In this episode of the Disruptive Successor podcast, Jonathan Goldhill talks to Melissa Houston, a certified public account who is also the founder of the Fractional CFO Agency, where she helps small business owners ensure that financial and business strategies are in place. Melissa is also the host of "The Business Society" podcast. Melissa talks about regularly doing a deep dive in your business's books, particularly your profitability and cash flow. Melissa cautions small business owners to chase profits over revenue and control the company' growth. As the founder of the Fractional CFO Agency, Melissa advocates for hiring a CFO to oversee the financial side of the business and ensure that cashflow is being managed carefully.
Melissa: "Going through that journey of self discovery, I realized that by suppressing my need to get out there and do the work that I really felt called to do, because I was suppressing that and I was trying to ignore that, it was coming through in bad behaviors and making choices that were not good for me."
Jonathan: "It's so important that we work on ourselves personally to be able to grow our businesses. If we aren't growing ourselves personally, then it's really difficult to grow our businesses."
Jonathan: "In my business, we say revenue is vanity, profitability is sanity and cash is king. You can have a really successful business, make really good money and be really fulfilled at much lower levels of revenue volume than you think."
Melissa: "Look at a small business owner, who maybe is making, let's just say 300,000 a year, and their profit margin is really high even after they've paid themselves and they're still pulling in 150,000 profit every year. If you've got a 7-figure business that's not even making $150,000 of profit, which believe me, happens quote often, who's better off?"
Melissa: "The expression of, you can't fill a leaky bucket, it applies to business. If you're just going out there to generate cash and hope that that's gonna solve your cashflow problem, you need to understand that analogy, you can't fill a leaky bucket. If you've got leaks in your business that you haven't looked at, checked up on, and filled, then bringing in cash is just gonna leak right out of your business."
Melissa: "The thing that I find people often misunderstand is the difference between a financial strategist CPA and a tax accountant CPA. Not all accountants are created equally. You will never find me sitting behind a desk doing tax returns, because to me, you might as well kill me slowly."
Melissa: "Having that plan of growth, and projecting what those growth numbers are going to look like, and ensuring that your profit margins stay tight as your profit grows, that is really important to monitor."
Melissa: "Fractional CFOs means that you're hiring that expertise that you would get from any full-time CFO, but you're hiring them on a part-time basis on a retainer basis. So they're accessible to you. And depending on the agreement that you've worked out, you set your terms of agreement for working together and you can be in regular contact with them throughout the month."
To learn about Melissa, check out the links below:
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