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Unlock the secrets to business success and gain valuable insights from local industry leaders. Join us as we delve into the strategies, triumphs, and lessons learned of thriving companies, empowering entrepreneurs to elevate their businesses to new heights.
Sharon: [00:00:05] Welcome to It's Time for Success, the Business Insight podcast. I'm your host, Sharon de Koning. I love business, I love working with businesses. I love learning about business. Hence the creation of this particular podcast. At this podcast, we get to interview other people and so they can share their wisdom and their insights with you, our listeners, and me as well. I get to learn a lot. This particular podcast is also sponsored by my company, It's Time Promotions, wherein I also get to work with businesses much like yourselves. At It's Time Promotions, we pride ourselves with doing majority of our work in-house. So we do embroidery, we do screen printing, we do engraving, we do all the print for the signs, right up to fleet graphics, full wraps on your vehicles. We have three locations here in Alberta. If you have a company and you think that you can use our services, I would really appreciate the opportunity. If so, just kindly reach out to my team at itpromo.ca. Tell them you heard about us on this podcast and receive some special pricing. Thank you everyone.
Sharon: [00:01:06] You know, I always say that small businesses are the heartbeat of our towns, but sometimes to keep that heart beating strong, we need to bring in some expert doctors for the dollars and cents. Today's episode, we're going to be concentrating on those dollars. Today, I'm thrilled to welcome back John Stevens to the show. He is a man who has navigated over 100 business acquisitions. He has a passion for advocating employee ownership and someone who knows exactly how to help a business owner break through that invisible ceiling that every business owner hits. Please welcome the Managing Director of Camilla Advisory Group, Mr. John Stevens.
John: [00:01:43] Thanks, Sharon. Thanks for having me again. Happy to be here. Love discussing our business with you.
Sharon: [00:01:48] It's so cool. John. I think we're going to go back. We're going to go backwards here a little bit. Can you tell us a history of your firm, the Camilla Advisory Group, and why you decided to offer fractional CFO services.
John: [00:02:00] Yeah for sure. Great question Sharon. For my career, before we started our firm six years ago, I was a chief financial officer for a long time with a couple different companies. And then I was a CEO and back over 25 years ago when I was a CFO, we were a business that was growing. We were doing lots of acquisitions, those acquisitions that you mentioned. And so I was building a great team of, uh, controllers to work on our team and accountants. And my goal was always to hire individuals, because I have a farming background, with a farm background, because it drove work ethic and or competitive sports and CPAs, obviously. And we were growing. So we needed a lot of team members. But I found myself at a time when we had too many team members. And I thought to myself, hmm, I wonder if there's any small businesses out there that could use, um, one of our accountants one day a week to help them with their challenges that they had and their growth. And so I knew one local accounting firm really, really well. I gave him a call and I said, do you have any clients that could use somebody one day a week? And sure enough, they had a client that could use one of our guys one day a week.
John: [00:03:05] And it obviously helped offset some of this cost because we just didn't have enough work. I like to hire new people. And the funny thing is, to this day, that individual still works for that company and still goes that business one day a week over 25 years later. And so in the back of my mind, I always thought the fractional CFO model would be a great model to help businesses here in Western Canada, Alberta, Saskatchewan. There's so many small and great businesses that have good accountants or good controllers, but just don't have that financial strategic leadership. And so I always thought if I started a firm, one of the things that we wanted to do was, was do for actual CFO. So we started a firm with my partner, Jason Vandenberg, who I worked with for over 20 years, starting the firm. He was my CFO. I hired him actually as a, I think the very first job. He was a financial reporting manager, but he was my next door neighbor. It took me three years to convince him to come work with me. And so we always thought the fractional CFO model would be a great model to help businesses.
John: [00:04:03] And that's what we like to do is help businesses. And it ties in to our employee ownership and also can tie into our M&A advisory work that we do as well. So we were excited to start it. It's gone well. We have about ten individuals working with us, working with different companies, and it's become very popular over the last decade where if you go back 25 years ago, I think people were if you said fractional CFO, they wouldn't even know what it is. But you see it more and more now, especially with the smaller businesses and the businesses that need that financial strategic leadership, you know, one-two days a week where somebody can go in and Covid actually changes the model a fair bit as well compared to when we started. And we can talk about that as we as we go through it. So yeah, it's a little bit of history on how we got into fractional CFO and, but it was something that had in the back of my mind for a long time that if we started a firm, that would be a service we want to provide.
Sharon: [00:04:55] The first time I've heard the word fractional CFO was at my WPO group, and I. My ears perked up. Like what? What is that? And so can you elaborate to our listeners? Some of us don't know what CFO even stands for. So what is a CFO? How can they help a business?
John: [00:05:11] Yeah. So I think a good way to look at it, Sharon, is that historically, a lot of owners and entrepreneurs have looked at the accounting group as someone that prepares the financial statement, does the tax returns, and I like to compare it to the rearview mirror looking through the windshield. So the traditional accountant is looking in the rearview mirror. What's happened last month? Do my financial statements and such where a CFO or chief financial officer and it could be many, many names. Vice President of finance you see that as well. But the most senior financial person in the organization, they're the ones that are going to do the financial analysis. They're going to look forward. They're going to say, okay, how can we improve our profit? What's our cash flow look like? Do we have too much customer concentration? We, working on what a forecast looks like, what a budget looks like. What are our financing needs going to be in the business going forward. Do we need to change information systems. The list goes on and on. But it's much more strategic and much more forward looking than the traditional accountant role, where it's backward looking, where they're doing the monthly and annual financial statements and tax returns.
John: [00:06:20] So it's a strategic partner in your business is really what it is that can help you grow your business. And my career, as I've said, I started out as a CFO and then I was the CEO. And I think that's probably because it was a strategic accountant that I didn't care about what happened. I did care about what happened before, but I didn't want to be the one to do that. I just wanted to look at that information, see what that means to our business going forward, whether we need to do an acquisition and buy a business, or whether we need to change our manufacturing processes, or whether we need to get new customers or how can we improve our profit? All those type of things. That was what's much more exciting to me than just obviously the historical stuff will tell you that. And that's what a good fractional CFO will do, is be very forward-looking and be very strategic, and even even down to helping with strategic planning, those type of things. But really looking at the business from a strategic perspective.
Sharon: [00:07:11] So as an entrepreneur, and I wish I could see everybody put their hands up right now. Every entrepreneur out there, put your hands up and tell me if you have an actual budget. Seriously, how many do? I don't.
John: [00:07:23] Right. For sure.
Sharon: [00:07:23] I have it listed out. It's all blank, blank, blank because it's really hard to organize that. And as I think almost every business as well has that, where we have peak times, low times for 20 years, I know those low times are going to come. I know they're going to hit January, February, March. They always come. Those are our struggling months. Oh, Christ, we got payroll coming up. Oh no, we got this. You know, we always have those ups and downs, but we're still not prepared for it. So people like yourself as a fractional CFO, you look ahead and help us get through those with less stress on my shoulders.
John: [00:07:53] Absolutely. And I'm a I'm a big believer in I like to use the term forecasting when it comes to small businesses, because budget...budget is important. But a lot of times budget is what happened last year. And we take what happened last year and assume the same thing's going to happen this year. But a forecast can take into consideration where are things changing in our industry? Have our costs increased? We have tariffs. What do we have. And so we can build that forecast which obviously ties into budget. Typically the way I like to is you do a budget once a year. This is what it is, but you have to update your forecasts on a quarterly basis because things change. If you don't have a forecast in your business, it's like running your business blindly. So yeah, that's, I would be one of the number one key things. And it's interesting with AI as well, now there's some wonderful tools out there. If you have an accounting system that can work with some of these tools in order to build a forecast or budget, these days, it's a lot easier than what it used to be. And so it's interesting, I've talked to a few of our fractional CFOs, and we can talk about maybe it's a good time to talk about how the model has shifted during Covid.
Sharon: [00:08:56] Mhm.
John: [00:08:56] Prior to Covid, a lot of times fractional CFOs would be charged out. You'd go to one business one day a week. They'll use that as a simple example. And then you go to different business on Tuesday. Use the example of 25 years ago. That was the model that one day a week you go to that business and you help that business. The next day you go to another day. And so we used to charge out on a monthly basis where you would go for weeks in a month, for those four days, this is your monthly fee and you'd get that fractional CFO. But with Covid, what happened was everything went virtual. And so it ended up that you were working for one client, two hours on Monday, four hours on Tuesday, nothing on Wednesday, and then a couple hours Thursday, Friday, which ended up being a lot more efficient because they may need you. There may be a supplier you're dealing with. There may be a more efficient way of helping the business. And so we went totally to an hourly model. There's obviously some understanding of what those hours are going to be for the month, but there's no guarantee. But what's happening with AI and what made me think about it was our CFOs are using more and more AI to do forecasts and those type of things. Their hours are shrinking, so they're becoming more efficient for our businesses and we're not charging for that. So it's interesting that we have to maybe look at the model and, you know, cash flow and forecasting is one of those where it used to take a lot longer to do a real good forecast and budget. But now with AI, you can do it a lot, a lot quicker.
Sharon: [00:10:17] So I have a question. Businesses, so i'm going back backwards. So imagine out here in rural...I'm in rural Alberta. It's not like we have CFOs out there that we could hire to come into their business. So for us, we could literally hire anybody across Canada right now. Right? Basically.
John: [00:10:35] Correct. And we have clients right across Western Canada. So we have actually a lot of virtual clients, a lot of small businesses. Obviously, you travel out there and you meet with them and you understand their business and you meet with them from time to time. But it's amazing how much can be done virtually. It's the nature of some of the businesses I find in Western Canada. They may have started in Strathmore, Alberta, but they end up with a location in Fort St. John or wherever it may be as they grow. Mhm. A lot of the businesses we work with are virtual. That being said, we do have clients where, um, you know, our guys go into the office each and every day and they only have one location. So it just depends on the client. We have a great variety of clients in terms of size of business. We have smaller entrepreneurial businesses. We have larger businesses. Some of our CFOs do work more than one day a week. They do 2 or 3 days a week. And what happens sometimes, and we don't like when it happens. But as the business grows, I think it's happened three times in our last six years, is the business wants to hire our individual full time. In one case, the individual invested in the company as well. And we're okay with that because it means they're doing successful and they're doing more with the business. But that does happen with fractional CFO as well, is that the owners want to hire the individual full time, even though they don't think they need them full time, but they end up being much more operational, much more strategic, and really dive into the business.
Sharon: [00:11:53] Well, even that shows how much of an advantage a business owner needs a CFO then, right? Or like a fractional, it just, it's proven itself there. So if I'm a business owner, when would we consider a fractional CFO? Like what would be our key points or what are like, when would we do that?
John: [00:12:09] Yeah, I think any business can use a fractional CFO because we, we talked about it earlier, whether it's cashflow challenges or understanding profitability, understanding strategically what the future business is going to look like. All the things that we, we talked about, you know, you talked about with your business, not having a forecast, any business, I think can use some kind of strategic financial advice going forward, whether that's we have clients that one individual is very efficient only. I think it's one day a week that he helps the business, but he's been doing it for a long time. I say a week, one day a month, and he's helping the business and guiding the controllers and accountants there. We do have some clients where we actually have what I would call junior CFOs or controllers, where we actually tag team because some of our CFOs are very senior, which obviously that means more expensive, but we can bring in a tag team of a senior CFO and a junior CFO. And these teams have been working together for quite a few years. And it's a cost-efficient way of getting that strategic advice because the more senior individuals, obviously some of the work, you know, takes time.
John: [00:13:15] It's just an efficient way. And these guys work together. So we've done that actually quite often. In quite a few cases, it works actually quite well. And it just depends on obviously the, the current status of what do you have for finance or accounting or bookkeeper. If you're a very small business, it depends on who you have there. It's interesting, one of the clients that we had, we went in as a practical CFO and what was the very first thing we did. We said, no, you need a full-time controller. The accounting staff that you have right now is not serving you. And it doesn't make sense for us as a firm to be doing it. So we help them go find a controller. They hired a controller. We continued as a fractional CFO with them, so that it can be the case where you just don't have the right people because you obviously need some people focused on the rear view mirror as well, preparing those financial statements on a very timely basis, getting you the information you need because you need that information in order to look forward and do the strategic things. Looking forward.
Sharon: [00:14:10] You know, when I was doing my research, I read that. So the CFO has to and the bookkeeper or the controller, whichever the case you have in that situation, they work hand in hand. So yeah, one looks behind, make sure everything's documented perfect, which will help the CFO look forward if all those documents are recorded properly.
John: [00:14:27] Absolutely.
Sharon: [00:14:27] So a business doesn't have a, doesn't need to have a certain amount of revenue or what's the average revenue for a client of yours?
John: [00:14:33] I don't believe they have to have a certain amount of revenue. Small businesses that want to grow actually can benefit as much as an established business. Another way to look at it to Sharon is I always said that one of the things that is very difficult to grow a business. So entrepreneurs start a business and the easiest, and I used to use the revenue numbers 10 to 20 million. The easiest is to grow your business to 10 to 20 million in revenue. But the hardest is to take it to that next level because as an entrepreneur, you can't do everything yourself anymore. And so using fractional CFO and HR, fractional HR is very popular as well, makes great sense because if you want to go hire some senior CFO full time, it's going to cost you a lot of money to have them come in one day a week, two days a week to help you with your business is not going to cost you the same as hiring a full time. So all of a sudden you need a full time CFO, you need a full time HR, you need maybe full time business development, maybe full time to run your manufacturing operations. So you add all this overhead, but your business isn't growing as quickly as it should, and that's driving your margin down. So taking that business to the next level, the fractional model can help very, very well. So it can help small businesses, but it also can help you scale your business to the situation. I talked about where you scale your business up. Now you can afford a full time CFO and you're continuing to grow and a full time CFO makes sense.
Sharon: [00:15:59] And even like just having a healthy, healthy business, like that's, you know, you get to pay your staff properly, you give back to the community. It's so important to have a healthy business as well.
John: [00:16:08] Absolutely.
Sharon: [00:16:08] We have less stress.
John: [00:16:10] Yeah. For sure.
Sharon: [00:16:11] Okay. So I'm just based on like your conversation on some of my pain points. So my pain points are I have that cycle where it's, we have slow months, busy months, all that kind of stuff. So we talked about, you called it the forecast. It's not a budget, Sharon. It's a forecast. So we talk about that kind of stuff. Exactly. When you get your, our books or our from our bookkeepers or our controllers. What do you deep dive into? Tell me what your life looks like.
John: [00:16:37] Yeah, obviously the financial statement. I always like to say that the, the, the most important one is the cash flow. But the balance sheet and income statement are important as well. Understanding your cash flow, understanding your balance sheet, understanding you have the right financing in place in order to support the going up and down. What financing needs to be in place? What class will look at margins? What can what is the return on equity? Return on equity is such an important number because capital is invested in a business and in capital is liquid and should go different places. So if you're not getting the right return on your capital and the business, maybe the business isn't the right business. And so looking at all those things, whether it's cash flow, whether it's margins, uh, the balance sheet, those are, you can tell a lot by looking at financial statements. The financial statements tell a good story, especially if you have a pattern historically of what's happened to the business over a period of the last five years. You can tell a lot about the business. And so those are some of the things that you want to see and you want to understand, right away is, you know, what is the return on capital? What are the margins? What is the cash flow? What's the balance sheet? And, you know, what does the strategy look for? What are the forecasts look for? What's changing in your business? All those types.
Sharon: [00:17:51] Numbers intimidate me. Like the numbers like they intimidate me and they scare me. And I always look at that bottom number and think, oh, I made money this month. Whoo hoo! You know, or shoot, I didn't, you know, they intimidate me and they scare me. So having somebody in my corner to help me with those would be so advantageous. Also, you probably have different clients. Like I'm the kind of person that jumps in and thinks later, then you probably have those people that are how they think and they strategize. Like you probably have all different kinds of people to deal with. Probably.
John: [00:18:21] You're right. So every, every personality is different. Every entrepreneur is different. That being said, there is, there is kind of a blueprint for what an entrepreneur looks like, but you do run individuals that, you know, want to measure four times before they cut. And I can think of a client that was thinking about building a new manufacturing facility. And so one of the big projects that our CFO did is looked at the feasibility of what the cost is going to be, what that change going to be, what's that going to do to sales? What's that going to do to cost? What's that go back to return on capital? And so he wanted a very detailed study on what this looked like, where other people will just go ahead and build a building and, uh, think it'll make sense. And so there are different individuals and different needs with, in terms of, and the owners of the business that we work with obviously drive those needs. Some like technology, some don't like technology. I think we, we have owners of businesses in their, you know, late 70s that just don't like looking at spreadsheets. They like to have a conversation and, and really understand it. So there really is a wide variety of clients that we work for a wide variety of industries too, and that's what we really try to do is find the right CFO.
John: [00:19:35] Industry experience is a good thing, but it to me, it's not necessary. Sometimes it's interesting when you bring somebody into an industry where they don't have experience, they can really see some things that maybe somebody that does have some experience. But a lot of times our clients want industry experience. So whether that's manufacturing, real estate, service, business, whatever it may be, we really try to match up what the individuals are looking for from an industry perspective. And so and that's that we're a bit of a matchmakers where we try and do the match. We had a client, the potential client recently with looking for a very specific individual. And we have, Jason and I both have a very large network of individuals. And we went out and through our network, identified someone that had the skill set that they were looking for, and it was a specific industry. And obviously, we need to do our due diligence and understand that this individual, somebody that we want to have as part of our team. And it was somebody that was doing some fractional CFO work as well.
John: [00:20:29] As I said, to see a fractional CFO. It's been very popular lately, and it's popular with a lot of individuals that maybe were a full time CFO before. They don't want to fully retire. Um, but they do want to still, um, you know, keep their mind sharp doing something. So maybe they're only working a couple days a week for 2 or 3 different clients, another 2 or 3 days a week, they're playing golf or, or doing whatever, whatever they want to do, just not working as hard as they did. But it is it is rewarding. I find it rewarding. It's no different than when we talked about employee share. Plan is you're taking your experience that you've gained over a number of years, and you're able to help businesses make a difference with their business. And it's rewarding for me when I talk to our clients where and time and time again, I talk to our clients and they say, what a difference the individual has made just one day or two days a week. And so that's rewarding to see that we're helping their businesse. And the owners are, I think you mentioned it, maybe less stress or just taking some of that stress and providing some certainty with that strategic guidance.
Sharon: [00:21:35] Yeah. Stress or even brain meltdown. Like sometimes I wish I knew more and I don't know more and I don't, I can't learn more. I feel like I'm maxed out. For this is a good example. And I think this is where the, the fractional CFO would probably help somebody like myself. So for example, we have promotional products. So when It's Time Promotions and we also do signage like so vehicle graphics, vehicle wraps, vehicle signage. But a lot of our people don't know we do both, because our name is It's Time Promotions. So I've often wondered if it would be beneficial for me to split the two companies and what that would look like and how that works. But I don't have the, I don't have the brain cells to commute those financials and that outlook, you know what I mean?
John: [00:22:17] Yeah, I know exactly what you mean. It reminded me of one of our factual CFOs exactly the same scenario. He has two businesses. They're related, but they're not related. And so he hired one of our fractional CFOs. And one of the very first projects was, and the financial statements are kind of mixed together, and you can't tell how much profit you're making from each one. He knows one business is actually a better business. And so it was a project to, to take the financial information and, and break it down and determine, you know, which business makes more and what would it look like? And does it make strategic sense to split the businesses off. So yeah, perfect example of what some of our fractional CFOs do.
Sharon: [00:22:55] Yeah. Or even like locations. This is another thing I'm wondering about because like we have three locations. So we're in Lloydminster here, Provost and Wainwright. But as you mentioned, Covid changed the world. And we like we're very fortunate. We ship right across Canada. We have customers way up in the Yukon. We have customers, we even have customers in Toronto, BC. So I mean, we're very, very grateful for that. But we've often wondered, is it beneficial for us to keep opening more locations or is it more beneficial for people to buy into those locations, or is it more beneficial just to have somebody doing sales in those locations? I have so many questions and I don't have the brain cells. I don't know the numbers. I don't understand it.
John: [00:23:32] That's exactly what a fractional CFO does, is help with all the strategic decisions and, and see what makes sense. So it's a, it's you hit the nail on the head. That's exactly what a fractional CFO does.
Sharon: [00:23:43] Because every, every business has those. Like, that's just my business. Every business has the same scenario in a different way. Same thing, but different.
John: [00:23:52] Absolutely.
Sharon: [00:23:53] Every day you go in.
John: [00:23:54] Matter how small you are or how big you are, every business has all those issues.
Sharon: [00:23:58] We do have those issues. Okay, so for example, I'm wanting to hire a fractional CFO. What does that look like?
John: [00:24:06] Well, as I said, before it used to be where we'd have a guarantee so much a month. So typically what we do is, is understand what your needs are. And so every business is a little bit different. We talked about what some of those needs are. And so we want to try and match the individual to what your needs are and what your industry is. And so that would be the first thing we do. Sometimes we present a couple of candidates. Sometimes we don't have any candidates, but we, we try to to see, right now we do have, as I said, we have about ten, I think. We do have some capacity with some of the clients. So the first thing would be, okay, which one of our current individuals would be a match to your business? And then we would do an introduction and see if there is a match. And then based on your needs, we would determine approximately how much time is required. Is it? And typically for most businesses I like to use that one day per week. It doesn't always work out that way. It can be less and obviously it can be more. But I like that one day a week there's enough things going on with the business, and then we charge an hourly rate and our individuals keep track an hour.
John: [00:25:08] But what I like I said before, when I say one day a week, that doesn't mean it's going to be, um, eight hours every Monday. It may even be 15 hours one week and one hour the following week, just depending on how things change or if you're working on something, probably. And we do an engagement letter for that hourly rate and there's another and we invoice you on a monthly basis and we don't, there's no terms where some other firms out there, you know, we'll do a three month, six month term. If you're not happy with our folks, then, you know, cancel the contract. There's nothing that's committing to a longer. But I can, I can say that all of our clients have never done that. So they're, they're happy and they see a huge difference in terms of what our clients, or our professional CFOs bring to our clients. So it's a fairly simple process. The most important process is getting the match of the individual, that there's a good match, and that individual's going to deliver some value to the client.
Sharon: [00:26:00] So more so a match for the industry or for personality or both.
John: [00:26:05] Both, combination of both.
Sharon: [00:26:07] All right. Okay. So I feel what I'm picking up right now. I feel sometimes we hit that ceiling, which I had mentioned and I feel that people need help to push through that ceiling. So for myself, we've incorporated EOS into our system and that helps us get my team organized. So I've, you know, I've embraced the team part of it. So we're all aligned and running together. I have a fantastic bookkeeper actually two one for receivable, one's for payable and they're doing their job. I have an amazing accountant who speaks to me like I'm human and not, you know what I mean? Like in my language. I have a I have a lawyer in my corner that's always available to me. So I feel that I'm doing everything right, but I feel that this is the next step.
John: [00:26:57] You bring up an interesting point, Sharon, when you said you have your accountant in your corner, that's doing the right thing. So a lot of external accountants act almost as fractional CFOs for business. And we've seen that with some good-sized firms here in Edmonton, where a partner on the firm actually becomes almost the quasi CFO for businesses that are growing. And so that's who the individuals go for. And that's what they're doing is they're providing a fractional CFO role. The problem is, is most accountants, especially in small towns like Lloydminster, they're so busy with a lot of their clients is they can't get it, they can provide really good advice, but they can't get into the weeds to provide that next level of strategic assistance from a financial perspective. And some third party accountants do it, but I would consider some a lot of your external accountants to be a little bit of that fractional CFO strategic voice helping clients. And you see it a lot, especially in in small towns, a lot of those acquisitions that you talked about, um, I were right across Western Canada in small town Saskatchewan, small town, uh, Alberta, have done acquisitions in Lloydminster and then acquisitions in Provost and some of the towns that you've talked about in the past, Grand Prairie, lots of towns in Saskatchewan. And so I ran into a lot of the accounting firms in the small town. And that's what they do is they they help their clients with with some of that. But the next level is to bring in somebody that's going to devote some more time.
Sharon: [00:28:18] Yeah, I like her. Like she always, you know, you're at this margin, you're doing blah, blah, blah. Next year, focus on this. But it's behind again, right? It's that rear view mirror that you had mentioned. Oh yeah. And she's always there. I can reach out in the middle of the year and talk to her. That's not a problem. But I don't think of it because I'm busy.
John: [00:28:35] Exactly.
Sharon: [00:28:36] Yeah. Okay. Before we jump on to acquisitions or anything that you feel our listeners should know more about fractional CFO?
John: [00:28:45] I don't think so. Just a few. Uh, you know, if you don't have a forecast or not a clear financial strategy for the rest of the year or 2027, or limited visibility into what the future looks like or don't really understand profitability or cash flow. We're here to help. Um, I think a fractional CFO can add value to your business. And that's what our clients that we currently have say, most of them with the most of them say, especially the ones that didn't have one before, they'll come to me and they'll say, how did I live without a fractional CFO? Like it becomes this valuable thing within your business that they almost couldn't see the world without it. So yeah, it's a great tool.
Sharon: [00:29:21] That's awesome. You did mention, I'm going to go back. You did mention about succession with a fractional CFO. We touch on that a little bit.
John: [00:29:30] Yeah, obviously succession is important and maybe ties ties into the M&A discussion, but succession is important. We talked about employee share plan in the last episode. Fractional CFO can help prepare your business if you're thinking of selling your business in the future. So especially if one that's had some experience with M&A in the past, maybe some acquisitions where there's certain things, if you're looking to sell your business that just really need to be done and it can be management succession, it can be you talked about the governance and processes and procedures and those type of things. They can help get those things in place that a potential buyer is going to want to see. And just understanding, um, a lot of things about selling your business. That's something a fractional CFO can help with as well. So it does tie in if you're looking at selling your business sometime in the next five years, a fractional CFO can help you prepare.
Sharon: [00:30:22] You did mention I like this word. You said your belief is not so much about selling, but building a good business. Can you elaborate a little bit on that? I liked your story behind that.
John: [00:30:33] Yeah, I've always said that. Maybe it has a little bit to do with private equity, and you're seeing private equity kind of change. As private equity would go into a business and a financial engineer it and then sell it in five years. But it's very difficult to build a business to an exit point of five years to try and maximize value. It's financial engineering. I believe that you need to build a business for the long term that's going to far outlive you, because you can't just be making decisions with the business that are going to be short term all the time. In order for a business to sustain and be long term business, you need to make those long term decisions. That being said, succession planning is an important thing. So, selling your business is something that may eventually be something you want to do or need to do. Selling it to your employees isn't an option, so getting it ready to sell is something you can do. But you should always make those decisions with the business so that that business is going to be around and outlive you.
Sharon: [00:31:30] Mhm. Yeah. I hope that the service that we offered my team that we've created, which is fabulous, I hope that they have somewhere to work forever and ever and ever as long as they want to work. I hope that that's here because, um, we built a great culture here. Okay. That's mergers and acquisitions. I'm just going to sit here and nod and smile because I have no idea anything about it. And I did research it, but I still have no idea about it. So you are going to have to explain everything to me for sure.
John: [00:31:58] So I'll just talk a little bit about what we offer. As we talked about employee share plans last episode, we talked about fractional CFO. Two things. Two of our services. But because of the experience and you said in the introduction, just throughout my career, the companies I was involved with were very acquisitive. We were buying businesses. We sold businesses as well. Um, we have a lot of experience. When I say we, my partner Jason, we've worked together for 20 years. And so with experience, you can help businesses, you can help businesses. In that it's a scary process to sell your business. And well, the typical clients that we've helped since we started our business are ones that want to sell to what I call a strategic buyer. And a lot of times, because they've run a good business, a strategic buyer shows up and starts talking to them and give them what I would consider an unsolicited letter of intent. And that was the case with a lot of the companies that we've helped because they ran a good business. But instead of just signing that letter of intent and selling your business to that individual, what we've done is as we say. Let's go out to some other strategic buyers and see if there are other buyers for your business. And so a transportation company is a good example. So we went out in one of our clients to, I can't remember how many a half a dozen other transportation companies other than the one that had provided the letter of intent. And we ended up selling the business to a different one.
John: [00:33:26] And so it created a competitive process. And so where we help is obviously you can go to your accountants and your lawyers and such, but we through the whole process is we'll help negotiate the letter of intent. And then once that letter of intent is signed, something called due diligence, as I'm sure a lot of your listeners are familiar with that, as the company's going to want to do due diligence on you. So we'll help you through that process. But at the same time, you're moving to a purchase agreement as well. And so there's lots of things that need to be negotiated in the purchase agreement. One of the things a lot of accountants and lawyers that haven't done, a lot of them forget about, is working capital. In your business, you have lots of working capital. You have receivables from your clients. You have inventory. Maybe you make a lot of your inventory specific to your clients. But understanding when you sell your business, what that working capital is going to look like, what does what we call normalized working capital is such an important component that people forget about a lot of times, and if it's a good-size transaction, it can be worth millions and millions of dollars. And so we can we can help through that process. We're not a large firm when it comes to M&A, so we're not going to do a wide swath and offer your business up to every private equity firm in North America. But we can be very strategic and help you through the process of that letter of intent, the due diligence all the way through the purchase agreement and closing.
John: [00:34:44] And we work hand in hand with your legal team, or we can bring in legal teams that we're familiar with and have done work before. And where we complement the legal team is because Jason and I have operational experience. I was a CFO, I was a CEO, we bought companies, we sold companies. There's so many little things that you can see, just based on your experience, that you can help the clients. So that's our M&A advisory service on the sell side of things. And we've done a handful, half a dozen. So we don't do a lot in the last six years. They're very specific. But these deals will take, you know, six, nine months from start to finish to get done. And we're working with the buyers, working with the sellers, going through the process. We'll put together, in some cases, what we call a teaser and a SIM. So a teaser is just a one-page little summary on your business. And so that example of the transportation company where we'll go out to different transportation companies with that teaser, where a SIM is a confidential information memorandum, where now the company needs to find the potential buyer needs to sign a confidentiality agreement to get the SIM. We have one of our fractional CFOs that really likes putting SIMs together, and they're a lot easier now even with using AI that comes along. So helping them through that process, we don't always do the SIM aspect of it.
John: [00:36:01] Again, it depends on the situation. Maybe switching over to the buy side a little bit. We've done a few buy side engagements or specialties, I would say is more selling on the strategic side. But on the buy side, I'll give you a couple example,s with client here in the Edmonton market that wanted to expand to Saskatchewan, they didn't care whether it was Regina or Saskatoon. They had identified some potential companies that wanted to purchase in those markets for them to just reach out and have a conversation and say, you're interesting. Are you interested in selling? It can be difficult, especially in a competitive environment, if they quasi compete with them. And so they hired us on a no-name basis to go. We had an interesting buyer, are you interested in selling your business? Had another example of a Edmonton company that want to expand to Calgary. So they again identified the companies. We went in and helped them through that process. So we don't do a lot of the buy side. But again, we have experience doing that. Why we do M&A advisory is simply because we have 30 some years worth of experience. And, uh, you know, we, we really helped our clients sell their business and Jason has experience as well as we have other fractional CFOs that have experience as well. And so we'll bring them in, in certain certain circumstances to help the business. So yeah, that's our M&A advisory services. So hopefully that gives you a summary, a little bit of what we do.
Sharon: [00:37:19] Yeah. So I now have a, imagine I have now, It's Time Promotions has a fractional CFO. And then I want to buy a promotional company or a sign company. I'm not sure which one yet in, I don't know, Cold Lake or Grand Prairie. So, in this situation, my fractional CFO is already doing their due diligence. But you would be able to the same company would be able to help them with the buy side.
John: [00:37:47] Yeah. Yeah, exactly. And so a lot of times the CFO can do a lot of work. And it actually is a really good point that we never touched on with the CFO is all of our CFOs have access to myself and access to Jason. My partner Jason does do some fractional CFO work. I don't do any. I focus on the employee share plans and some other stuff, but I act as a mentor with a lot of them. So that'd be a great example where you hire a fractional CFO for us, and you want to buy a company in Grand Prairie. That he or her, your fractional CFO can do a lot of that work, but they may have some questions and about the letter of intent or whatever. And so I will go on a lot of engagement letters where I can help them out for an hour or two hours here and add a lot of value because just from my experience, or Jason can do the same thing and add some value. And so we do that in a lot of cases where we come in and we, uh, we'll help that business, uh, do an acquisition, but the fractional CFO can do the majority of the work, but we can really augment that.
Sharon: [00:38:48] Because in my mission, this is my mission. I want five locations before 2026.
John: [00:38:55] Love it.
Sharon: [00:38:56] I have three.
John: [00:38:57] 2026. You better get busy. Only.
Sharon: [00:38:59] Oh, sorry. Sorry. 2028. 2026. 2028. Yes! I better get busy. Great. So those are five locations, but I don't know how I'm going to get those two other locations, what that looks like. If I'm going to buy or just open, I have no idea what I'm doing or where they're even going to be yet. Anyways. Okay. I think this has been remarkable. We're already at 40 minutes, so we probably should wrap it up here soon. So is there anything else that our listeners could benefit from you that we've missed on?
John: [00:39:23] I don't think so, Sharon. It's been a great conversation. Yeah. So thank you again for having me on your podcast again to talk about some things I'm passionate about.
Sharon: [00:39:32] It's important and I don't think that people realize that it's accessible. Like, I don't think that business owners know that they can have this extra help for a fraction of a CFO cost. Is that how that works?
John: [00:39:42] That's exactly right.
Sharon: [00:39:44] Right. So I think if you're wanting to grow your business or if you're at that standstill, if you hit your ceiling or if you're generally in that rolling curve. Like I am like January, February, March, you know. Yes, we have cash flow, but I spent it all in December or January because I. Whatever. I feel that I need somebody to keep me accountable and on focus and how that works. So I think that there's lots of businesses out there just like mine and we run the same. So I think that having you out there, being awareness that they're out there will help our listeners for sure.
John: [00:40:13] Absolutely.
Sharon: [00:40:14] Okay. Tell us how they can reach out to you if they have questions or your firm in general, if this is something they want to approach on, they can talk to you and you can guide them accordingly. How do they get you?
John: [00:40:24] Absolutely. Yeah. Go to our website, Camillagroup.com. And there's a place there where you can, uh, ask questions. Fill out your form with your contact information and get sent to us. Our contact information is on there as well. Reach out on LinkedIn. We have a Camilla Group website on LinkedIn as well. So either the website Camillagroup.com or LinkedIn. Um, be more than happy to have a conversation.
Sharon: [00:40:45] That's awesome. Okay, I always ask one book, you did mention a book before and I meant to write it down, but but I forgot it already. But this one, I'm going to ask you for a book based on CFO, partial or fractional CFO or mergers and acquisitions. More pinpointed, because I see all those books in the background there.
John: [00:41:01] You see all those books. Actually, I'm going to give you one that's just a book that's applicable to life. And he was, I'm a big fan of his, and it's applicable to financial and mental models. Uh, if you haven't read Charlie Munger's Almanack, uh, read Charlie Munger's Almanack. Um, I was fortunate enough to go to the Berkshire meeting in Omaha quite a few times. And I was there, the last year that Charlie Munger was there before he died. He died at 99 years old, I think, uh, a few weeks before his 100th birthday, which was going to be January 1st a couple years ago. But there's a lot of great advice in Charlie Munger's Almanack. So, uh, go, go buy that.
Sharon: [00:41:39] Charlie Munger, sorry, what was the name of the book again?
John: [00:41:42] Charlie Munger's Almanack.
Sharon: [00:41:44] Almanac. Obviously, I need more than just numbered helps with.
John: [00:41:48] Yeah. No, it's it's actually I recommended to my sister who started a business a few years ago, and she just loved it. And I'm a big fan of Charlie Munger. And, and there's a lot of, a lot of good advice in that book.
Sharon: [00:42:00] We do need like as a business owner, we get into the trenches, we work, we work, and sometimes we forget that there's life out there. So I think being I always preach to actually, I had a Zoom meeting with my staff and we just talked about gratitude and positive attitude and how it reflects on life, not just work, but your whole entire life, and how to embrace that and how easy it can be to shift if you get your mind on it. But anyways, I'm a huge advocate for all that kind of stuff. And life is short. Did you know that? Life is very short.
John: [00:42:29] Life is very short and it goes by really, really quick.
Sharon: [00:42:31] It's fast.
[00:42:31] Really really quick.
Sharon: [00:42:33] So yeah, be grateful every day.
John: [00:42:35] Enjoy every day. Enjoy every moment and practice gratitude. I love that.
Sharon: [00:42:38] Yes, yes. Okay, I'm gonna wrap this up. So John, thank you so much for coming back and sharing about your wisdom, your insights, your expertise with our listeners today. If John said something to you, to our listeners today, um, sometimes it's just a light bulb. We call it the BFO. Sometimes you have like this blinding flash of the obvious that might have come from today's episode. So please reach out to John. As you know, he's a fountain of knowledge and information. Thank you for listening to It's Time for Success, the Business Insights Podcast. If you enjoyed today's chat, please subscribe so you never miss a breakthrough session with one of our guests like John, and share this episode with one other business owner who needs to hear this about fractional CFO and M&A today.
Sharon: [00:43:19] If you've encountered a learning curve or have a question you'd like to answer on our... Please reach out if you have a topic you're passionate about and want to share with our listeners, please email me at sharon@itpromo.ca. We would love to get you on a podcast. Until next time, surround yourself with those who lift you higher and always pay it forward. We'll see you on our next episode. Thank you everybody.