How To Scale Your Business: Fractional CFO Insights For Strategic Growth | Ahuva Gruen

Unlock the secrets to financial clarity and strategic growth for your small business as we sit down with Ahuva Gruen, a seasoned CPA and the mastermind behind AG Financial Services. Gruen reveals the misleading nature of relying solely on a bank balance and emphasizes the power of clean financial books and understanding your finances in depth. This episode promises to transform your perspective on financial management and introduce you to the invaluable role of a fractional CFO in guiding your business towards sustainable growth.

Accountants are more than just number crunchers—they're strategic partners in your business's success. We shift the narrative from mere tax compliance to a dynamic partnership that enhances your financial health. By closing books regularly and forecasting financial futures, accountants can uncover cost-saving opportunities and investment potentials that you might overlook. This episode champions the idea of viewing an accountant as a vital investment in your business's financial well-being, helping you navigate potential pitfalls and achieve your business goals.

Scaling your business isn't just about growth—it's about doing it right. We explore the distinctions between scaling and growing, focusing on the efficiency and financial planning required to scale successfully. With real-life examples of businesses that have faced challenges in scaling, we provide insights into managing debt wisely and using credit lines effectively. For business owners feeling stuck, this episode also delivers strategies to regain momentum and commit to your entrepreneurial dreams with financial clarity and sound planning.

Ahuva Gruen: Fractional CFO & Founder of AG Financial

Website: https://agfinancialcpa.com/

LinkedIn: https://www.linkedin.com/in/ahuvagruen/

Podcast: https://agfinancialcpa.com/podcast/

Email: agruen@agfinancialcpa.com

#BusinessGrowthTips #FractionalCFO #BusinessScaling #CleanFinancialBooks #EntrepreneurMindset #AccountingTips #BusinessStrategy #SmallBusinessOwner #SmartBusinessMoves #CashFlowManagement #FinancialPlanning #GrowYourBusiness #BusinessSuccess #ScalingSuccess #EntrepreneurshipTips #SmallBusinessGoals #FinancialFreedom #MoneyManagement  #SmallBusinessPivots #BusinessPodcast #MichaelDMorrison #BOSS #BusinessOwnership #OklahomaCity

Chapters

• 0:00 Financial Clarity for Small Business Owners
• 12:37 Strategic Financial Planning for Business Growth
• 18:09 Effective Business Scaling and Debt Management
• 26:43 Overcoming Business Stagnation With Financial Clarity
• 32:11 Business Growth With BOSS Loans

Transcript

Speaker 1: 0:00

All right, welcome to another Small Business Pivots. We have another special guest from around the world and, as we do weekly, I always say there's no one that can pronounce and announce their business name and their name, like the business owner. So I'm going to let you have the floor here for a second. Introduce yourself, your business and where you're from.

Speaker 2: 0:20

I am a Hoover Gruen, I'm a CPA from New Jersey and my business is AG Financial Services, which is a fractional CFO business with an account for keeping services which means is CFO stands for Chief Financial Officer consultants and I go and help businesses grow and succeed and get unstuck with areas of financial as a consultant, Instead of paying a full-time salary, instead of paying benefits and employer taxes if you don't need a full-time CFO, this is effective, financially worthwhile investment in your business.

Speaker 1: 1:04

Yeah, I's. I know a lot of business owners that could use your assistance, so how do you think we're going to help our listeners to best today?

Speaker 2: 1:13

Number one is awareness to know what's going right, what you're doing right, what you're doing wrong, where you can improve tips, ideas. Number one to open our audience's eyes to know what they can improve in where they're leaving money on the table, what they could do better, how they could get unstuck great podcasts, how they could get unstuck and really succeed in their business.

Speaker 1: 1:45

Fantastic Well listeners and reach their dreams.

Speaker 2: 1:48

Oh, that's even better.

Speaker 1: 1:49

You just put the icing on the cake right there. So let's introduce the show and we'll be right back, because we got a lot to help our listeners with today. Welcome to Small Business Pivots, a podcast produced for small business owners. I'm your host, michael Morrison, founder and CEO of BOSS, where we make business ownership simplified for success. Our business is helping yours grow. Boss offers business loans with business coaching support. Apply in minutes and get approved and funded in as little as 24 to 48 hours. At businessownershipsimplifiedcom, our business owners use their bank accounts as a measuring stick. If I've got, I know right. If I've got money in the bank, I must be doing well. If I don't, I can't sleep at night. So you are a fractional CFO which helps business owners get unstuck. A lot of them are so. Do you got anything? You're just like, hey, here's. Here's what I want to start with.

Speaker 2: 3:02

This is a great starting point Audience business owners. Number one bank account. It's not the right place to start. It's not the right place to start and it's not the right place to end.

Speaker 2: 3:16

Yes, cash flow is important, but, number one, you have to have clean books. You have to be able to read your financial reports to understand them, your profit and loss. You could have money today in your bank account but it could be gone from your debt payment, from your payroll, from your expenses. Or you have no money in your bank account and you could have big sales and the money just didn't come in yet. So number one is to have clarity with your financials. You have to have clean books to know what you're basing on. And then it's really important to have an understanding. A lot of my clients tell me I open their eyes because, number one you have to have an understanding of your financials, of your profit and loss, of your balance sheet. Profit and loss is income and expenses, balance sheet is assets and liability and equity.

Speaker 2: 4:17

I had a client that said to me the other day I made so much money this month. Last month you said I made $40,000 in net income. I didn't take on $40,000. I said come, like I do all the time Come look at your balance sheet, come look at your profit and loss. And he saw it. He had a debt payment on a loan. He has inventory cash in the bank is.

Speaker 2: 4:45

It is not really where you should start and where you shouldn't. It is a piece of it. Cash is king, but there's so much more. There's so much more importance to really understand than to know oh, cash in the bank, yeah, you could spend it all, but then what happens on a slow month? What? What happens if you make? If there's a one month that you don't make so well, then how are you going to pay your expenses? You're going to go. If you go make a huge barbecue and spend all your money from your business, you won't be able to milk the cow for years to come. You won't be able to live off the business and prosper for years to come. You won't be able to live up the business and prosper for years to come. So that's a great beginning and that's like oh ouch, a lot of people, michael, they don't even know what's going on in their business If you're running financials.

Speaker 2: 5:38

I saw a couple of companies on more than one platform QuickBooks Online QuickBooks, desktop QuickBooks, another program. You have to have one central place really to know what's going on. And part of cleaning books is also you know, reconcile your bank account, your bank accounts are now reconciled to your software and how do you really know if it's clean books, how do you know if it's accurate? Number one you have to have accurate books, bookkeepers to keep data. But you have to have book good, big, keep, good bookkeeping and then you also have then you could really work with the data. And that's where I come in. Yes, some of them I do help them with their bookkeeping, but really strategically controlling the money and strategically what's working right, what's not working right. We're leaving money on the table where they could expand. And you know also profit margin. You have to know what's going on, what's your overhead, what's your course of goods sold. You can't tell that from the bank account. You can't tell anything. You can't tell. Okay, I'll leave some for later.

Speaker 1: 6:54

Yeah, well, so that clarity. So in the business coaching world, when we work with clients, we often say that one of the things that most business owners are missing, if they just had clarity and that could be in the strategy, that could be in their books, financials, that could be anything, but it usually is just lack of clarity. So that's a great point From the business owners that you work with. For some reason, I know that most business owners try to do accounting themselves. They try to do the QuickBooks themselves, to start off, because they think they don't have enough money to hire a bookkeeper or a CFO. What advice do you have that could encourage them, inspire them to say, stop that thinking and go hire an accountant, because you can't do anything without clear, accurate records, like you said.

Speaker 2: 7:47

Great point. There's a few different aspects of that. Number one, like it says in the book, who, not how, Do what you're best at and delegate the rest. It's important. I'm sure, like you tell your clients in your coaching in all areas of the business, a lot, of, a lot of business owners either, either they're not good at it, so then their books are not clean, are not straight. You could have software today, tomorrow, if you're not doing using it right, you don't know what you're doing, it's not going to get you accurate information. And and if they do have, do you have time? Could you use your time for something that is much more financially worth it? I saw a quote from a book Great at Work recently Do less and obsess To do the most important work that will bring the most benefit and do it well and delegate the rest. And also that's bookkeeping.

Speaker 2: 8:56

But I do much more for businesses than just bookkeeping. I'm helping them with the financial, with the profit margin. I had a client I came in and he was using deposits to fund operation which, as we all know, that's like a bad recipe, and I said I believe it's like he didn't know what was going on. I have good profit margin. I said I believe it's like he didn't know what was going on. I have good profit margin, I said really. I said, after I dug a little bit, I said I believe your profit margins are off and it's your employment, your employees' efficiency, Business owners they're good at what they do but they're not good at running the financial as strategic.

Speaker 2: 9:37

I'm also accountability. Accounting besides accounts could stand for accountability. A lot of them are all over the place running a hundred different ends. You can have good processes or some of them. A lot of them don't but if you don't follow through and you don't make sure and their mind is on all over, they can't concentrate on the financials. So either they're not good at it, or they can't concentrate, or they could be using their time more wisely.

Speaker 1: 10:06

Absolutely, and I want to kind of piggyback on that, because every business owner that doesn't have accurate financials. When I ask them what their profit margins are, they whip it out real quick. But when we get their financials straightened out, get them accurate and up to date in real time I'm batting a thousand at this. I've yet to have a business owner what they thought their profit margin was that's actually what it was after we had accurate books. So if you're just guessing, you're probably wrong, because I've yet to meet a business owner that was right, that didn't have clear, accurate financials from an accountant like yourself.

Speaker 2: 10:47

Right and also I forgot to add in. So this is my specialty, this is my expertise. My expertise so I could offer and advise and I'm an outsider from them to really look and dig in. Like a client of mine said, I get into the gut of the company. Yes, we look at, we make a budget and, yes, the profit and loss and the balance sheet and the statement of cash flow, but I also we discuss and we strategize and we control what's driving those numbers. I'm not that enough for me. Just that's step one. The first step is to have clean books. But I'm not just making reports and making a forecast. It is about making sure we get there and what's holding us back or what are we doing or what are we not doing to get there. And that's what business owners don't have. If they're, let's say, a lawyer, their forte is being good with the legal, a doctor, with medical. They're not good at financials, they're not accountants. It's also their expertise of being in the field for over 20 years and willing that this is my life mission.

Speaker 1: 12:07

Yeah, that's a great point. We have a couple of areas in accounting that we hear often and I'd like for you to kind of expand on those, because I'm a big believer in accountants. In fact, if I would have gone back over two decades ago, the first thing I would have ever hired was an accountant. I mean, that's how strong I feel about accounting. So we hear about closing books and forecasting. Can you kind of explain what both of those are and how that helps a business owner?

Speaker 2: 12:35

Great point I want to point out. Everyone thinks of accountants as taxes. There's different areas of accounting. There's accounting that's compliance, that's taxes, and then there is CFO and private accounting that helps the businesses grow and succeed. So tax accountants are focused on taxes, on compliance to Uncle Sam and the government, and I'm focused yes, of course we have to give in the taxes and it should be clean and accurate and not get letters but much more on helping the business grow and succeed. So great point.

Speaker 2: 13:15

So closing books means closing the books, making sure everything is accurate, everything is reported correctly. Closing the books at the end of the year means to file taxes, closing the books. But more important is closing the books monthly. It's closing the books, having clear books, or at least, if you're small, quarterly, to be able to make financial decisions, to be able to see profit margins, to see where you made money, where you lost money, to have clear books, what location made money, what location lost money, what services you should expand on that. You're leaving money on the table. What services? Is just draining um funds, draining operations, draining resources like where?

Speaker 2: 14:04

And the second part is forecasting is when you want to grow, you want to do well, you want to be also efficient and effective. It's to make a forecast, a budget, how much you could spend on everything every month, how much income and expenses are. So you don't have help. I have no way to pay my taxes or no way to pay my any like seasonal expenses. And to really know on different expenses, different income, the return on investment, what you will get for that investment, for that expense, for that income. Really to know also, when there's a slow month, in a better month, to put money aside, really to have like the goal what we want to reach, what else, what our sales targets are. What do we want to keep our expenses? What do we want to keep our expenses? What do we want to keep our course of goods sold really to grow and to scale.

Speaker 2: 15:04

You have to have forecast. But before you can forecast you have to know, have clear books, you have to know what's going on. Because when I do forecast, I don't just set back the numbers based on the past, but I look at where we should cut costs, where we're leaking out money, where we should spend more that will make us more money, return on investment, or what products we should sell more. Yes, it's the forecast, but it's not just spitting back numbers, it's everything that goes in, like I'm sure you work on in a slightly different way, is the four Ps People, profits, profit and products to work with. That all drive the financials, which is what I believe in looking at the whole picture and not just at the reports. Yes, reports telling us a story, but we want to improve the story, so we can't just oh, this is the report, now what are you going to do to get to our goals?

Speaker 1: 16:10

I love that description because many business owners think of accountants as a tax accountant and they think of them as kind of an overseer of the IRS. In other words, they're kind of more on the IRS side than they are on the business side. But that's not actually true. You're a partner of the business, you're trying to help them and for those that continue to say I can't afford an accountant, I promise you the deductions you're losing.

Speaker 1: 16:42

Yes, the deductions you're losing and everything else that an accountant can provide for you will pay for itself over time. Is that fair to say?

Speaker 2: 16:51

Right, but it's more than that. If you wait for your tax accountant, you lost a whole year of improving. Yes, you think I can't afford, but I see so many business owners. They would make so much money more if they had the financial guidance they would be. If they're leaking out money and they don't know what they're doing, they a lot of time unfortunately go under because they don't know what they're doing. They a lot of time unfortunately go under because they don't have the financial guidance To have. It's so important. It's not an expense. Yes, on your tax return it's an expense, but really to think of it as an investment into your financial health, into your health of your company, of your business, of your baby that you put your heart and soul in.

Speaker 1: 17:39

Let's jump over to. I know a lot of business owners. You're listening to Small Business Pivots. This podcast is produced by my company, Boss. Our business is helping yours grow. Boss offers business loans with business coaching support. Apply in minutes and get approved and funded in as little as 24 to 48 hours at businessownershipsimplifiedcom. If you're enjoying this podcast, don't forget to hit the subscribe button and share it as well. Now let's get back to our special guest. Let's jump over to. I know a lot of business owners talk about scaling their business, and I know that's kind of one of your expertise. So can you kind of explain what scaling a business really means, Because I know there's a misperception of what scaling versus growing a business is. Can you help us with that?

Speaker 2: 18:33

Scaling a business. I think I use it the same as like growing your business. But you want to grow your business and make more money. I have a, I had a lawyer, I have a lawyer client, an attorney. He made more money before I came, when it was just him and a partner, than now that he has four or five attorneys working for him. And attorneys are supposed to have good profit margin. But if you don't have good processes, if your employees are not, for example, for him, tracking their hours so they can't bill and their expenses, money was leaking out. You don't want to just grow, you want to really scale and make more money. Every expense that you, every investment, your website, your marketing or equipment what's the return on investment? Is it going to be more efficient or it's just a good electronic toy that it's exciting, but is it really going to be more efficient?

Speaker 2: 19:35

I have a client who had equipment that he invested in when he was getting bigger and he thought it's so efficient. And when it came down to it, when I really went by project, project, a lot of projects, to see how much we made on it and if we didn't make, why? What went wrong? What could we control? While we can. We saw that these equipment on smaller projects ended up costing more money and they were losing money. So very nice that you want to grow and you'll go and take out a loan and buy equipment Now with the loans. It's one thing to take out a loan to invest, but don't go take out loans just to fund your operation because that's a slippery slope. But he wanted to take out a loan to buy this fancy equipment that was supposed to really save money and it was supposed to make them make more profit on the project make more profit on the project. But when I dug in and when we really did homework, we saw that a lot of the deals it ended up taking much more labor and losing money using the new expensive equipment.

Speaker 2: 20:50

So you have to really know what you're doing Really, what is going to make you grow, before you go hire more staff really to make sure your staff are using their time wisely. You're delegating to each staff using their strong points, not just don't hire more staff. If your staff has time, more stuff if your stuff has time. Don't buy more products to expand to more products if you're leaving money on your table for the products you're ready. So I guide companies when they're growing. First they have to get stable when they're growing to really grow successfully. Not make impulses buy, not make impulses investment. Really make sure everything is financially worth it. You're going to go buy a new building? Does the numbers make sense? You're going to expand your office? Does the numbers make sense?

Speaker 1: 21:47

We hear a lot from influencers that you know you don't want debt and I think a lot of them are coming from the place of personal debt like credit cards and things like that. But in business there is such a thing as good debt. Can you kind of explain the differences in why a business owner would get a loan and what makes sense for that, for expansion or anything else? Scaling?

Speaker 2: 22:10

Great point. Debt could be good and it could be bad, like fire. Fire could be good. It heats our houses, but fire could be deadly. That is the same way.

Speaker 2: 22:22

Credit card interest is a fortune of money. It's like money leaking out. It builds up, it's like a slippery slope. Like a slippery slope. But if you take a debt for an investment, for inventory, if you have a plan in place, how are you going to pay it? You have to count in what's the interest rate into your cost of goods sold. If you're doing it as an investment with a plan in place, that's good debt. But if you're just doing it to fund operation, then stop. What's going on. If you're blowing money, if you're looking at like we started in your bank account and you didn't save for quite months and then you have to go in debt, that's a very slippery slope. It can engulf your whole business like a fire God forbid. You have to know what. You have to be able to pay it. You have to know what it's going for, yet how much interest is going to be?

Speaker 1: 23:19

I'm kind of derailing a little bit, because Boss offers business loans as well as business coaching, and so we have lines of credit, we have long term, we have small business loans, but lines of credit a line of credit is talked about often. Could you kind of expand on how that helps a business owner or doesn't help a business owner, and how to use it?

Speaker 2: 23:42

Great point Lines of credit. It's not like a set loan that you have like 20 years or 10 years to pay a line for credit. It's that they could pull out money when they need it and pay it back. And sometimes you know it depends on the loan If the interest rate could change. It's not like set for a certain amount of years. Now, like I said, when to use it it depends on the business. Let's say I have a e-commerce business. E-commerce business they have to invest a ton of money in an inventory. That's just the name of name of the other game and amazon, for example. They're supposed to have three, four months worth of inventory. A lot of them cannot afford it without a line of credit. Line of credit is more flexible. But if they use it smallly, for inventory, for an investment, knowing what they're paying, knowing what's the terms, knowing how they're going to pay it back, then it's much better than just using a credit card.

Speaker 1: 24:49

And so the difference between a credit card and a line of credit is you don't want to hold a high balance. It's not like a credit card, where you blow it up and hit the maximum. So, in your opinion, is a line of credit good to have, like go ahead and apply for one, just so you have it in the future, or no?

Speaker 2: 25:10

I think it's good for business to have a line of credit. I think it's very good, but I think that what I found with clients and with business owners if they have it, it's very easy to go and slip and take for and to spend too fast. You should have a line of credit, and that's very good, because sometimes you need money, unexpected expenses or a good opportunity. Yes, have a line of credit and that's very good, because sometimes you need money, unexpected expenses or a good opportunity. Yes, have a line of credit, but don't use it to go expand your office. Don't use it to take out money and throw a big party for your family or fancy vacation. You have to have it, but you have to have self-control or a system of checks and balances depending on the size of the business, to not just go and waste it.

Speaker 1: 26:03

And if they have a good accountant like yourself, you'll keep them from doing that.

Speaker 2: 26:07

I keep them from doing it. Before you go buy a whole container of a new item from China let's say the e-commerce is it a good product? Are you getting it for a good price? Is there a market for it? Or is it just going to eat up cash and they're going to be sitting in your warehouse or like equipment? Lines of credits are very good. It's very healthy, but you have to really know when to pull out money Not as easy, but like, almost like a credit card. They don't realize how they're spending and then they say where's my money at the end of the month.

Speaker 1: 26:43

Well, you mentioned something because of a lot of our. You mentioned business owners being stuck and a lot of our listeners are stuck Working with so many business owners. Can you give any tips on how to get unstuck, because I know for a lot of them they're just out of bandwidth and they don't know what to do next. But I'm sure you've worked with business owners that kind of hit the plateau and then they leapfrog because of and what are your tips for that?

Speaker 2: 27:09

Tips. Number one have clarity. Number two look at profit margins. Look at where money's leaking out. Where are you leaving money on the table? Get educated, open your eyes, do the next right step. It's so important processes To have good processes. A lot of businesses get stuck if they don't have good processes. If they pay their vendors the same day but then they're not getting paid two, three months later, that's bad price. That will hit their cash flow and make them stuck. They have to have good. I'm sure this is one of your things that you work on with all your coaching clients.

Speaker 2: 27:51

Absolutely but it all hits the financial too. They have to have good processes. I mean, if someone's stuck sometimes it's sales they have to know what's going on. Where's the biggest fire burning? Where's the biggest pain point? Is it the processes about when they're getting paid, when they're paying their vendors? Is it cash flow? Is it checks and balances? Is it cash flow? Is it checks and balances? Is it profit margins? Is it their products? Is it client retention? What is going on? You really have to know like to work is so important to have processes.

Speaker 2: 28:31

If an employee goes in to do a project, if they do too much, if they didn't know what the scope was, you lose money because you're not getting paid for it. If they do too little and you have to go back again or they mess up, then it's also a big issue. And for products, if you don't send the right thing, if it's not good quality. It's not only important to have clients, you have to keep them and you have to keep them happy. It's really important. Like you said, people don't want to invest in it. It's much easier, it is possible, even if you're stuck. But the faster you get help, the faster you'll improve.

Speaker 1: 29:16

Absolutely. And I find, with business owners as well, part of that getting stuck process is because they're out of bandwidth, they're shorthanded, and I know for a lot of business owners they are very stressed about. They know they need help but they don't know if they can afford it. And I promise you, listeners, if you have an accountant, you will know, you will feel confident that, yes, I can invest in this machine, I can invest in this person, or no, I can't and I need to reduce some expenses or liabilities. So that's the power, another power of having an accountant. So how do people get ahold of you? Where can they find you?

Speaker 2: 29:54

an accountant. So how do people get a hold of you? Where can they find you? I'm on LinkedIn, ahuva Gruen. On my website, ahuvacfocom. They could DM me, they could call me, they could get me on LinkedIn on my website. Old-fashioned telephone email.

Speaker 1: 30:10

The old-fashioned telephone. Some of our youngers probably don't even know what that means.

Speaker 2: 30:15

But sometimes it's best with my clients. It's not only good to have an accountant.

Speaker 1: 30:22

To have a shop is to communicate, not just oh, once a year you brought up another point is most business owners wait till the end of the year, and that is a no, no, no, no, no. Just don't do it. You're costing yourself a lot of money and stress throughout the year.

Speaker 2: 30:45

And there are tax strategies that I could suggest that it's too late at the end of the year and the tax accountants and different strategies to make more money, to pay less taxes that you lose out.

Speaker 1: 30:59

Absolutely. Yeah, that's that's. Another great point is I didn't I forgot about that, because when December 31st, once January 1 rolls over, you're there's nothing you can do, there's no strategy. It's what's done is done. Now you have to report what you did or didn't do for that year. But I know that we have a CFO on staff and our CFO is literally can tell us, probably in June, July, sometimes later, earlier of here's what you need to be doing by the end of the year. Here's what you can be forecasting. Here's yes, you can get this additional rent space or else you're going to pay that in taxes. So it really is powerful to have an accountant. So if you were, I always wrap up at the end of the show. If you were in a room full of business owners different seasons, different industries, different seasons of life what is something applicable that would work for all of them to hear?

Speaker 2: 31:51

Open your eyes, follow your gut, but with Smiley. Based on financials, based on your guidance, do the next right step. Don't give up on your dreams. There's a lot to say.

Speaker 1: 32:06

Wow, that's beautiful. Well, you've been a wealth of knowledge and a blessing to many. I appreciate you taking the time to share with our listeners today. Thank you.

Speaker 2: 32:15

Thank you, it was great.

Speaker 1: 32:17

Thank you for listening to Small Business Pivots. This podcast is created and produced by my company, BOSS. Our business is growing yours. Boss offers flexible business loans with business coaching support. Apply in minutes and get approved and funded in as little as 24 to 48 hours at businessownershipsimplifiedcom. If you're enjoying this podcast, don't forget to hit the subscribe button and share it as well. If you need help growing your business, email me at michael at michaeldmorrisoncom. We'll see you next time on small business pivots.