30] Lee Brumbaugh: what’s usually an area that you’d say if they don’t know FocusCFO like for us, right? We’re always improving your sales process. We do a lot with sales playbook, right? If you don’t have a sales playbook, you can’t onboard hire, do those types of things. So we’re really focusing a lot on there.
[00:23:44] Lee Brumbaugh: It seems like we can always do something to enhance their sales process to sales playbook. Where do you see a lot of. the early rewards of like a gap that you guys are consistently finding is, is being addressed in the SMB marketplace.
[00:23:57] David Tramontana: cash flow is number one. ’cause in cash flow is big because if the client has any debt with the, they’ve taken out loans from a bank, um, they’re trying to manage that and they’re, if, if they’re growing, and trying to figure out when to add. Uh, and so we usually start off with like a 13 week cash flow.
[00:24:10] David Tramontana: Ultimately, we want to build what we call a DNA model, which is a more sophisticated rolling 12 month. Excel spreadsheet understands the cost of goods and the revenue and the fixed overhead. So the DNA model is much more complicated and takes a little bit longer to build, especially on a day a week.
[00:24:25] David Tramontana: But the 13 week cash flow is a high priority for that target market you just described. And usually we’re doing that in a tandem with whoever the accounting resource the client has. Usually at that 5 million size you, you referenced, there’s probably a bookkeeper, a staff accountant, maybe a controller.
[00:24:40] David Tramontana: Generally we don’t see controllers to a little bit bigger business, but. Whatever the accounting resource is. we’ve been pulled in for a reason. Cash flow is probably a, a pain point, because they’re dealing with inventory or the growth if they’re a service company and visibility. So our CFO often builds the 13 week cash flow template, um, by understanding the business and how it works and getting all the right levers in there.
[00:25:01] David Tramontana: And then we’d like to turn it over to the accounting person to own it. Um, and then we’ll kind of like monitor and manage them to make sure it’s up to speed. Then it might be part of our one-on-one with the business owner. It might be part of the leadership team meeting, but that’s kind of the, the low hanging fruit that is identified very often.
[00:25:17] Lee Brumbaugh: Yeah, makes a lot of sense. And I know, I’ve worked with clients where you guys have put in a 13 week cash flow and I know that how much it can impact just the stress of how you run the business, manage the day to day. You know, when you get those things in place, you, you’ll see a business owner start to breathe and have a plan, right?
[00:25:31] Lee Brumbaugh: if you’re flustered all the time of like, how are we gonna make payroll and those types of things, it’s not the right way to operate a business. And I know you, your company brings so much clarity there,
[00:25:39] David Tramontana: Uh, my very first client with FocusCFO, you know, I kind of learned our talk track and I was working with them and I, I asked, um, you know, Hey, what, what are your KPIs? Of what he said, what are KPIs? I said, key performance indicators. How do you know how well your business is doing if you’re winning or losing any given week?
[00:25:54] David Tramontana: So the business owner kind of looked at me. He looked around his office and he goes, how busy my people are and how much cash I have in the bank. I’d say that’s, it’s kind of good, but I think we can help you build some better tools.
[00:26:04] Lee Brumbaugh: Well, David, this has been great. We, we really enjoy working with your organization. I know, um, focus, CFO has been a great resource for Sales Xceleration. I think there’s so much synergies win, whether it’s your first or we’re first or even together, when we can get alignment around a lot of things.
[00:26:20] Lee Brumbaugh: We talked today, whether it’s the right revenue, the right ICP. So very appreciative of what your organization has done and very thankful that you’ve been able to join us today.
[00:26:28] David Tramontana: Oh, happy to be here, Lee. Uh, you guys are great partner as well. I mean, because like I referenced a couple times in today’s conversation, I mean, to have a business of, um, sustainable and transferable value, which is our, mission statement for our clients. Not only do we need to have the the finance house order, but they gotta have a predictable revenue stream.
[00:26:44] David Tramontana: Um, and that’s where you guys come in a lot of times. Um, so you guys are great to work with. Appreciate it.
[00:26:49] Lee Brumbaugh: Thank you, David. Well, thank you everyone for joining again. This has been another episode of Sales Against the Odds. Tune in again in two weeks. Where we’ll have another thought leader that brings a unique angle of how you help grow your business. Thanks everyone.
