How to Think Like a CFO if You’re a Solopreneur | Cash Flow Connections Podcast

Think Like a CFO (00:00)

Hey capital raisers, I want to give you $11,000 worth of goodies. I’m talking about capital raising closing scripts, the viral capital playbook, over 20 hours of capital raising sessions from our previous events like RaiseFest, a summit where we showed people how to raise $5 million in 30 days. Plus, I want to give you access to a community of hundreds of capital raisers who are active in our group, helping you out, answering your questions. If you want to learn more about that, just go to RaisingCapital.com.

Look, we all know that real estate has created more millionaires than pretty much any other business. The problem is, it’s also created lot of heartaches and bankruptcies. Sure, we can get access to a ton of real estate education on the internet, but that’s precisely the problem.

How can we tell which strategies will consistently produce asymmetric returns and which should be avoided at all costs? My goal is to give real estate entrepreneurs, capital raisers, and investors all of the secrets so that we can grow our portfolios without dealing with costly investment nightmares. And that’s what this program is all about. I’m Hunter Thompson and welcome to the Cashflow Connections Real Estate Podcast.

Hello everyone, welcome back to the show. Today we’ve got Dan de Gaulier, who is the founder and CEO of Ascent CFO Solutions, which is a fractional CFO firm that provides part-time and flexible ways to grow companies engaged with experienced chief investment and chief financial officers. I should say, I’m excited for this conversation. It’s something that a lot of people we work with are looking for more oversight when it comes to the financial management of their company.

And I can tell you that as someone who runs two companies that are small, man, it’s very, very common for groups not to take this at all seriously. And then all of a sudden they get bitten and then they go, wait a minute, I got to totally reframe the way I think about things like P &L and cashflow management. And I’m sure that’s where you get a lot of your clients. So I’m excited to have this conversation. Hopefully we can avoid that with some tips and strategies for today. Dan, welcome to the program.

Dan DeGolier (02:18)

Thanks so much for having me, Hunter. I’m excited to meet you.

Think Like a CFO (02:21)

Yeah, this is going to be interesting. I’m excited to jump in as well. Before we jump into kind of all the stuff you work with and help clients through, tell me about your background and how you got into the world of entrepreneurship and in particular the CFO path.

Dan DeGolier (02:36)

Sure. So I started my career as a traditional CPA. worked for a global CPA firm doing audit and tax work, which was a fine extension of my education, but I really did always kind of have an entrepreneurial fire in my belly, if you will. I really appreciate technology and disruption that occurs within software companies and early stage companies developing something new and exciting. So pretty early in my career, after four years in public accounting, focused on technology. Started learning more about

venture capital and venture backed companies. spent the majority of my early career in technology companies, venture backed companies. Cool. From there, I can tell you a little more. next step from there was I was working as a full-time CFO of an international, a publicly traded enterprise software company that was actually headquartered in Sydney, Australia. It was a global company. I worked in the Denver office, which was responsible for about 65 % of global revenue as the Americas headquarters.

got involved in contracts, sales and operations. It was a very broad role as head of finance and administration for the Americas region. Left there to take a role with an early stage company raising its first round of venture capital. That was my kind of my light bulb moment, right? It was, I joined this company without doing much diligence on them. I had was coming from having a very long commute by Colorado standards from North Boulder to South Denver. And I had taken this new role with this fledgling startup and

runaway realized that they really couldn’t afford a full-time CFO. My role was not just CFO. I was controller and accounting, you know, I was wearing all kinds of hats and it wasn’t necessarily fulfilling for me, nor was it a good use of their money to be paying for a full-time CFO. So that was my light bulb moment. I thought to myself, wouldn’t it be interesting if I could be CFO of a few different companies? could have an accountant or two working for me. You could do the month end close and all the accounting transactions. And I could focus on the strategic, on the fundraising, on the financial planning analysis, FP &A.

Things like that. And so that was 2008. And then is when I had taken that role. We raised some money for that company and then we’re missing our numbers a couple months in a row and we had to cut costs. went to the CEO’s office, literally walked in his office and said, we’ve got to cut costs now. We can’t, we can’t sustain this. And it looked, I made eye contact with him and I said, I’m going to go pack my stuff. So it was clear that I was at that point overhead. and since we had some capital in the bank, needed to make that last.

So at that point, I kept moving forward with the concept of working for multiple companies as a part-time CFO. became a fractional CFO in 2011. And then in 2015, I realized that I could build a business out of this. And so I hired a second CFO and now we’re 40 employees total. Of that, those controllers, accounting managers.

Think Like a CFO (05:21)

Cool.

Dan DeGolier (05:24)

Financial analysts, senior accountants, we’ve got a full stack of people who are looking to outsource the whole finance and accounting department. For those who just want that strategic CFO for a couple of days a week, then that’s a great fit for us as well.

Think Like a CFO (05:35)

What are the profile of clients that you work with in terms of revenue, industries? We’d love to learn more.

Dan DeGolier (05:42)

Generalitarian

companies between 5 million and 75 million of revenue will go a little bit lower if they’re funded. so occasionally we’ll take on a pre-revenue company if the introduction comes from an investor and they’re really doing something really exciting. But generally we’re looking for companies that are scaling are either, the profile of our best clients is when they realize the way they’ve been doing things no longer works. They’ve started to scale revenue and their processes are breaking.

Their forecasting is breaking. Maybe they have a new board to report to and reporting to do things like that. This oftentimes when a client will come to us is when they’re at that pivot point where the old way of doing things is no longer valid and working.

Think Like a CFO (06:21)

So it sounds like a lot of the companies you work with have a venture back or angel investors or something like that. Some do. Okay, cool. I’d love to learn more about some of the key takeaways that we can learn from when companies are just running with such thin margins or no margins and then I’m assuming that may motivate them to contact you and initiate that conversation. At least I’m speaking from myself, know, obviously the real estate industry.

has been through a dramatic change in transaction volume, which is really how you make your money in this industry. And so I coach a lot of people that were accustomed to the velocity of money being magnitude, you know, eight times more. And you can’t really build a business that anticipates that kind of correction, at least not that I would think emotionally, financially, spiritually, it’s just not common. I’m sure you’ve worked with a lot of clients that have dealt with similar things. I’d love to learn more about the planning process, how people can do to get back on the right foot, et cetera.

Dan DeGolier (07:20)

Yeah. For me, no matter what, whether it’s a company that’s profitable and growing and expanding, or whether it’s a company that’s venture backed and burning cash every month, you’ve got to have a really good handle on the cash flows. For us, cash is, you know, it’s a cliche, but cash is king. It really is the most critical oxygen for your business. You’ve got to understand it. If you need to raise additional debt or additional equity, or that’s not an option because of the environment or other factors, you’ve got to figure out a way to get breakeven and cashflow positive.

You’ve got to understand multiple scenarios. And that’s where really good financial modeling and cashflow forecasting comes into play, where you’re really leaning into understanding your cashflow cycles, understanding your historicals, and using that to help predict the future.

Think Like a CFO (08:03)

What about any metrics we can come to in terms of buffer, in terms of these things? Because obviously markets change and these types of things, especially in tech, especially in software, it can be rapid changes. How do you kind of navigate that with your clients?

Dan DeGolier (08:19)

Yeah. mean, having some level of either a cash buffer or access to a line of credit or access to capital and having a supportive investor who is that you’re really close to and understands your challenges and opportunities and is prepared to some bridge financing if necessary. I there’s a multiple ways they can take it, but just understand have multiple scenarios, whether it’s again, cash buffer is ideal. I have several months of cash on hand if possible, not always possible.

And so just understand what those scenarios are. And if you don’t have access to that, where you have a plan of where you would have to cut. If you got to take a deep cut, common philosophy is cut fewer times, but cut deeper. So be prepared. Have that scenario in your back pocket. Hopefully you don’t have to use it. Hopefully you’re not having to impact employees’ lives by doing a reduction in force, but we’ve seen it time and time again at all times of companies. I’ve seen it in my career and plenty of companies have had to go through that in various economic cycles. So.

have options, be prepared for the downside and be prepared for the upside.

Think Like a CFO (09:18)

How do you talk about financial planning? What’s the typical cadence that you want your clients on in terms of looking at the founders, for example, or the principals, for example, looking at their books, making sure things are on point. Obviously, you’re acting as a CFO, essentially outsource CFO, so your level of integration is far different than the other team members. That’s obviously why they hire you. But can you speak to the level of intensity that you encourage your clients to bring when it comes to checking in on that stuff?

Dan DeGolier (09:43)

Yeah. So we generally, I’m generally a fan of a three-year financial model. you know, beyond three years, you know, there’s a lot of people think five years is a good amount of forecast and I’m not opposed to that. I just know that the further out you go, the more variables you’re going to have. And in an early stage company, it’s even more difficult to predict. So if you’re a 20 year old company predicting out five years, you can probably extrapolate. You can look at market forces. You can look at new markets. You can look at all the different factors that you’ll be able to drive a longer term.

But for most companies that we’re working with it again, you know, they’re typically $50 million or less in revenue, a three year forecast of a financial model is really valuable. then we also, so budgets are good. We’re bigger fans of the rolling forecast, right? So, you know, as you set your, let’s say you set your budget in November, December and prior year, you go through that and you go in right now, you know, we’re recording this on tax day, actually April 15th. And so as your quarter into the business, you know, you’ve learned more things in that quarter, right? You know,

Either you’ve signed more customers, you’ve lost customers, you’ve hired more people that are maybe more expensive or less expensive than you predicted. And so you adjust those for that forecast to again, always having that point that eye on the ball of what your cashflow looks like. Do you have a cash out date? Is there a certain runway where you’re to have to raise additional capital or are you in a situation where you positive cashflow, but you can only expand as far as your cashflow allows you to expand.

Think Like a CFO (11:06)

Let’s talk about KPIs. What are some of the KPIs you look for with clients that you encourage them to track? One of the things that I’ve found, I see that you’ve got a Inc. 5000 award back there, which is awesome. It’s hard to do. One of the big differences between startups, solopreneurs in particular, and let’s say Fortune 500 companies is that there’s not a lot of transparency in terms of KPIs on the smaller companies, and they’re more reliant on the founder’s intuition and their subjective feel of the business versus

Really the tracking, there’s very little tracking the smaller the company is because there doesn’t need to be when you start unless that’s just your personality. So we’d love to hear about KPIs tracking and how you help clients implement some of that.

Dan DeGolier (11:48)

Yeah, for sure. So every business, every industry is a little bit different and every business is going to have unique APIs as well.

You know, a SaaS company is going to, there’s a pretty standard set of metrics that you want to be tracking. In a SaaS business, you want to track your ARR and your churn rate and your net retention and your CAC to LTD ratio. And you know, there’s plenty of books and other resources around a SaaS company. A products company, a manufacturing company is going to be paying attention to things like inventory turns and receivable cycles. Actually all businesses should be paying attention to receivable cycles and your day sales outstanding. That’s critical.

And then, you know, again, all the things around cash, all businesses are going to care about cashflow metrics and whether or not you’re hitting your forecast there, or if you’re burning cash more than expected, you need to dig into it and understand why is it your payable cycle or your receivable cycle or your inventory cycle. So they’re going to vary by industry, but you know, that’s, think, part of the value of having a strong CFO, whether they’re full time or part time on your team is somebody who can.

Heal back the layers and really understand what are the real drivers that are affecting your growth, ultimate profitability and your cash flows. So again, I don’t want to, you know, I’m not trying to evade the question, but it does vary a lot. There’s certain, like I said, there’s certain standard ones that are going to apply across all companies. Then there’s going to be certain unique ones, you know, in the sales driven organization, you’re going to be looking at all your sales, KPIs, going to be looking at your pipeline and your conversion and all of the things around stages of your pipeline.

Think Like a CFO (13:12)

Let’s talk about kind of broader things here because obviously you’ve worked with some very successful people. I’m sure you’ve seen some rises to incredible heights and maybe some falls to some incredible lows. I’d love to learn some of the key takeaways you’ve had working with wealthy people and especially some of, you know, people that didn’t expect the level of success that they were able to achieve. I’d just love to hear because you can obviously see more details maybe than they even know about their own business and their own financial situation.

Dan DeGolier (13:42)

Right, right. Yeah. I mean, that varies a lot as well. would say certain individuals have different risk tolerances than others. I think that’s important is as you start to, if you’re self-funding a business and it requires a lot of capital, you’ve got to kind of know what your own pressure points are, what are your own breaking points or how much are you willing to fund this? How much are you willing to invest in it to get it off the ground and to get it into a profitable place? Or is there a point when you’ve got to…

make harder decisions, whether you want to, if it’s, you know, deciding if it’s, you know, the whole idea of failing fast. Okay. If you, once you realize the market’s not ready to accept what you’re offering, then you, you know, don’t keep throwing good money after bad. I think everybody’s risk tolerance is a little bit different. Everybody’s direct involvement in a company’s, you know, a family office is going to be different than a solopreneur or a self-funded person who’s building a company starting in their garage.

Think Like a CFO (14:37)

Totally. Okay, what about the other side of this? The biggest mistakes, know, things that you really want to help your clients avoid or things that you’ve seen where you’re like, this is a red flag.

Dan DeGolier (14:49)

Yeah. I guess two things come to mind. You know, I don’t want to beat the cashflow horse to death, but you know, certainly understanding that cash and what are the risk factors to your cashflow. And then customer concentration is kind of ties into that. But you know, if you’ve got, if you’re reliant on a handful of companies for constituting 80 % of your revenue, or God forbid one of your clients would be more than 50 % of your revenue, then that’s a huge risk factor. And you’ve got to be actively working to create some diversification within your customer portfolio.

I think countless companies have gone out of business because they were too reliant on one or few clients, customers.

Think Like a CFO (15:24)

interesting and that’s one that I wasn’t really thinking about. I got to put you on the spot because those are actually two very good ones. Anything else that you really look for to kind of ensure the health of a company?

Dan DeGolier (15:34)

Understanding market forces, understanding competitive forces, understanding how a AI company might be able to disrupt what you’re doing and do it for a third of the cost or a 10th of the cost. Staying in front of technological advancements. And right now know AI is a buzzword, but also is going to be changing the way that everything happens in the coming months and years. And I think that you’ve got to at least understand how you can use it so you’re not going to be left behind and someone’s going to eat your lunch, if you will.

because they’re going to be able to do something much more cheaply than you can.

Think Like a CFO (16:08)

For sure. offline we were talking about an initiative that you’re working on. I forgot real quick. Can you remind me what you are focused on right now?

Dan DeGolier (16:14)

Yeah. So we’re really leaning into our data visualization solution called insights by a sense CFO, which is we’re utilizing third party tools such as power BI and other tools to create real time dashboards. It don’t just give you your financial history, but gives you visibility into your pipeline and to your HR and what’s going on with it with your people. And also forecasting. mean, rather, you know, Excel is still a great way to do forecasts and we do that for plenty of clients, but more and more we’re seeing clients who

like to see something kind of in real time where the inputs are very clear and you can really see how you’re tracking against your forecast in a single screen desktop view.

Think Like a CFO (16:52)

What’s the technology that you use? I’m not familiar with it. Can you repeat it real quick?

Dan DeGolier (16:56)

Yeah, Power BI is one of the tools we use at Microsoft Business Intelligence Platform.

Think Like a CFO (17:00)

I see. Okay. And what are some of the inputs that you have to create that visualization?

Dan DeGolier (17:06)

Yeah. So the inputs are to other systems, right? So it can connect to your ERP or your accounting system. It’ll connect to your CRM. It’ll connect to your HR system. So it generally is in a cloud-based environment. You’re connecting in real time through APIs. In some instances, if it’s an older technology, you might have to do automated exports and imports into the system. But more and more, with a good data analyst like we have on our team, we can create or

find a third party integration that allows you to pull that data in for a very robust dashboard.

Think Like a CFO (17:38)

Very cool. So we talked about kind of going from infancy startup, bringing on a CFO. I’m trying to think about from the perspective of a lot of listeners of this show. Before we jump off, I want to hear kind of some low hanging fruit. There’s a lot of people listening to this that are solopreneurs. Maybe they’re doing seven figures of revenue. Maybe not many of them are not, but then one year they will make quite a bit of money. In my industry, it’s common to sell a bunch of assets over a very short period of time and all your revenue is generated.

From your perspective, what are some of the solopreneur strategies that people can implement to hopefully increase the revenue and later maybe call you and maybe work with you guys directly?

Dan DeGolier (18:16)

Yeah. So to increase the revenue. mean, obviously understanding your market, understanding, you know, in real estate investment, that’s kind of unique, right? You have fewer transactions, but more significant transactions. So there, think it’s just really being, being well connected and knowing your market. But I think for other, for in general, for solopreneurs, just always be selling, always be messaging, always making, you know, have a strong network, which takes time. mean, I’ve built up my network over my entire career, which, you know, I don’t want to age myself by saying how long that is, but. ⁓

The power of the network is pretty significant and again, always being thoughtful about your risk factors.

Think Like a CFO (18:51)

Cool, love that. So we will link to your contact information, the show notes page, anything else we need to do for people to learn more about you, your company, etc.

Dan DeGolier (19:00)

We’re really active on LinkedIn. LinkedIn is our primary mechanism for communicating. We try to put out useful content a couple of times a quarter, and we have a mailing list. We don’t like to spam people. We only want to put out things that are useful. We’re not going to barrage you with spam, but I would suggest follow us on LinkedIn and on our website. There’s a form to sign up for our newsletter. If you want to get periodic updates with information about how we’re entrepreneurship and cashflow forecasting and modeling. And of course the dashboarding that I mentioned.

Think Like a CFO (19:26)

Will do. We’ll link to all that. I really appreciate you coming on, Dan. Thanks again. Alright, so I’ve got some bad news. This episode is over, but I’m probably answering questions during one of our live Q &As in our online classroom for capital raisers. How nice would that be to be able to ask me questions directly every single week? Also, to supercharge your experience in this online classroom, we threw in over 20 hours of capital raising trainings, including my capital raising closing scripts,

Dan DeGolier (19:30)

My pleasure, Hunter.

Think Like a CFO (19:55)

our investor referral program and much much more. If you want access to all this and you want to ask me questions directly every single week, just go to raising capital.com forward slash CRE to learn more.