Today, I'm going to share five huge mistakes that I wish I had avoided when I started my Fractional CFO firm. 

I'm sure these mistakes have cost me at least $1,000,000 in revenue (and who knows how much profit) over the past eight years.

I hope that by learning from my mistakes, you can scale your firm and hit your goals significantly faster than I did.

But here's the thing - take this list and pick one that you know you need to focus on and attack it like a bear. Otherwise, you may end up making the same face-palm mistakes I did.

"Learn from the mistakes of others. You can't live long enough to make them all yourself." -Eleanor Roosevelt 

Mistake #1: Don't offer bookkeeping.

I know this is a contentious topic in our industry, and you have to decide what's best for you.

For me, I realize I should not have offered bookkeeping for two primary reasons: 

Reason 1: When I first started my firm, I told myself that I would use low-cost bookkeeping to get my foot in the door with potential CFO clients. The idea was that I would wow them with bookkeeping services and then upsell them to advisory services.

Out of dozens of clients, that strategy played out exactly twice.

What ended up happening was that the clients psychologically anchored us as tacticians. When it came time to ask for a seat at the big kids' table, they didn't see us as strategists.  

One day, this became all too real for me when a client called me and said, "Hey. You guys do great work! I bet you know others who do great work, too. I'm looking to hire a Fractional CFO. Is there anyone in your network that you could recommend?" 🤦‍♂️🤦‍♂️🤦‍♂️ 

Reason 2: In my experience, bookkeeping represented only 10% of our net profits and 90% of our headaches. The juice was simply not worth the squeeze for me. 

Sure, the gross profit margins were sweeter than a Chick-Fil-A sweet tea! But the gross profit dollars didn't justify the headaches. 

I'm not suggesting you shouldn't offer bookkeeping. I just know that it was a bad move for my firm, significantly slowing us down and adding a ton of unnecessary drama.

Your mileage may vary.

Mistake #2: Prospect Daily

Perhaps the most significant source of stress, anxiety, and sleepless nights for any firm owner is worrying about getting new business in the door.  

"OMGosh, I need two new clients YESTERDAY and I have exactly 0 leads in the pipeline right now." -Me, You, and Everyone Else

How do we keep finding ourselves in this spot?

It's because we tend to stop our prospecting and marketing activities when our book of business is full. If you're anything like me, you may even have told yourself that prospecting when your book is full is a BAD idea because you don't want to have to turn new business away. Gosh, how embarrassing would THAT be??? Perish the thought.

But it's in those moments that we forget how long it takes to get a new lead in the door. We forget that prospecting work takes anywhere from 30-90 days to result in a new client! 

So we find ourselves in this cycle of plenty of business (maybe even struggling to onboard fast enough) followed by periods of extreme drama from not having enough business.

The remedy?

Daily prospecting.  

Even if you don't need new business, keep working on your pipeline because you will one day need it.

In the meantime, have a few firms you can refer leads to (I'm happy to take them—just sayin'). This is also a great time to raise your prices because you have nothing to lose.

Mistake #3: Standardize Services

If you want to scale a firm, you must standardize your services.

When I started, I thought I would offer "bespoke" services because who would want a cookie-cutter service? I convinced myself that I had to have custom solutions for every client.

The result?

❌ No processes or procedures.
❌ No clear picture of the talent I needed to hire.
❌ No way to forecast when I would need to hire.
❌ No way to consistently budget time or resources.
❌ Lots of frustration, stress, and uncertainty around growth.

Once I realized that bespoke just meant broke, I had to figure out how to back out of those customized packages to free up bandwidth for pivoting. 

Not pretty.

Mistake #4: Charge More Earlier

I am a MASTER negotiator.

Well, I'm a master at negotiating against myself anyway.

I'm great at telling myself stories about how much clients are NOT willing to pay for our services. I'm also really good at listening to those stories. 

When I started, I was convinced I could only charge $500 or $1000 per month for my advisory services.

One day, reality slapped me in the face. I was at a business development meeting in Denver, CO. I had set up a happy hour with the CEO of a company that I had my sights on. I was telling him about my firm and the services we offer. The conversation was going well until we got to the price point. This is how it went: 

Prospect: That sounds exactly like what we need. But let's get to it - what's your price? 

Me: $997 a month. (gulp)

Prospect: (Chuckles) Oh. Yeah, I typically work with consultants that charge $997 an hour. You're probably not ready for us yet.

Spoiler alert - I didn't close the sale.  

But this was a great lesson. I found that when I charged lower prices, our services had a lower perceived value. As a result, I tended only to land smaller clients.

Every time I raised prices, the perceived value went up, as did the size and quality of our clients.

It's not much different from what happened when Peloton raised its prices by thousands of dollars. Counterintuitively, demand skyrocketed.

Don't be afraid to test higher prices. And remember, higher prices don't mean that you need to offer more deliverables. 

Mistake #5: Master Boundaries

Perhaps the single biggest factor impacting a firm's ability to scale is mastering the art of setting and maintaining boundaries.

Yes, you've got to have a scope of work. But if you can't stick to that scope of work, you'll end up with a client roster full of people pulling you in all sorts of directions.

You'll end up spending too much time serving each individual client, which means one of two things:

1. You spend more time working (hello, burnout!) or
2. Other clients will suffer (hello, churn!) 

Both outcomes are bad.

Learn to do a great job communicating your boundaries and do the hard(er) work of saying no and keeping those boundaries in place.

Remember that whenever you let a boundary slip, you inadvertently set a new precedent for what your clients expect from you. Fixing a bad precedent is an uphill battle that is hard to overcome.

Just say no.

What should you do? 

Pick just one of these mistakes that I made and spend 15 minutes evaluating how you've seen it play out in your firm. Identify one thing that you can do differently.

If you can't pick anything out then I'll give you one:
Go raise your prices.

Your Coach,
Michael