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AmazonBusiness .com. You're listening

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to KivaColder CEO, episode

0:27

295. What if cutting 40 %

0:29

of your client base was actually a

0:31

catalyst for business growth? It

0:33

sounds backwards, but that's the bold move

0:35

Stephanie Skarzowski made, and it paid

0:37

off big time. After selling off the

0:39

small business arm of our financial

0:42

strategy and bookkeeping firm 100 degrees consulting,

0:44

Stephanie saw a 73 %

0:46

revenue jump and a 376

0:48

% increase in profit margin

0:50

in just one year. In

0:53

this case study, we unpack why Stephanie sold

0:55

off a misaligned division of her

0:57

business and how she structured the

0:59

deal. If you've ever wondered what

1:01

it looks like to sell only a portion

1:03

of your business or whether you should, Stephanie's

1:06

strategic decision proves it's not an

1:08

all -or -nothing scenario when it comes to

1:10

exiting your business. Welcome

1:16

to Cubicle2CEO, the podcast where

1:18

we ask successful founders and

1:20

CEOs the business questions you

1:22

can't Google. I'm your host,

1:24

Ellen Yin. Every Monday, go behind

1:26

the business in a case study

1:28

style interview with a leading entrepreneur who

1:30

shares one specific growth strategy they've

1:32

tested in their own business, exactly

1:35

how they implemented it, and

1:37

what the results and revenue were.

1:39

You'll also hear financially transparent

1:41

insights from my own journey, Bootstrapping,

1:43

our media company, from a $300

1:45

freelance project into millions

1:48

in revenue. Hey,

1:57

everyone, welcome back to the show. Today, I'm

1:59

joined by Stephanie Skrzewski, founder of

2:01

100 Degrees Consulting. Stephanie,

2:04

so excited to have you.

2:06

Thank you so much. I'm so excited to

2:08

chat with you today. Right before

2:11

we hit record, Stephanie was so kind

2:13

to share that. She has been a

2:15

loyal listener for years and years and years.

2:17

I mean, I know we've like been

2:19

chatting in DMs for years, but it's always

2:21

so great to welcome a guest who

2:23

knows our show inside and out and Stephanie

2:25

brought the numbers, brought the data for

2:27

you guys, which is no surprise, by

2:29

the way, of course, because she owns

2:32

a CFO and bookkeeping service company. So we

2:34

expect the great numbers here. But just

2:36

so you all know, the case study we're

2:38

getting into today is how Stephanie actually

2:40

sold a portion of her

2:42

business and niched down

2:44

to skyrocket revenue and

2:46

profitability. So by doing this,

2:48

they actually saw a 73 %

2:50

increase in revenue in just that

2:52

first year and a staggering 376

2:56

% increase in profit margin.

2:59

Yes, please. So, so looking

3:01

forward to getting into these numbers. But of course,

3:03

Steph, you know, what's your

3:05

keepable to CEO story? That's where we always start.

3:07

So what was that catalyst that led you fully

3:09

into entrepreneurship? Yeah, so

3:11

I was working inside

3:13

nonprofit organizations. I started as

3:15

an operations manager and

3:18

sort of grew my way

3:20

into eventually the CFO

3:22

of an organization that was

3:24

building schools internationally. And

3:26

I loved my work because

3:28

that meant I was jumping from

3:30

Nepal to Haiti to Nicaragua

3:33

to Malawi. I got to see

3:35

some incredible parts of the

3:37

world and meet some amazing people.

3:40

it also meant that like I was

3:42

really busy and not home very much.

3:44

And my husband and I had

3:46

been married for a few years and

3:48

we were wanting to start a

3:50

family, but that was not really very

3:52

doable when I'm thousands and thousands

3:54

of miles away. It was also very

3:57

stressful. And so I had this

3:59

idea that perhaps smaller nonprofit organizations might

4:01

be able to use those

4:03

same skills I was using in

4:05

this larger nonprofit. And

4:07

I thought, well, maybe I could be

4:09

like a part -time CFO for a

4:11

couple nonprofits. And if

4:13

I could just replace my

4:16

salary, but have that

4:18

flexibility for my own life,

4:20

then why not try?

4:22

So I started sending cold

4:24

emails to organizations, smaller

4:27

nonprofits whose missions I personally

4:29

really cared about. And I sent those cold

4:31

emails and I said, listen, I'm a nonprofit

4:33

CFO. I think I could provide you these

4:35

services at a fraction of what it would

4:37

cost. you to have somebody full time, what

4:39

do you think? And that

4:41

led to my first four clients, which

4:44

led to more and more clients,

4:46

and that's how the business began. So

4:48

it was really this desire for

4:50

more flexibility and more control over my

4:52

own life, really. Makes complete

4:54

sense. I'm going to take

4:56

us on a tangent for just a moment before we

4:59

circle back to the case study, but I do

5:01

actually think it's relevant to what we're talking about because,

5:03

you know, you wouldn't have been able to make

5:05

the decisions that you've made in your business, including the

5:07

decision to sell a portion of it without knowing

5:09

your numbers, right? And I think oftentimes. entrepreneurs,

5:12

we know we need financial help, like

5:14

we hire bookkeepers, we hire accountants. I think

5:16

the CFO piece, though, unless you've built

5:18

a company at that scale, sometimes still kind

5:20

of eludes people, like, what does that

5:22

really mean? Like, what does a CFO actually

5:24

do that's different than having your books

5:26

in order and, you know, filing your

5:29

taxes at the end of the year

5:31

and paying those taxes? So can you

5:33

just give us kind of like a

5:35

high level explanation of what a CFO

5:37

does, especially a fractional one, like your

5:39

company in someone's business. organization. Yeah,

5:42

that's such a good question because we

5:44

often have leaders coming to us

5:46

saying, I hired a bookkeeper, but why

5:48

isn't she helping me sort of

5:50

analyze my financials? Or why isn't she

5:52

helping me with cash flow forecasting?

5:54

And I'm always like, well, that's not

5:56

really her job. But that's why.

5:58

So the bookkeeper is really sort of

6:00

in the line item detail of

6:02

your financials. They're telling QuickBooks that

6:05

this expense from Amazon is for

6:07

office supplies and this expense is

6:09

to pay a contractor. like

6:11

in the nitty gritty detail of

6:13

what has already happened. Maybe they'll

6:15

run some reports and QuickBooks for

6:17

you. They do your bank reconciliations,

6:19

which just means they're comparing what's

6:21

in your bank statements to what's

6:23

in your accounting system. That's kind

6:25

of where they stop. Then

6:27

you have your tax accountant or

6:29

your CPA, and that's the person that

6:31

is up to date on all of

6:34

the IRS rules and regulations. They're

6:36

filing your taxes for you.

6:38

They're helping you maximize your deduction.

6:40

and that's kind of where

6:42

their role stops. And your

6:44

CFO, your chief financial officer

6:46

is really focused on like

6:48

long -term strategy. So we

6:50

are doing the forecasting. We're

6:52

looking at cash flow into

6:54

the future. We're predicting revenue

6:57

and expenses so that we

6:59

can make decisions today that are

7:01

going to impact the financial health

7:03

of our business, our organization in

7:05

the future. So we do analysis

7:07

of the financial statements as well,

7:10

but it's really that sort of

7:12

visionary, forward thinking, see around

7:14

the corner piece that your

7:16

CFO is focused on. So almost

7:18

really growth, growth minded, growth oriented. Super

7:21

helpful. And I can see how

7:23

having that visionary partner is so

7:25

important for CEOs who want to

7:27

do all the things that have these really

7:29

big dreams and ideas, but need to

7:31

know, do I have the resources and capacity

7:33

to actually afford this, right? Or execute

7:35

on this. So thank you for that very

7:37

helpful explanation. For the context

7:40

of this case study, you, like

7:42

we mentioned, 100 degrees consulting offers

7:44

CFO and bookkeeping services. And at

7:46

the point before you decided to

7:48

sell a portion of the business,

7:50

you were servicing both small businesses

7:52

and nonprofits. But the small

7:55

business arm was, for lack of a

7:57

better term, kind of a problem child in

7:59

your business. Can you explain to

8:01

our listeners what that looked

8:03

like? Yeah. So

8:05

when I started the business, the

8:07

intention all along was to be a

8:09

fractional CFO for nonprofits. That's where

8:11

my expertise and my experience was. And

8:13

that's really where my passion was.

8:16

But pretty soon thereafter, I started having

8:18

small businesses come to me and

8:20

say, Hey, can you do that same

8:22

work for my company? And even

8:24

though I had no experience doing that,

8:26

I thought, Sure, yeah, why not?

8:28

It's forecasting cash flow for a nonprofit

8:30

or for a small business. There's

8:32

really not a lot of and pretty

8:35

soon that side of the business

8:37

really continued to grow and so

8:39

I thought okay well this must

8:41

be okay this must be successful

8:43

but there were definitely some challenges

8:45

in there. We never really

8:47

had a focal point or

8:49

type of small business client that

8:52

we would work with. So

8:54

we had clients that were influencers.

8:56

We had marketing agencies. We

8:58

had a med spa. We

9:00

had product businesses. We

9:03

were all over the place. We

9:06

had no filters to say yes or

9:08

no. It was just like, do we think

9:10

we could do the work? Sure, let's

9:12

do it. So that was one problem is

9:14

that we had no specialty. We had no

9:17

niche at all. Another

9:19

problem was finding talent because

9:21

what I found was

9:23

that we would post a

9:25

job position with the

9:27

title CFO on LinkedIn or

9:29

on other job boards

9:31

and CFO for small businesses.

9:33

And what we were getting was like,

9:35

largely like old retired white guys that

9:38

used to work at a bank or

9:40

like investment bankers. I'm like, this is

9:42

not what looking for

9:44

at all. So we had

9:46

a really hard time finding talent that

9:48

had this small business expertise,

9:50

but that could also serve

9:52

a med spot and an

9:55

influencer at the same time.

9:57

So talent was another piece.

9:59

Another challenge was marketing. I was

10:01

constantly talking to two different

10:03

audiences. talking to my nonprofit

10:05

people and I was talking to

10:07

my small business people and I thought

10:09

it would be easy to talk

10:11

to the two because we were basically

10:14

doing the same work but the

10:16

nuances of language is very different. If

10:18

I even use the word business

10:20

when I'm talking to a nonprofit that

10:22

turns them off and they immediately

10:24

think this is not for me and

10:26

so there's just like these nuances

10:28

of language that I could never talk

10:30

to like say the right things to the

10:32

right people. So I was constantly writing

10:34

two different emails. We had segmented our email

10:36

list. I had two

10:38

different types of posts. I would

10:40

post on Instagram. We were all

10:42

over the place with our marketing. So that

10:44

was another challenge. And I

10:46

think the fourth challenge, why

10:48

this was our problem child,

10:50

was that the expectations of

10:52

the CEOs of small businesses

10:54

were very different than the

10:56

expectations of the CEOs of

10:59

nonprofits. So the nonprofits know

11:01

that for compliance reasons, they need a

11:03

budget that's approved by the board. There's a

11:05

specific tax form they must fill out.

11:07

There's things on that tax form that they

11:09

have to do that we help with

11:11

all of that. So for them, a lot

11:13

of it was about checking a box.

11:15

Like we know we have to do these

11:17

things. We are willing to pay to

11:20

get the right expertise on our team to

11:22

do that. Whereas on the

11:24

small business side of things, we found

11:26

that a lot of clients were really expecting

11:28

us not to be a chief financial

11:30

officer, but to be a chief growth officer.

11:32

And so when their revenue was not

11:34

going in the direction that they wanted, it

11:36

kind of came back to us. Well,

11:38

why aren't you providing suggestions on how we

11:40

can grow our business? Like, I don't

11:43

know how to grow a men's spa. That's

11:45

not my expertise. I can look

11:47

at the numbers and I can show

11:49

you things that we can model different scenarios,

11:51

but I can't give you more. strategies

11:53

to grow your mud spa. And so

11:55

that was the other piece was that, you

11:57

know, it just seemed like clients were

11:59

not super happy. I mean, we certainly

12:01

had some. It wasn't everyone, but

12:03

we didn't have that same like

12:06

resounding sort of reviews that we

12:08

had with our nonprofit clients. Just

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I can see why it would be

13:41

challenging to kind of combat those mismatched

13:43

expectations when like you mentioned the expectations

13:45

of your two different types of clients

13:47

were completely different, right? And so, and

13:49

so it wouldn't necessarily appeal to a

13:51

small business owner in the same way

13:53

that it would to a nonprofit organization.

13:56

And I really want to highlight that

13:58

point that you made to our listeners, because

14:00

I think that is

14:02

not looked at enough how

14:04

the actual result of a service, like

14:06

you said, can be exactly the

14:08

same, like what you're actually delivering, but

14:10

the nuances of the language and

14:12

how much that impacts whether or not

14:15

someone believes your service is the

14:17

right fit for them. One. I not

14:19

idea one term that came to

14:21

mind as you were talking is like,

14:23

even how as small business owners,

14:25

we would call, you know, the people

14:27

who pay us either customers or

14:29

clients. And then how nonprofits, they're not

14:31

calling their donors customers, right? Like

14:33

they're calling them that their donors,

14:35

their supporters, their whatever advocates. And

14:37

so again, such a

14:39

small difference, but yet if

14:41

you used it. for the

14:44

other industry. It's not, it's not

14:46

interchangeable. And so I, I

14:48

just really love that, that you

14:50

had the, the ability to

14:52

kind of zoom out and see

14:54

what these challenges were. So

14:56

knowing that these were problems for you, what

14:58

was kind of that final nail in the

15:00

coffin that made you realize, okay, even

15:03

though we do have, um, you know, a

15:05

growing client base on this small business

15:07

side, we need to shed this. Like how

15:09

did you finally come to that? that

15:11

moment where you were like, I gotta cut

15:13

this. Yeah,

15:15

it didn't come easily. I am

15:17

a very driven person and I

15:19

am a fighter and I will

15:21

work really hard to make it

15:24

work. And so we tried so

15:26

many different things. We

15:28

tried, we told ourselves, okay, no more product

15:30

businesses. All right, we've drawn that line in

15:32

the sand. Okay, no more brick and mortars.

15:34

We've drawn that line in the sand. So

15:36

we started saying, okay, with new clients coming

15:38

on, we are going to have a little

15:40

bit more of a narrow focus. We tried

15:43

that. We tried sort of

15:45

re -staffing on our team. And

15:47

so instead of having a CFO

15:49

role and a bookkeeper role,

15:51

we tried like a finance manager

15:53

role sort of in the

15:55

middle so that maybe client expectations

15:57

wouldn't be that we're gonna

15:59

revolutionize their revenue. So we tried

16:01

sort of restructuring the team. And

16:03

I think it was the sort of

16:05

final nail in the coffin was

16:07

like one more client complaint that coming

16:09

to our client services manager that

16:11

like, Hey, this isn't what I expected.

16:13

And I think it was then

16:16

that I was like, I can't have

16:18

another one of these conversations because

16:20

we've tried certain things and it's still

16:22

not working and I'm tired of

16:24

navigating client complaints. I want them to

16:26

be happy and I'm like literally

16:28

losing sleep at night because I know that

16:30

they're not and I don't know what else we can

16:32

do. And so I

16:34

had sort of decided that I

16:37

think we need to let this go. But

16:40

my first idea was that we're just going

16:42

to shut it down. We're just going to say,

16:44

okay, in how many ever months we had,

16:46

of course, I think I had said like in

16:48

six months, somewhere really far down the road,

16:50

I was like, we're just going to tell them

16:52

that we are going to wind down and

16:54

we are no longer going to serve them. So

16:56

I think it was like, I just can't

16:58

have another one of these client conversations where they're

17:00

unhappy. Yeah, absolutely. I

17:02

can see how that really can

17:04

be just. you know, a heavy

17:07

burden to carry, honestly, especially if you

17:09

care like you obviously do about your

17:11

clients and their success and their happiness.

17:13

So I can totally empathize with that.

17:15

When you did make the, you know,

17:17

make the call like, okay, we're going

17:19

to let this go. What

17:21

then was a catalyst to kind

17:23

of make you aware, oh, hey,

17:25

selling's actually an option. I don't have

17:27

to just completely nix this revenue

17:29

arm from our business. Yeah.

17:32

So I had a call with my

17:34

business coach and the one topic

17:36

that I knew that I wanted to

17:38

bring to her on that day

17:41

was what to do with the small

17:43

business side. And the question that

17:45

I came to her with was, you

17:47

know, the small business side of

17:49

our company is struggling. Do I invest

17:51

and, you know, put resources in to fix

17:53

it? I don't know what that is, but

17:55

like I'm willing to do it if that's

17:57

the right decision. Or do I shut it

18:00

down? And she said, well, you're not

18:02

going to do either one of those.

18:04

What about if you sell it? And

18:06

she's like, you have this asset that

18:08

you have built. You have clients that

18:10

have been with you for years. You

18:12

have like IP that they are

18:15

using. You have so much equity in

18:17

basically having built out this really

18:19

robust business that you need to sell

18:21

it. You need to be paid

18:23

for that. And it just blew my

18:25

mind because I literally, I don't

18:27

know why it's not rocket science, but

18:29

I. had not even considered

18:31

the possibility of being able

18:33

to sell a part of my

18:35

business. You know, you're

18:37

not alone in that too, by the way.

18:39

I feel like when a lot of us

18:41

start our businesses, we start it from this

18:43

place of passion or like an existing skill

18:45

set. And I don't think a lot of

18:47

people actually start their businesses with an exit

18:49

plan in mind. So it's not really, you

18:51

know, on our radar to be like, okay,

18:53

Will we sell this someday? And if so,

18:55

how do we prepare it for a sale?

18:57

So I definitely think there's a lot of

18:59

listeners that can relate to being kind of

19:01

mind blown by this concept that something

19:03

you've built does have value outside or independent

19:06

of you being part of it. Did

19:08

you at that point get a formal valuation

19:10

of this portion of your business? Or

19:12

I guess, I mean, technically, since you guys

19:14

are a CFO company, maybe you did

19:16

it yourselves. Like how did you then arrive

19:18

at the number that you wanted to

19:20

sell it at? Yeah,

19:23

so I sort of valued it

19:25

myself. I definitely did not go

19:27

out and get it done professionally

19:29

because I think I knew from

19:31

the beginning that it was gonna

19:33

go to somebody I knew. That

19:35

was very important to me to

19:37

make this successful was that I

19:39

didn't just wanna hand off this

19:41

client portfolio to some random company

19:43

that I had never met before.

19:45

So I basically looked at the

19:47

value of all of the existing

19:49

contracts that we had. I thought

19:51

about you know, retention and churn,

19:53

thinking like, okay, well, if this

19:55

goes under another owner's hands. Do

19:58

we think maybe some of these clients might

20:00

leave? So really thought

20:02

about all of that and then attach

20:04

a price point myself. And I'm

20:06

not an expert. I think I had

20:08

walked one client through selling their

20:10

company. I was their fractional CFO

20:12

and had kind of seen it from the

20:14

outside with one company, but I did not

20:16

have experience in this. But I was able

20:18

to kind of pull the numbers together, do

20:20

my own research and come up with a

20:22

price that I felt comfortable with. With

20:25

the hindsight that you have now, Stephanie,

20:27

looking back, Is there any part

20:29

of you that wishes you had

20:31

sought a third party opinion on this?

20:33

Or are you glad that you

20:35

did it the way you did and

20:37

you wouldn't necessarily change anything about

20:39

the pricing? Yeah,

20:42

I could kind of go two ways

20:44

with this. Part of me is

20:46

at the time, and I think still today,

20:49

I really did care about those clients

20:51

and the team members that we had that

20:53

were serving those clients. Could

20:56

I have gotten more money if I

20:58

had had a professional valuation and maybe

21:00

sold it to a bigger firm? I

21:02

believe strongly that I could have.

21:04

Yes, I could have made more money.

21:07

But considering that I was willing to just shut

21:09

the whole thing down for nothing because it

21:11

was such a pain point to me. I am

21:13

really happy with the decision because I'm sure

21:15

you'll ask the question, kind of like, what did

21:17

the sale look like? Who did it go

21:19

to, et cetera? We'll get there in a second.

21:21

But I'm really happy with how it turned

21:23

out. I think it was a win -win -win for

21:25

everybody, for me, for the buyer, for

21:28

our clients. And so I

21:30

am happy with the direction it

21:32

went. Did I potentially leave money on

21:34

the table? Probably. But I'm

21:36

okay with that because I know how it

21:38

turned out. feel

21:41

like that point can't be

21:43

overstressed, right? That sometimes there

21:45

is financial opportunity costs, but it comes

21:47

at the price of not having

21:50

to sacrifice like your piece over it.

21:52

And that has an inherent value

21:54

too, like your ability to sleep at

21:56

night, knowing that the people that

21:58

you cared about are taking care of

22:00

as well. And also the speed

22:02

of a deal like that because.

22:05

To your point, if you had gone the

22:07

more traditional route like a there's brokers

22:09

fees, there's time to list on the market.

22:11

There's a lot more just work for

22:14

all of the prospective buyers who might be

22:16

doing due diligence on you. Like it

22:18

would have probably taken you away from other

22:20

things in your business and also been

22:22

a lot more of a drawn out process.

22:24

So I can totally see when weighing

22:26

the pros and cons why you might take

22:28

a little less money up front, but for

22:31

the speed and ease of the transaction.

22:34

I think that's a brilliant point

22:36

that I didn't really think about,

22:38

but I initially had this conversation

22:40

with my business coach in November

22:42

of 2022. And by

22:44

mid -January of 2023, we were

22:46

like putting, like deals had been

22:48

signed, the lawyers had gone over everything.

22:50

And we were like putting the wheels in

22:52

motion to make this happen. And so

22:55

it was like less than two months, I

22:57

think. And to your point, it would

22:59

have gone on way longer. We would have

23:01

continued being stressed by those clients' engagements.

23:03

just weren't working. And so yeah,

23:05

that's a fantastic point that doing it

23:07

the way we did it, we were able

23:09

to move quickly and sort of like

23:11

just really turn a new page in our

23:13

company much faster. And when we talk

23:15

about the numbers and the revenue growth, that

23:17

would have taken longer because we still

23:19

haven't been engaged in the deal. So I

23:22

think that's a great point. Yeah. Oh,

23:24

so true. And wow, I'm so impressed.

23:26

I was going to ask you

23:28

that. So like a 30, or not

23:30

30 day, a three month turnaround

23:33

time from ideation to actual execution, which

23:35

I don't know what the average

23:37

deal process is, but I believe I

23:39

heard somewhere. when a small business

23:41

sells at least, it's usually like at

23:43

least a year that it takes

23:46

for everything to go through. So I

23:48

mean, you cut that by 75%.

23:50

That's incredible. I'm just curious,

23:52

by the way, there was like one minute thing

23:54

you said a moment ago that I wanted

23:56

to circle back on. You mentioned when you were

23:58

doing your own internal valuation, you considered

24:00

factors like potential client attrition when

24:02

you made the transition over. Just

24:06

curious how accurate did your predictions end

24:08

up being on that front? it

24:10

play out exactly as you imagined

24:12

or hoped? And did

24:15

clients that ended up transitioning over,

24:17

were they receptive to this? What

24:19

was a general kind of consensus

24:21

when you announced that this transitioning

24:23

would be happening? Yeah,

24:25

well, I think that we were able

24:27

to, or the new owner was able

24:29

to retain most of the clients, and

24:31

we haven't talked yet about who that

24:33

new owner was, but when we get

24:35

there, you'll see why, or I can

24:37

tell you right now, but yeah, so

24:39

I think that was part of it. There

24:41

were clients that fell off, yes. I

24:44

wouldn't say that the clients that

24:46

fell off were a direct result of

24:48

the transition, but I think

24:50

it was like other factors that sort of

24:52

made it sort of a

24:54

natural time to leave. Like, okay, you

24:56

know, my company's having cashflow problems and

24:58

you're also having this transition. We're just

25:00

going to part ways right now and

25:02

just do this very amicably and very

25:04

like just a clean break. So I

25:06

think there a couple clients did fall

25:08

off more because of that reason, less

25:10

because of the transition itself. Okay.

25:12

That makes total sense. Let's not keep our

25:15

listeners guessing any longer. I know we've

25:17

teased it a couple of times. So tell

25:19

us about who the buyer ended up

25:21

being because like you said, you decided to

25:23

really utilize your existing network. I

25:25

believe you presented this opportunity to buy

25:27

this portion of the business to five

25:29

people in your network instead of going

25:31

to the general market. Can you share

25:34

with us? Not obviously you don't to

25:36

identify by names, but who, who were

25:38

these five people that you reached out

25:40

to and why did you choose these

25:42

specific organizations or individuals and then who

25:44

ended up actually purchasing? Yes.

25:47

So it was really important to

25:49

me, again, that whoever our client

25:51

portfolio went to, that we were

25:53

aligned on values, that we were

25:55

aligned on just the way that

25:58

we approach business, client care, things like

26:00

that. That was really important to

26:02

me. And so I went out

26:04

to other women business owners, other

26:06

women I knew in the accounting

26:08

and bookkeeping space that serve small

26:11

businesses or similar businesses to our

26:13

client portfolio. So they

26:15

were also all women. and all

26:17

small businesses. And

26:19

two of them had, or

26:21

one of them had worked for

26:23

me in the past. And then she

26:25

kind of left to go do

26:27

her own thing. And then three of

26:29

them were, let's see, two of

26:31

them had done that. Okay, yeah, three

26:34

of them were other, just other

26:36

business owners that I knew. And one

26:38

was actually a CFO that was

26:40

working for me. So she was actually

26:42

an employee of my company. And

26:44

she had her portfolio working under me,

26:46

working with my company. And she

26:48

ended up being the eventual buyer. I

26:50

did have conversations with all of

26:52

the other ones. We had

26:54

NDAs in place. And so I

26:56

was able to share the

26:58

client roster and the potential revenue

27:00

and talk about the opportunity. But

27:03

with those other ones that we eventually

27:05

did not go with, they

27:07

maybe didn't want the entire portfolio.

27:11

bookkeeping services and not CFO and

27:13

so we would sort of have

27:15

to slice and dice things too

27:17

much. It didn't feel like a

27:19

seamless deal or a seamless process and

27:22

then I talked to the the woman

27:24

that was working for me. She

27:26

was already serving at least half

27:28

of the clients in the broader

27:30

portfolio that would eventually be sold

27:33

to her. She had

27:35

done some before she came to work

27:37

for my company. She had already

27:39

done some sort of consulting work before.

27:41

So she was a bit familiar

27:43

with. owning a business and she's just

27:45

an incredible, highly organized person and

27:47

she cares so deeply that I knew

27:50

that she would be a really

27:52

good fit. And what made it to

27:54

me feel like an extra win

27:56

was that I didn't have to lay her

27:58

off. I was basically handing her an entire

28:00

business, an entire revenue stream versus having

28:02

to lay her off, which I

28:04

would have done if we, I

28:07

mean, I would have given her the opportunity to stay

28:09

on and work with our nonprofit clients. I don't think she

28:11

would have taken that. If I

28:13

had to lay her off and instead of doing that,

28:15

I got to basically hand her a business. Amazing.

28:18

Well, I already see the win

28:20

-win coming to you, Formation. So

28:22

I'm assuming then she left your

28:24

business fully to

28:26

take on... portfolio and essentially

28:28

start a new company under

28:30

her own branding and organization and

28:33

equity and whatnot. Did that

28:35

create any disruptions to the nonprofit

28:37

arm of your business? Were

28:39

there any employees that were working

28:41

kind of in a crossover

28:44

capacity that then had to decide,

28:46

am I exiting with this

28:48

new person or I'm staying on

28:50

and fully transitioning to nonprofit

28:52

clients? No. So

28:55

she did not work with any

28:57

nonprofit clients. So that was

28:59

a very clear cut. We

29:01

did have two bookkeepers

29:03

on our team that served

29:05

basically that small business

29:07

portfolio. And so they were

29:09

invited to go work for her

29:11

new company. So they would basically

29:13

have the same client roster, but

29:16

instead of being paid by 100

29:18

degrees consulting, they were now paid

29:20

by this new company and working

29:22

directly under her. remainder

29:24

of my team we had a

29:26

couple bookkeepers that were sort of crossover

29:29

and so we gave them an

29:31

opportunity to stay and to just work

29:33

on nonprofits and you know we

29:35

invited them we made it this whole

29:37

big thing and they decided to

29:39

stay and they're still with us you

29:41

know two plus years later and

29:43

so we were able to find spots

29:46

for them. We didn't

29:48

have any CFOs that

29:50

were working on both,

29:52

maybe like one crossover here

29:54

and there, but that was an easy transition.

29:56

So it was really those two bookkeepers

29:58

that had a pretty solid mix, but we

30:00

were able to invite them to stay on with us

30:02

and just do nonprofits. Out here,

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of America Corporation. Amazing. I'm glad to

30:36

hear it was such like a

30:38

simple transition. That's always lovely to

30:40

hear when obviously you're going through big

30:42

changes like that. So I know

30:45

you sold, Stephanie, for an undisclosed six

30:47

figure amount. Was this

30:49

paid upfront or was this a

30:51

deal that you closed where there

30:53

was a lump sum payment and

30:55

then additional installments? I ask because

30:57

I recently, about a year ago,

30:59

went through the process of actually

31:01

getting my business valuated and it

31:03

was really interesting to hear from

31:05

the firm that I worked with.

31:08

how that looks, you know, depending on the

31:10

deal, like there's a lot of times. And

31:12

I've actually, we've interviewed some people on our

31:14

podcast recently too. In fact, there was a

31:16

guest who actually sold her company and then

31:18

eventually bought it back a number of years later,

31:20

which was really interesting. We'll link that below

31:22

in the show notes if you're curious, if

31:24

you haven't listened into that case study. But

31:27

she was talking about how with her exit

31:29

plan, you know, she had been paid a

31:31

certain amount and then her additional payments were.

31:33

based on the performance of how that company

31:35

did after it sold. And so I'm just curious,

31:37

any nuances or things that you learned in

31:40

that deal structure that you could share with

31:42

our listeners, I think would be super helpful. Yeah,

31:45

so the way that we structured

31:47

it was that I would get an

31:49

upfront payment, a lump sum that

31:51

would be like the equivalent of maybe

31:53

like three sort of installment payments

31:55

in the future. So it was a

31:57

big chunk that came upfront. I'm

32:00

thinking it was maybe like 10 to

32:02

15 % of the total purchase price. And

32:05

then what we had agreed

32:07

upon was very similar to

32:09

what you're saying, where I

32:11

would get a percentage of

32:14

her revenue every month until

32:16

the total purchase price had

32:18

been met. And so that

32:20

protected her from if we did a

32:22

flat fee, like, okay, you have to

32:24

pay me just for sake of our

32:26

numbers $10 ,000 every single month. Well, what

32:28

if a bunch of clients drop off

32:30

and now I'm like, you know, obligated

32:32

for this big payment that I can't

32:34

afford. And so she really wanted

32:36

that protection in place and I

32:38

was fine with that too. And

32:40

so it's a percentage of her

32:42

revenue every single month, which she

32:44

she basically would send me her

32:46

financial statements, a breakdown of the

32:48

clients, what they paid her, the

32:50

percentage that we had agreed upon

32:52

giving me the total, and then

32:54

her like bank wire confirmation. So

32:56

she would send me this little

32:58

financial package every single month that

33:00

broke everything down. and so

33:02

that again sort of protected her

33:04

from not having to overextend herself because

33:06

she had still had to pay

33:08

for herself and now she had these

33:10

two bookkeepers she had to pay

33:12

for so she wanted to protect herself

33:15

in that way which I you

33:17

know completely agree and then we also

33:19

had a referral agreement in place

33:21

because at that point I was still

33:23

sort of out there as like

33:25

a small business CFO and we would

33:27

constantly get new requests for discovery

33:29

calls and so we had a referral

33:31

agreement in place where, again, she

33:33

would pay me a percentage of this,

33:35

of a new client's retainer that I

33:37

sent to her. And so that also

33:39

kind of went against the purchase price.

33:41

And then we ended up, that agreement

33:44

went on and then we ended up

33:46

actually just settling just a few months

33:48

ago with a final lump sum payment.

33:50

She was like, I don't want to

33:52

do these monthly payments anymore. Like

33:54

just settle this up in one chunk.

33:56

And I said, great, like let's do it.

33:58

And so now our, our deal is officially

34:00

closed and we got a lawyer to,

34:02

you know, review all the terms that we

34:05

both signed something that said like, yes,

34:07

she has fulfilled her agreement to me and

34:09

we're paid up and we're good. So

34:11

exciting. Congratulations to both of you. I bet

34:13

that feels so, so amazing to fully

34:15

close that chapter and exciting for her to,

34:17

to get to embark on this fully

34:20

on her own. I'm just curious.

34:22

Again, I'm not an expert

34:24

in deal structures. So I don't

34:26

know if this necessarily falls

34:28

into this classification, but since the

34:30

payments were made over time

34:32

until she finished that lump sum

34:34

recently, would that have been

34:36

considered? owner financing because she

34:38

didn't pay you cash upfront for

34:41

the whole deal. And if so,

34:43

did you add on interest to

34:45

like, let's say just for round

34:47

numbers, let's say you sold the

34:49

business for $2 million, were you

34:51

then adding additional interest on top

34:53

as part of that monthly revenue based repayment? Or

34:56

did you just say, Hey, look, it's 2 million

34:58

flat, regardless of how long it ends up taking

35:00

you to pay that full amount to me? Yeah,

35:03

exactly. No, I didn't add any

35:05

interest. I think both of us

35:07

were quite interested in keeping this

35:09

deal as simple as possible. And

35:11

like I mentioned before, extracting every

35:13

last penny that I possibly could

35:15

out of it was not my

35:17

goal. So that could

35:19

very well be standard in deals, but

35:21

that's not something we included in

35:23

our snow. Okay, that's great

35:25

to know. Thank you for your

35:27

transparency there. Before we move into

35:29

the aftermath of selling the business

35:31

and all the amazing growth that's

35:33

actually brought your own company, I

35:36

wanted to give our listeners kind of

35:38

a better picture of what exactly was

35:40

sold beyond the book of business and

35:42

the existing client contracts you had because

35:44

I'm sure there's maybe at least a

35:46

handful of listeners who are hearing this

35:48

case study and thinking, huh, maybe I've

35:50

built something in my service -based business

35:52

that could eventually one day be sold. And

35:55

if I were to sell it, what

35:57

exactly am I selling? Right? So besides obviously

35:59

handing over those client contracts and, and the

36:01

book of business, if you will, what

36:03

other assets, so to speak, had

36:06

you created or what other IP

36:08

went with this deal? Like how

36:10

did you package it all up?

36:13

Yeah, so I did have

36:15

some other products. I had

36:17

an online course and a

36:19

couple other things like that,

36:21

templates and things meant for

36:24

small business owners. She

36:26

didn't want that. And so I

36:28

did not sell that to her.

36:30

But what I did do in

36:32

the agreement was grant access to

36:34

what we call our finance workbook.

36:36

And it's this sort of big

36:38

behemoth of a Google sheet that

36:40

we use for all of our

36:42

clients. that we developed. So it's got

36:44

cash flow forecasting and dashboards and all

36:46

of the stuff in there. And so

36:48

our legal agreement grants her, I don't

36:50

want to say unlimited, but it's like,

36:53

you know, she can freely use that

36:55

with her clients that we sold to

36:57

her as well as any future clients.

36:59

She is allowed to use this finance

37:01

workbook however she wants. She is not

37:03

allowed to sell it or like make

37:05

money from it basically, but she can

37:07

use that however she wants. And so

37:10

it was really just that bit of

37:12

intellectual property that we her free ability

37:14

to use and access, just not reproduce

37:16

or sell. That makes complete

37:18

sense. So it's like a licensing deal

37:20

in perpetuity, but for a specific

37:22

use case. Yes, exactly. Well,

37:25

I guess now that you have had

37:27

the experience of kind of partitioning out a

37:29

portion of your business to sell, is

37:31

there any part of you that's looked at

37:33

those assets that she turned down or

37:35

passed on like the course? Have you thought

37:37

to yourself, hey, maybe I'll sell just

37:39

the course IP by itself to another buyer?

37:41

Have you explored that at all? You

37:43

know, I haven't. No,

37:46

I haven't. I haven't thought about

37:48

that at all. I certainly, I guess

37:50

I probably could. I will say

37:52

have a very similar program for nonprofit

37:54

leaders. Then I do have that.

37:56

That's trademarked. That's, you know, that is

37:58

selling all the time. And so I

38:00

don't know if there would be any sort of

38:02

conflict because the other, the course for small businesses

38:04

is kind of similar. But I

38:06

don't know. Honestly, I haven't explored it, but I

38:08

would certainly be able to. That's a great idea

38:10

because I don't think we have any intentions of

38:12

working with small businesses. again. Well,

38:14

I'm always just interested. You know me. I

38:16

like my curiosity goes a thousand different ways.

38:19

I'm like, I have to ask all the

38:21

questions. Let's talk about the aftermath of selling

38:23

your business. So, uh, I mean, amazing results.

38:25

You saw a 73 % increase in revenue in

38:27

the first year post sale, 43

38:30

% increase in the number of

38:32

clients you had on your

38:34

roster, 21 % increase in average

38:36

revenue per client. 376

38:38

% increase in profit margin. This is the

38:40

one that totally blows my mind. And

38:43

actually, in relation to that,

38:45

only a 4 % increase in

38:47

team expenses. I have individual

38:49

questions on kind of each of these,

38:51

but is there anything just generally speaking

38:53

that you want to add to this

38:55

data? I mean, what

38:57

I will say is that at

38:59

the time, we were quite nervous because,

39:01

you know, small businesses made up like

39:03

30 to 40 % of our number

39:06

of clients. Like we had already run

39:08

the numbers. We knew that they were

39:10

not making as much money as our

39:12

nonprofit clients, but it was still scary

39:14

to be like, okay, bye -bye, 40 %

39:16

of our clients and like hope for

39:18

the best. Um, so we were

39:20

scared. Like we had all the, all the

39:22

numbers, we had all the data, but

39:24

we were still really nervous. And in fact,

39:26

when we told our team, we had several

39:28

employees that were like, are you sure

39:30

about this? Like, you know what you're doing

39:32

because this on the surface does not

39:35

look like a great idea. Um,

39:37

so we were really nervous. Uh, you

39:39

know, again, even with all of the

39:41

data in hand, but I would say

39:43

maybe a little surprised at the results

39:45

that they were so. significant.

39:49

But yeah, just still nervous. No,

39:51

I mean, totally understandable. You're

39:53

cutting off a significant arm

39:56

of revenue. And

39:58

because you are a CFO, right?

40:00

When you were looking at, you know,

40:02

removing this. Of course, granted, there is

40:04

the cash flow from the payments from

40:06

selling the business. But let's say we

40:09

were to exclude that in this hypothetical,

40:11

let's remove the income that you're

40:13

receiving from actually selling the business. If you're

40:15

just looking at your own company now,

40:17

if you cut off this 30 % to

40:19

40 % of revenue, how much

40:22

runway had you given

40:24

yourself to make that revenue

40:26

back up? Did you have any

40:28

projected cash flows or anything where

40:30

you were like, look, we need

40:32

to get back up to a

40:34

kind of base level in six months, or

40:36

what did that conversation look like internally? No,

40:39

we did not have a deadline. I was

40:41

like, okay, by this date, we better have

40:43

recouped or gotten back up to where we

40:45

were. We didn't have a deadline in place.

40:48

I will say, yes, we let go

40:50

of revenue, but we also let go

40:52

of expenses by letting go of... know,

40:54

the team member and the two bookkeepers

40:56

that eventually bought the business, but we

40:58

did let go. There was another person

41:01

that we did have to let go

41:03

of entirely like another CFO. And

41:05

so we dropped in expenses too.

41:07

And the thing is that part

41:09

of the business was so unprofitable

41:11

that like that net income that

41:13

we were losing was like not

41:15

really that much, like embarrassingly low.

41:17

And so it wasn't like we

41:19

were now having to dip into

41:21

savings for three months to be

41:24

able to pay the rest of

41:26

our staff salaries. It wasn't really

41:28

like that. And we've

41:30

always had a very consistent

41:32

inflow of referrals and that

41:34

really continued with nonprofits. I

41:37

think to some degree, we probably were

41:39

able to, I think we definitely were

41:41

able to ramp up the number of

41:43

clients coming in because now, I'm

41:45

not diluting my message across

41:47

two different audiences. I'm talking just

41:49

to nonprofits. I'm speaking only

41:51

at nonprofit events. I'm doing only

41:54

nonprofit focused webinars. And

41:56

so then we were sort of regaining

41:58

our reputation as, oh, you're the nonprofit finance

42:00

people. And so I think

42:02

that. Honed in focus allowed

42:04

us to bring in clients even

42:06

more quickly. So we didn't have a

42:08

deadline, but I think naturally it

42:10

allowed us to like make that up

42:12

and you know, and then some

42:14

pretty quick. Right. And

42:16

that kind of leads directly into

42:19

my question specifically around the 43 %

42:21

increase in the number of clients. So

42:23

like you just mentioned, obviously your

42:25

capacity to market increase. for this

42:27

particular niche for nonprofit clients, but

42:29

other than having more capacity and

42:31

just more clarity in your messaging

42:33

targeting only one audience, were there

42:35

any additional revenue or not revenue

42:37

drivers, client acquisition drivers during this

42:39

period of time that you think

42:41

contributed significantly to that 43 %

42:43

increase? That's

42:46

a good question. We have never

42:48

had much luck with paid marketing

42:50

Facebook ads or Google ads or

42:52

anything like that. So it was

42:54

definitely not something like that. I

42:56

think it was really my I

42:58

sort of I had always split

43:01

my time between like going to

43:03

events for business owners versus going

43:05

to events for nonprofits. And so

43:07

I would say I do at

43:09

least half a dozen to a

43:11

dozen different speaking engagements a year,

43:13

whether it's virtual or on stages.

43:15

And now, instead of doing half and

43:17

half, I was doing, say, all 12

43:19

of them focused on nonprofits. So

43:21

it was really still the organic

43:24

channels that we were using, but it

43:26

was just not diluted between two

43:28

different groups of people. That

43:30

was it. We didn't

43:32

engage in any other

43:34

sort of outbound marketing. The

43:37

other thing I will say is

43:39

that it was also during this time

43:41

that we brought on a client

43:43

services manager that was really focused on,

43:45

they had not really focused on, I

43:47

would say a piece of their role was

43:49

some outbound, you know, some outbound sort

43:51

of exploration and looking for ideal clients. So

43:54

that was a piece of it. But

43:56

I would say it was mostly probably my,

43:58

my focus and attention to nonprofits. Yeah.

44:01

No, I love hearing that because sometimes I

44:03

think we're looking for this silver bullet,

44:05

right? But really it is just where your

44:07

energy. goes like that expands.

44:09

And so I love that you just

44:11

really doubled down on what was already

44:13

working and just doing more of that

44:15

in the right rooms and right containers. The

44:18

21 % increase in average revenue

44:20

per client though. That part's

44:22

interesting to me. Was that just

44:24

based on price increases or

44:26

again, what contributed to the average

44:28

revenue per client? Yeah.

44:30

So believe it or not, our

44:33

small businesses actually

44:35

the average revenue per small business

44:37

client was significantly less than the

44:39

average revenue per nonprofit client. It

44:41

sounds very counterintuitive, but again, kind

44:44

of going back to what I

44:46

said before, I feel like nonprofits

44:48

almost valued our services much higher

44:50

than our small businesses did. And

44:52

so that led me to I

44:55

don't know if it was subconsciously or

44:57

whatever. I was charging small businesses less. And

45:00

I think small businesses also looked at us

45:02

as sort of like, well, you're a nice to

45:04

have. You're an extra. And so

45:06

I'm not willing to pay this much.

45:08

I'll pay $800 a month, but I'm not

45:10

paying $3 ,000 a month. And that just

45:13

wasn't the case in nonprofits. then

45:16

the small business average revenue

45:18

per client was bringing the whole

45:20

average way down. And

45:22

so by eliminating them,

45:25

our average revenue per client went

45:27

up. And also we did use

45:29

the transition as an opportunity to revisit

45:31

pricing. We had not

45:33

for many of our clients who had

45:35

been with us for three, four,

45:37

five years, we'd literally never once increased

45:39

their prices. Meanwhile, I am

45:41

giving my team a raise every single year.

45:43

The cost of everything is going up and

45:45

they're still what they had started paying five

45:48

years ago. And so we sort

45:50

of use this opportunity as a

45:52

big giant company overhaul to reset our

45:54

pricing and create a whole new

45:56

matrix for the way that we're pricing.

45:58

And then we did, we did raise

46:00

clients prices around that time as well. You

46:04

know that feeling when someone shows up for you

46:06

just when you need it most? That's what

46:08

Uber is all about. Not just a

46:10

ride or dinner at your door. It's

46:12

how Uber helps you show up for

46:14

the moments that matter. Because showing up

46:16

can turn a tough day around or

46:18

make a good one even better. Whatever

46:21

it is, big or small, Uber

46:23

is on the way. So you can

46:25

be on yours. Uber

46:27

on our way. So

46:30

we talked about you

46:32

know, when we were talking about the transition,

46:35

how the business, the

46:37

small business clients, most of them, the

46:39

majority stayed on with the new owner. I

46:42

guess I didn't really ask though

46:44

about how the other arm of

46:46

your business received this kind of

46:48

transition or overhaul, if you

46:50

will. So yeah, for example, like

46:52

with the new updated pricing model,

46:55

did you have any any feedback

46:57

that you weren't expecting there or for the most

46:59

part were those nonprofit clients understanding and like, yeah,

47:01

that makes sense. It's been a number of years

47:03

we should be paying more. Yeah,

47:05

no, not that. No,

47:09

nonprofits are very price sensitive if I'm

47:12

going to generalize. And so it was

47:14

really hard. And I think that there

47:16

were a lot of lessons in communication

47:18

that we learned during this period. And,

47:20

you know, if anything, if I could

47:22

go back and do this again, it

47:24

would be that I would we

47:26

would have communicated better to

47:28

everybody. But I think

47:30

with the nonprofits, I think we sort

47:33

of came in a little bit

47:35

too hard with some of them. And

47:37

really, their pricing should have increased like 100%.

47:39

And so a couple of them, we were

47:41

like, you're in this new pricing model and now

47:43

you're going to pay double. And they're like,

47:45

yeah, absolutely not. And so we were

47:47

faced with sort of backpedaling a little bit

47:49

and saying, OK, well, do we tell them

47:51

that okay well no just kidding you don't

47:53

have to pay that price you can pay

47:55

us less or like can we come up

47:57

with some plans so that we both win

47:59

and so that's what we did was

48:01

that you know we we also know

48:03

that nonprofits operate on a very like

48:06

black and white budget cycle and so

48:08

if their fiscal year is January to

48:10

December like we need to have price

48:12

increases sort of locked in with them

48:14

by like October, November, because they're going

48:16

to their boards for approval on that

48:18

budget in November, December. And if we

48:20

come to them in February, they're going

48:22

to be like, no, we can't, we

48:24

don't have the money in the budget.

48:26

We just got it approved. We don't,

48:28

but we can't do that. And so, so

48:30

we had to be really conscious

48:32

of sort of budget cycles with them.

48:34

And we also had to be

48:36

flexible. And for those clients that were,

48:38

you know, that we really wanted

48:40

to retain, we would say,

48:42

okay, well, we won't put the entire

48:45

price increase into effect right now, we're

48:47

gonna stair step it. So we're gonna

48:49

do X % now and then X %

48:51

at the beginning of the new fiscal

48:53

year to kind of give them room

48:55

to ramp up along with us. Of

48:58

course, there are those clients that like... Not

49:00

that we didn't care about them, but maybe they

49:02

were just not ideal clients for us anymore. Or

49:05

maybe their scope of work just didn't

49:07

even fit within our new pricing model,

49:09

our new service model. So we

49:11

use that as an opportunity to...

49:13

them the option to leave, to let

49:15

go. And so this was another

49:17

sort of opportunity to really hone in

49:19

on exactly the kind of clients

49:21

that we want to work for, get

49:24

them in the right scope of service,

49:26

get them in the right pricing model. And

49:28

yes, we lost clients in that process, but

49:30

I think it was absolutely the right

49:33

thing to do. But yeah, I think communication

49:35

was like a little bit rocky at

49:37

that time. We probably could have done a

49:39

better job. No, hey, I mean, we

49:41

can appreciate the honesty because we've all been

49:43

there where, you know, you don't know

49:45

if you've never done something like that before,

49:47

right? How do you know how people

49:49

will perceive it and exactly what's going to

49:51

land? And so I'm glad that you

49:53

have that experience under your belt now for

49:55

future price increases. So that's, that's great

49:57

news. And I love that we're talking about,

50:00

you know, some of these lessons that you

50:02

learned that go beyond just, you know, hard

50:05

numbers, like the one that

50:07

you just mentioned. The profit margin

50:09

increase, I think that's probably the

50:11

piece that our listeners are going

50:13

to be most interested in, that

50:15

almost 400 % increase in profit

50:17

margin. I'm sure a lot of

50:19

that can be attributed to, like

50:21

you said, letting go of several

50:23

different team members. So the payroll

50:25

obviously decreased drastically, which would then

50:27

increase your profit margins. But was

50:29

there any other any

50:32

other piece that really contributed to such

50:34

a high jump in profit margins?

50:37

Yeah, so it was, like I

50:40

said, the small business portfolio was

50:42

not very profitable to begin with.

50:44

And so just pulling out both

50:46

the revenue and the expenses from

50:48

that portfolio automatically gave us a

50:50

jump. But what we were

50:52

also able to do There

50:55

were a couple of

50:57

our CFOs that primarily did

50:59

nonprofits, but also had

51:01

some small business clients. Their salary

51:03

remained the same. We kept them,

51:05

but now we just freed up

51:07

some of their capacity so we

51:09

could take more clients on without

51:12

having to increase our expenses. That

51:14

was part of it as well. basically

51:16

helping them not have to jump

51:18

from wearing my nonprofit CFO hat

51:20

to wearing my small business CFO

51:22

hat and really sort of focus

51:24

their expertise, gave them even

51:26

more capacity than just like

51:28

a one for one client

51:31

replacement. So that was

51:33

really helpful. And then we

51:35

did have some marketing efforts

51:37

that were, I will say,

51:39

you know, through social media, and that's really

51:41

where our small business clients were that

51:43

we just let go of because we're like,

51:45

I'm not sure that our nonprofit clients are

51:47

looking for finance support

51:49

for their organization while they're

51:51

on their personal Instagram. And

51:54

so, you know, we had social media

51:56

person that was helping us and we decided

51:58

to let that go as well. And

52:01

so So dropping that expense helped.

52:03

So it's kind of a combination of

52:05

all of these things that jumped

52:07

it up. I would say the most

52:09

significant driver though was letting go

52:11

of the small business portfolio. I think

52:13

at one time, our revenue for

52:15

that portfolio was something like, I don't

52:17

know, $60 or $70 ,000 a month.

52:19

And our profit was like... ,000

52:21

or 5 ,000, like something really small.

52:24

So was like, and that didn't

52:26

even count like my time or

52:28

operations manager's time to like be

52:31

managing it. So it was like,

52:33

okay, if we want to make

52:35

another five grants, there are way

52:37

easier ways to do this than

52:39

have an entire team and client

52:41

portfolio. This is not working. Wow.

52:43

The opportunity cost alone is not

52:45

worth the $500 or $1 ,000

52:48

gain. That's such a valuable lesson. Again,

52:51

people really need

52:53

to prioritize the profit

52:55

piece. A

52:57

lot of people would hear that and

52:59

go, wow, 60 to $70 ,000 a month

53:01

from just one revenue stream. Like that looks

53:03

so good or it sounds so good.

53:05

But yeah, the reality of it can be

53:07

quite harsh. And so I'm really glad

53:09

that, that you brought that to light here.

53:13

I also want to just

53:15

like shout you out for, cause I know we

53:17

won't have time to like dive into the details of

53:19

this, but I just want to shout you out

53:21

of something you had submitted in the pre interview on

53:23

how the ripple effect with that. increasing

53:25

profit margin was that you had

53:27

more wiggle room in your bottom line

53:29

to reinvest in your current employees

53:31

and become a more competitive employer. So

53:33

you are now able to offer

53:35

a full suite of benefits, health insurance,

53:37

401k match, remote work stipend. And

53:39

I just think that is so cool.

53:41

And again, maybe a non numerical

53:43

win or gain from this decision that

53:45

I just want to highlight. for

53:48

our listeners. So congratulations to

53:50

you on just being an

53:52

even better boss with your

53:54

current team. Thank you. Of

53:56

course. That felt like a huge win. The

53:58

day that we were able to announce to the team

54:00

that we're able to provide fully

54:02

paid medical insurance to everybody that

54:04

wants it was like, oh my

54:06

gosh, I'm a real business owner

54:08

now. Yes, it really does feel

54:10

that way. I remember when I

54:12

had full -time staff being able

54:14

to offer, yeah, medical benefits. And

54:17

401 came out like that, that

54:19

to me felt exactly like what you

54:21

just said. That made me feel

54:23

more like a real quote unquote real

54:25

business owner than almost anything, any

54:27

other milestone that I had in my

54:29

business. So definitely can relate huge,

54:31

huge celebrations there to wrap up our

54:33

case study, Stephanie. I want to

54:35

talk about this last lesson that you're

54:37

really carrying with you forward into

54:39

your current business. And that's this idea

54:41

that. being able to

54:43

sell this portion of your business really

54:45

opened your eyes to the fact that

54:47

you can build sellable assets. And now

54:49

you're kind of looking at, I know

54:51

you have no plans to actually sell

54:53

this current part of your business and

54:55

your non -profit client portfolio anytime in

54:57

the near future, but it's now like

54:59

a possibility, right? So you're

55:02

actively making decisions

55:04

or investing in things in your

55:06

current business to allow for that

55:08

possibility one day. Can you talk

55:10

us through kind of some of

55:12

these things that you're streamlining or

55:14

investing in like systems, templates, processes,

55:16

policies, team structure? Like

55:18

walk us through what, if anything,

55:20

has majorly changed since you've come

55:22

to this realization? Yeah,

55:24

I will say that I

55:27

am out of... a lot of

55:29

it very intentionally because it

55:31

used to be like the Stephanie

55:33

show. This is Stephanie's business

55:35

and like Stephanie is not a

55:37

sellable asset. And so really

55:39

putting the right team structure, we

55:41

have a very clear like

55:43

organizational hierarchy. Obviously I

55:45

am the CEO, but we have

55:47

a client services manager who oversees

55:49

all of our CFOs and bookkeepers.

55:52

We have an operations manager and

55:54

she oversees all of the operations admin, the

55:56

finance, the legal. everything for that part

55:58

of the business. So we have a very

56:00

clear structure. And then

56:02

within each department, we have document

56:04

not just processes that exist

56:06

in people's heads, but like documented

56:08

processes. We have libraries of

56:10

resources for our CFOs, for our

56:13

team. We have a

56:15

very structured onboarding process so that

56:17

anybody could come in, go

56:19

to the right Google Drive folder

56:21

and know exactly how to

56:23

onboard a new employee, like step

56:25

by step by step. We

56:27

have onboarding processes for our clients.

56:29

So again, anyone could come

56:31

in, go to the Google Drive folder and

56:33

know exactly what to do. Step one,

56:35

step two, step three. And so

56:37

really being able to like package

56:39

up our business and hand it

56:41

off to a new owner like.

56:43

That's pretty doable now. That was

56:45

not the case a few years

56:47

ago. But everything is

56:50

documented. We sort of had a little

56:52

bit of a test of it on

56:54

the operation side of things when our

56:56

ops manager was on maternity leave last

56:58

fall from September through December. And so it

57:00

was me and our client services manager

57:02

that were kind of jumping in. It's

57:05

pretty good. It is pretty good. There

57:07

are manuals for everything. There's checklists for

57:10

everything. There's a clear process. There are

57:12

policies. There are systems. We know where

57:14

the logins for everything are. Nothing

57:16

is really a mystery. And so we're

57:18

going to continue improving upon that and

57:21

continue working on that. That

57:23

I think is what has really changed

57:25

for me is that I feel very

57:27

confident that almost anybody could step in,

57:29

again, go to the right place in

57:31

our systems and be able to execute

57:33

just as we are. I think

57:35

that's probably the biggest thing that has changed. That's

57:38

so impressive. I love to hear from

57:40

buttoned up behind the scenes businesses

57:42

who are just killing it like that.

57:45

I think that's aspirational for all

57:47

of us. It's really interesting to hear

57:49

you talk about removing some of

57:51

your personal branding from the overall business

57:53

because it's interesting. I feel like

57:55

we're in a time right now where

57:58

It's going one of two ways. Like

58:00

I see some businesses leaning even more heavily

58:02

into their personal branding, but they are like

58:04

behind the scenes. I know they are building

58:06

something that could be sold, but to your

58:08

point, it is kind of a weird thing

58:10

if you get to that point of. selling

58:13

and, you know, even if the

58:15

behind the scenes operations are

58:17

really dialed in, selling your personal

58:19

brand still feels, I mean,

58:21

you're essentially selling your name, image

58:23

likeness to somebody else to

58:25

own forever, right? Potentially. And in

58:27

whatever application they want to

58:29

use that for. So there's definitely

58:31

that interesting kind of that,

58:33

that interesting struggle. Um, With your

58:35

external marketing these days, is

58:37

it really branded around 100 degrees

58:39

consulting? Or do you still

58:41

feel like you lean into leveraging

58:44

your personal brand to feel the growth of

58:46

this business? Yeah,

58:48

it's honestly a little bit of both. So

58:50

we did an audit of our website and

58:52

I was like, there are way too many

58:55

pictures of my face all over this website.

58:57

I noticed we did an audit. I saw

58:59

myself recently as well and I went through

59:01

like added so many more like group shots

59:03

so can relate. Yes. was

59:05

like, I need to be on this website way

59:07

less. So we did that. So it's not just

59:09

my face everywhere. And it's really

59:11

interesting because we do like new

59:13

clients don't talk to me. I don't

59:16

know most of our clients. anymore because

59:18

they never talk to me. Whereas before, clients would

59:20

come to us and say, well, I want to

59:22

work with Stephanie. Can she be my CFO? And

59:24

now nobody else that anymore because nobody knows

59:26

me. They know the brand, which is amazing.

59:29

That being said, like speaking things, I am

59:31

still the person that is out there speaking

59:33

on behalf of 100 degrees consulting for the

59:35

most part. But I do say, you know,

59:37

if I connect with somebody is speaking engagement,

59:40

I just say, yeah, let me connect you

59:42

to our client services manager. She would be

59:44

happy to talk to you and, you know,

59:46

you can share more. our services so so that

59:48

is it's a little bit different

59:50

but then I'm also sort of

59:52

on the side. I am trying to build my

59:54

personal brand because I'm writing a book. And

59:57

so, you know, the publisher

59:59

wants to see that I have my

1:00:01

own sort of audience and I

1:00:03

have my own personal brand. And so

1:00:05

in a way, I'm sort of

1:00:07

starting from scratch and I'm finding it

1:00:09

really difficult because when I started

1:00:12

the business 10 years ago, it was

1:00:14

like the landscape on social media.

1:00:16

Everything was so different. And we get

1:00:18

so many of our clients through

1:00:20

referrals anyway that I'm like, I don't

1:00:22

even nowhere to begin to create

1:00:24

a personal brand, whatever online. So I'm kind

1:00:27

of playing with that on the side,

1:00:29

but it's been challenging for me. That's

1:00:31

so exciting. I can kind of relate

1:00:33

in a lot of ways because I have

1:00:35

also been really leaning heavily into building

1:00:37

cubicle to CEO up as a standalone brand.

1:00:39

And it is the coolest feeling, by

1:00:41

the way, Stephanie, when Exactly

1:00:43

what you said when somebody I've actually had

1:00:46

instances before where I've been at a conference

1:00:48

and somebody like mentions the podcast and I'm

1:00:50

like, Oh, yeah, I host that or like

1:00:52

that's my company and they're like, Oh, really?

1:00:54

Like they didn't they didn't make the connection

1:00:56

that I was associated, which was so cool.

1:00:58

Um, but anyways, I, yes, I can empathize

1:01:00

with all that and I would love by

1:01:02

the way for you to share what, what

1:01:04

your book is, like what, what it's called

1:01:07

and then where else are listeners can continue

1:01:09

to connect with you and 100 degrees consulting. Yes,

1:01:12

so the book is called Do

1:01:14

Good and Prosper and it is

1:01:16

for people that are working in

1:01:19

impact first jobs like nonprofits or

1:01:21

teachers or health care workers or

1:01:23

therapists, artists, activists, anybody who's

1:01:25

really focused on having an impact because

1:01:27

we have sort of been taught

1:01:29

that you can either do good work

1:01:31

in the world or you

1:01:33

can do well for yourself financially.

1:01:36

And so I'm here to sort of share

1:01:38

that you don't have to choose. You

1:01:40

can have both. And so the book shares

1:01:42

nine different types of prosperity, and there's

1:01:44

a fun prosperity assessment where you get your

1:01:47

prosperity score. And so that's

1:01:49

what I'm working on right now.

1:01:51

So I have started a website

1:01:53

for that at dogoodandprosper .com. And then

1:01:55

to learn more about my company,

1:01:57

of course, we're at 100, like

1:01:59

the number 100, degreesconsulting .com. Amazing.

1:02:02

Both of those links will be below in the

1:02:04

show notes. So make sure you check them out.

1:02:06

Say hi to Stephanie. And I'm

1:02:08

really excited to read that book. I love

1:02:10

the yes and mindset, right? That improv

1:02:12

teaches us. And I think that's so true.

1:02:14

I think the more value you add

1:02:16

to the world, the more you should prosper

1:02:18

personally as well. So love that. Thank

1:02:20

you, Stephanie, so much for joining us today.

1:02:23

And thank you all for tuning in.

1:02:25

We'll catch you in next week's episode. If

1:02:35

you love today's episode, send

1:02:37

it to a friend, tag

1:02:39

us on Instagram at cubicle2ceo,

1:02:41

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1:02:43

star rating at ratethispodcast .com slash

1:02:45

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