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Transcript 

Kathy (guest):
Oh, workforce planning is so important when it comes to business.

Carol (host):
Welcome to The Fractional Edge, the turbocharged podcast. That’s your one-way ticket to unlocking the full potential of your workforce planning. I’m your host, Carol Fraser, a workforce planning wiz, fractional Chief Human Resources Officer, and a CEO who’s been around the block and probably tripped over a few HR manuals along the way. With over four successful ventures under my belt, I’ve mastered the art of navigating the challenges faced by small and medium-sized businesses like yours. Get ready to dive deep into the exhilarating world of fractional executive staffing strategies, where every twist and turn is designed to turbocharge your business success and leave you ready to supercharge your company. From hilarious success stories to side-splitting strategies, we’ve got the inside scoop to optimize your business and keep you grinning from ear to ear. Let’s rev up those engines and dive headfirst into the fast lane of business brilliance. Good afternoon, good evening, good morning, depending on when you’re listening to this wonderful podcast. This is The Fractional Edge, where we talk about how fractional leadership gives your organization a competitive edge. My name is Carol Fraser. I am the host today, and with me, I have Kathy Svetina as a fractional CFO. Kathy, please introduce yourself.

Kathy (guest):
Well, Carol, thank you so much for inviting me on your podcast. I’m super excited to be here.

Carol (host):
So tell the audience a little bit about where you’ve kind of come from. You moved from corporate into fractional. Why fractional? What is fractional to you? And we’ll kind of start it off there.

Kathy (guest):
Yeah, sure. So I came from a corporate background, and I was in corporate finance for about 15 years in Fortune 500 companies. One of the things that always bothered me was, you know, when you’re in the corporate world, there’s an army of people handling finances for those companies. But when you go into the small business space, especially the businesses that are growing and are on the smaller side, I’m talking about businesses that are between 10 to about 50 million in revenue. They generally have an accountant, they have bookkeepers. Sometimes they have a controller, but they don’t really have someone who is at the reins of those strategic decisions, so they’re really missing that talent. And that’s why I said, you know, when I left my last corporate job, like, “Well, do you want to do this again? Or do I want to try something else?” And that’s how I started Newcastle Finance, and it was in 2019. We’re recording this in 2024, so it’s been five years, and it’s actually going to be in two days. There’s going to be a five-year anniversary of my business. So yes, fantastic.

Carol (host):
Awesome. Now you’d mention small businesses, and then you kind of said between 10 and 50 million. So for our listeners who might not be quite at 10 million, what exactly is their possibility to have someone like you as a fractional CFO?

Kathy (guest):
So the reason why I say 10 to 50 million is because that is really like the last train to get someone like myself on, and you’re going to feel this pain, and it’s going to be very, very apparent to you. And one of the reasons why people come to me, you know, potential clients, is because they say, “Well, we have all the accounting set up. The day-to-day operations are done, you know, we get some of the reports. But the problem is it feels like,” and I’m gonna feel bad saying this, but those are their words, “Feels like I have a bunch of bean counters that give me the reports, but they’re not really helping me make those decisions. It’s just not enough.” And that is the time when you can think about that you really need someone to be at the strategic table with you, and that’s why the fractional CFO is such an important piece of your finances. Because at the 10 million, you’re going to have a lot more strategic decisions, especially if you’re growing, if you want to grow into a 50, 100, even more million-dollar business. The structure of the finances is going to become so, so, so important. And you know, in small business space, unfortunately, it just becomes just basic accounting. But the more you grow, you need more than just the basic accounting. And you know, a little bit of cash flow thrown in and some tax reduction, it’s a lot more than that, and that is a time when you’re going to need that fractional CFO that looks at the business holistically and helps you guide the business in the direction that you want to go to.

Carol (host):
I see. So it’s at that pivotal point of 10 million plus that if you thought you could move forward without some component of a fractional CFO, it’s going to be really difficult. It’s going to be a little painful, yeah?

Kathy (guest):
And it also, you need someone who is going to be almost like a middleman between you, your other departments in the business, fractional HR people, sales people, marketing people, and also your accounting people. You need someone who is going to have those conversations and take that back into accounting and make sure that your numbers actually make sense. So it really is making sure that whatever you are doing in the business. And one of the things that I always say is every single thing that you do in your business is going to eventually end up in your finances. So if you just have an accountant who the only thing that they’re doing is just creating reports, and I’m going to say that there’s nothing wrong with that, and accountants are great people, but if all they’re doing is creating reports and making sure that your AP is done, accounts payable is done, your accounts receivable is done, right? Which needs to happen, but if that’s all they’re doing, you’re going to be missing a lot of the finance portion, which is having those strategic conversations with your HR people, with your marketing people, with your sales people, and that is a separate type of skill that you need than someone who is just doing spreadsheets and accounting all day.

Carol (host):
Understood. You need the intelligence side of the numbers to start to be able to really help people understand how it’s impacting the business, not just from a P&L standpoint, but more from a strategic, long-term planning standpoint.

Kathy (guest):
Yeah, exactly. And one of my things is always making sure that the business that I go into is healthy and sustainable. Because one of the things is you can easily make your P&L look good. You just slash all the costs. And especially right now, what a lot of businesses are doing, they’re cutting their marketing expense, and it drives me up the wall. It’s because if you are cutting your marketing expense, how are you supposed to grow? How are you supposed to prepare for what’s coming in the future? So I’m always a proponent of yes, let’s take a look at your marketing budget, make sure that it’s spent wisely and that it’s actually effective. But let’s not use marketing as a slush budget. We’re looking to cut $100,000? Oh, the first thing we’re going to look at is your marketing expense. That just should not happen.

Carol (host):
You know, I think every person who might be listening to this podcast who comes from the marketing vertical is going to love you, because they are the ones who are like, “See, look what your finance person said.”

Kathy (guest):
And I know that I am a minority when it comes to that type of thinking. But I also have, you know, by having my own business, obviously, and by having the conversations, and from actually seeing all these decisions that the small businesses have made and big businesses have made, it just doesn’t make sense. So even for myself, like I am, if things are tough, marketing is the last thing I’m going to cut because I know that it’s going to affect me in the future. Maybe not right now, right now, it’s going to look good. But six months, 12 months from now, not so much. Yeah.

Carol (host):
Fair. Now, the one thing about being a fractional CFO, the word fractional CFO, has been around much longer than this new movement that has been going on. Call it in the last like three years or so, fractional CFOs as a practice, have been around for how long, like 10 plus years. Is that fair to say?

Kathy (guest):
It’s probably even more than that. It just wasn’t called fractional. Sometimes people were calling it like a consultative CFO, and you know, essentially, at the end of the day, it doesn’t really matter what you call it. Just matters what type of impact you have in the business. But you’re 100% right that in the last couple of years, especially after the pandemic, a lot of the executives and people in the senior roles in big companies have just been burned out, so now they’re trying to figure out, well, what is the next thing that I can do? And fractional is becoming a lot more popular, because businesses do need that talent. Obviously, they cannot afford that talent full-time. So they can get it for a fraction of the time, for a fraction of the cost. So that’s why it’s a win-win on both sides, because as a practitioner, you get to choose how many hours you work, who you work with, and you know, you can dictate your work-life balance a lot better than if you were in the corporate space. And on the business side, you get that talent that you need for a lot less cost than, you know, and you can actually afford it. Otherwise, you would just not. There’s no way you’d be able to afford that as a small business, for example, 10-50 million, someone who’s been in, you know, the big corporate world for so long.

Carol (host):
And they as well, these businesses can dictate how many hours a week or a month they want to utilize that person’s magic. It’s not as if we’re all the same, and we all have to work this number of hours per week per month. You know, one of the things that you had mentioned for those maybe companies under 10 million, is it normal, or is it a service you provide? Or do you see this in your industry, that maybe you offer more of an advisory role for those who are less than 10 million?

Kathy (guest):
So it really depends on where they are and what they need. So I will take a look at if they’re less than 10 million. So a lot of times companies are between five to 10 million come to me and they say, “Well, we’re not there yet, but we are going to be there very soon.” And that is actually the best time to get someone like myself on board, because we can do a lot of good for the business like that. And for those, I essentially, what I do is I have a product out there that it’s called the Next Gen Finance Roadmap. It’s really looking at where they are in the business right now. What do they need exactly to get to where they want to go. And I generally look at their finances through like a lens, five different lenses, to make sure that they get the service that they need. No more, no less. And then we structure an engagement based on exactly what they need. And that’s why that roadmap is so important, because a lot of times, also, when I come into the business, especially when they’re that small, they don’t really need a fractional CFO just yet. They just need a really good controller or maybe a really good accountant. And I can do a lot of good, because I could say, “Hey, you’re at this point right now that if you just change these particular things, it’s going to change your business significantly. How about you go talk to this person and this person, and then maybe a year from now, or six months from now, when you get to that point, then we resume the conversation, and then maybe I can step in.” It’s really the interesting part about fractional CFOs is that, especially in the small business space, a lot of times we are almost like bidding against ourselves, because I want to make sure that the business is able to support that structure, that financial fee that I have, and also that they’re getting the most that they can from the current finance people. And once that is completely, you know, you can get most out of them, then we look at what the next level is, the fractional CFO. So that’s why I’m saying, you know, it really depends on the business and what they need.

Carol (host):
Okay, that’s really insightful, because I think of there’s the perception that small businesses need a fractional in every group or in every vertical. So they need a finance, they need a marketing, they need a sales, they need an HR. And it’s not a yes or no question, but rather, it really depends on where that company is in its life cycle. And you know, if you are at that stage where you do have, you know, seven employees, and as you had mentioned, you know, maybe it’s an accountant, maybe it’s a graphic designer, you know, whatever that is, it would be helpful to either from an advisory standpoint or from some sort of real fractional have at least a conversation with each one of those verticals to really understand when do I need you and at what capacity do I need you? I think that that’s where a lot of these small business owners are. Either it’s a yes or a no, and I think where we’re starting to see people get more curious is when they’re saying, “Well, you know what? Maybe I should just talk to a fractional Chief Sales Officer and ask them, you know, at what point would I need somebody at your level?” Because that is all around my favorite topic, workforce planning, if you don’t know what you don’t know, then you don’t know what you need. So when you think as the finance person, you see the numbers. You see the assets of employees on all the reports. When you think about workforce planning and how fractional executives can support these small businesses. What is your take on that?

Kathy (guest):
Oh, workforce planning is so important when it comes to business finances, healthy finances, I would say. And that is one of the reasons, too, when I’m looking at the business and again, every single thing that you do in your business is eventually going to end up in your finances. And having someone who is able to spot the issues, because we have seen as fractional CFOs we have worked with, you know, many different businesses, probably across the industry. And it’s funny, because most of the fractional CFOs that I talked to, they are industry agnostic, and I know a lot of businesses get like, “Oh, but I really want them to be in my industry.” But I will tell you that it is actually in your benefit to have someone who has seen a lot of different industries, because we essentially become almost like bees, pollinating these different ideas, taking all the best practices from different industries and putting it into your business, and taking all that knowledge we had and applying it directly to you. That’s why I would say, you know, when, if you’re talking to someone, whatever, in fractional capacity, if they’re not in your industry, just be open to it. Just be open to the ideas that they have, and going back into your workforce question, it really is, looking at the business, especially from the seat that I am in, looking at where the business is right now, where do they want to go, and what are the things that are currently happening in the business? And a lot of times when businesses in that particular range have financial issues, maybe there’s a cash flow issue, maybe there’s, you know, it could be a lot of things. There’s a root cause for that, and it could be that the operations are not done correctly, that they don’t have the right people in the right seats for their sales. They might not have the right marketing in place. They might not have, you know, the right planning in terms of HR planning. So that’s why it’s important to do that workforce planning, so that you have the right people in the right seats. That way you’re not wasting money, and you can be so much more efficient. And if you have the right people, you don’t need, you might not need all of these, you know, 100 people that you have, you just need 50 people that are really effective at what they do, and they’re in the right place with the right type of talent that you need them at.

Carol (host):
That is such great advice for these small business owners and CEOs who are anywhere between, you know, 1 million to call it 300 million. You’re really at those areas where what has worked for you at 10 million may not be the same thing that works for you at 50 may not be the same thing that works for you at 100. I’ve known many organizations who over-hired, right? And of course, we’ve seen that in society today. We’ve over-hired, we’ve overcompensated and overcorrected, and now we’re at that stage where we’re finally somebody finally went, knock, knock, workforce planning, and they went, “Okay, so these are the people that we need,” and it’s great if you could get ahead of that, even in the planning stages, before you hit 10 million, because then you’re at least going, what kind of people do I need? But I think you get that information when you talk to all the different verticals of fractional executives. So thank you for your input on that. I appreciate that.

Kathy (guest):
Yeah, and as you said, over-hiring, you know, tech companies and tech startups are notorious for that type of workforce planning, which is, “Oh, we’re going to be here. This is where we need all these people.” We’re just throwing on the people, especially salespeople. And the problem is, when you think that, “Oh, we’re just gonna hire people, and then we can just fire everyone,” that becomes a very toxic situation in terms of your culture, which is going to come and bite you later in the future. And on top of that, when you go back into the market, when you really going to need all those people for sure. No one’s going to want to hire. No one’s going to want to work for you anymore, because now you have this reputation in the market, and I am in a lot of channels where sales and marketing people actually gather and people talk like it’s a small, small world. So making sure that you’re putting that effort and time into workforce planning the right way, so that you don’t go into the situation when, essentially you have to go end up on the market and no one wants to work for you because you’ve treated people as expendable.

Carol (host):
I’ve recently been listening to “Love as a Business Strategy,” and that company that’s kind of the subject of that book, which is Softway, you know, they did that. These executives tried to do it the old way, we’ll call it, you know, whatever you used to see in the early 2000s and just we have five generations of workforce right now. It’s you’ve got to find new ways to communicate and motivate and understand how people align to your company. So it’s, you make a very it’s that sage advice for the people who are in leadership roles. It’s time to really ask ourselves, it’s not only today what we need, but what do we want to be remembered for even five years from now? So that makes a good point. Yeah. So for your clients, are you one of the industry agnostic fractional CFOs, or do you focus on a couple of different industries?

Kathy (guest):
No, I also am industry agnostic, though. There are a couple of industries that I know really well, for example, construction and remodeling. That’s one of them, because I’ve just had clients in that space for a while. So I know that industry well, also professional services, service-based businesses, but I can work with any client in any industry. And I know, again, it’s like, “How can she work with me? How does she know my industry?” It’s, again, because I’ve had experience in all these different industries, and I can bring a lot of knowledge from different places, and, you know, cross-pollinate those ideas. So yes, to answer your question, yes, I am industry agnostic.

Carol (host):
So then, when you’re working with multiple industries, do you find any similarities that a fractional CFO is really a solid solution to their ailments?

Kathy (guest):
Yes, and at the end of the day, numbers are numbers and the business, it’s more important that you find someone who understands the business in your particular growth period than industry, and I will tell you why. Because, for example, if you are a startup who has investors and who has to come up with a set of financials, working with someone who has that type of experience, no matter what type of startup it is, it could be a completely different industry. It’s going to be in your benefit. But as the business grows, for example, if you have someone who knows the business and has been working with businesses between 10 and, you know, 50 million, it’s a lot more useful to you than if you have someone who has been focusing on businesses that are 100 million plus, and maybe they’re doing certain M&A for example. I do not have M&A experience. So if a client comes to me and says, “Hey, we’re doing this M&A type of situation, can you help us?” My answer to that would be no, but I have people that can help you. So it’s more useful in terms of what’s happening in the business versus the industry that you’re in, and the reason why I’m in the 10 to 50 million sphere is because that is the time when the business really needs the structure of the finances, and that’s what I’m really good at building that structure, that solid foundation on the finances, so that your business can grow. And I have a framework around that that I go and I embed into every single business that I’m in. It doesn’t matter what type of business it is, every single one of them is going to need solid accounting and bookkeeping. They’re going to need a financial analysis that is actually useful to the business. They are going to need financial systems and processes that actually work for them, no matter what type of business that is, they’re also going to need financial planning and strategy, and I have a lot of experience in FP&A, which is financial planning and analysis from Fortune 500 companies, and that is a specific type of skill that’s really missing in small businesses, but it is truly useful to them at that particular point in time, because they have the data. And now it’s like, okay, what do we do with all this data? How do we get the insights? So that’s why I’m good at building and the fifth one, of course, is the internal controls, which essentially means that people are not stealing from them. Because unfortunately, small businesses are so, so vulnerable to that.

Carol (host):
That’s, yeah, that’s where hopefully you’re gonna that that owner, that CEO, will pick up the phone and call a fractional CHRO and say, “Can you help me create a culture where people don’t want to steal from me?”

Kathy (guest):
That would be good, too. Exactly.

Carol (host):
So you have a quote on your website that I absolutely love, and it’s “We’ve grown so much, but why does it seem like we’re still operating at entry level.” That one just resonated with me, because I work with small businesses, and it’s, you know, sometimes I say they just can’t get out of their own way. Because, let’s face it, the brain that got you there is not the brain that’s going to help you solve the next level of problems. Many times, not going to say ever, but you know, somebody had said, you know, you can’t solve the problem with the same brain that created it, and that’s why you bring those trusted advisors around you, like fractional executives. So I’m curious, it’s a quote, so I’d love to know kind of some stories around when you go in and tackle these kinds of things, what do you do to help them kind of crack the egg and see things in a different way?

Kathy (guest):
I think the best way to tell you this would be with a story of a client that I’ve been working with for a while now. And the reason why that quote is on there is because that is literally what people tell me when they come to talk to me. It’s like “We’ve grown so much, but we’re still operating at entry level. Like, how is it possible? And I cannot move my finance people to do what I need them to do.” And yes, of course, you’re there. There’s nothing wrong that you did. It’s because you just don’t have the right people at the right level. There’s nothing generally and I will not say always, but generally, there’s nothing wrong with their accountant. Maybe the controller needs a little bit of training on certain things, but they’re doing their job. They are doing their job the best that they can. And the reason why you feel this way is because, of course, you don’t have someone at those levels, like a fractional CFO, for example. And I will tell you this client that I’ve had when they first came to me, they really did not have a good financial system and financial structure, and this is where we started, and that’s why that Next Gen Finance Roadmap is so, so important, because I’m able to, essentially, look under the hood and see, hey, this is what’s happening. We need to fix this. So they had, they did not have the right system, so they were a remodeling business, and everything was in spreadsheets. And with remodeling construction, it’s so important because there’s a lot of moving pieces, like you need to know that the estimates are in the right place, the change orders are happening because people constantly keep changing their mind as they’re building their houses or whatever they’re doing, right? It’s like, “Oh, maybe I want this tile. Maybe I want this stuff.” So keeping track of that is so important for finances, because if you don’t have, if you don’t keep, if you don’t have the right repository where all this data is stored, it’s just going to be a mess. You’re going to be missing your billing. You have no idea how much the project is costing you. So we said, “Okay, let’s stop doing that. We’re gonna come up with the right software.” So we implemented the right software for that particular industry, and it was an industry leader, so that already fixed a lot of the issues. Then we said, “Okay, now that we have all this, now we have to figure out the financials,” because the financials were a problem, and a lot of the businesses in that particular sphere is they have an issue with cash versus accrual accounting. And this is a whole can of worms that we can go down under. Oh yeah. The problem with it is because a lot of the accountants also, they just kind of, you know, like, “Oh, okay, well, we’ll just” – let me take this back. The problem is that the focus is on taxes versus getting insights that will make you, that will give you good decisions about your business. You have to have those insights. And if the only thing that you’re doing is just focusing about on taxes, you’re going to lose a lot of that data that you can make good decisions with. So what we had to change, they were on a semi, semi-accrual type of accounting. But we had to take it a step further, because remodeling and construction businesses have a very specific type of way how they do their accounting. That’s called work in progress adjustments versus under-billed or over-billed. We have to make those adjustments on their financial statements. They did not have that so as they were getting a lot of cash up front, where people were paying for their project, the P&L looked like, “Oh, we’re making all this profit. Look at us.” And then as the cost started trickling down, in next couple of months, and there was no income because we collected all that in the front it looked like we are, we are not making any money. There is so much loss. But it’s really not true. It’s just that those adjustments were not done the right way. So we had to fix that, obviously. And then the third thing that we had to fix was the commissions, because the commissions for the salespeople weren’t right, because no one actually did that analysis of where’s the business, what does the business really need? What type of behavior do we want to reward in these salespeople, and how do we map that so that it’s appropriate for the business, where it is, where we want to be, and that it makes sense in the behavior that we want to see in the salespeople. So that was, that was a big project, because you could think so that’s a couple of years, obviously, and they’ve been doing well, that’s

Carol (host):
That’s a great story, because I think back to some of my earlier clients, pre-COVID, and the sales components, you know, they’re kind of a linchpin in some companies where, if you aren’t incentivizing the right behaviors, and you aren’t necessarily recognizing the full expense of that individual. You know, it’s, you aren’t going to get the revenue or the sales that you need to not only pay for themselves, but to give you the business that you need. And it’s, I remember one story of mine, where they weren’t using, they were doing just straight like they’re going to pay you the salary, going to pay this percent commission, and then you go out there and do what you’re going to do. And I, as a certified comp person, kind of introduced a “Well, why don’t we do a variable program? Why don’t we if you can, you know, sell five times your worth, this is what your commission could be, or 10 times your worth, this is what your commission could be.” And they were selling services, and so it was really easy to kind of as well do the mix of the different services, because some of them could be big, some of them could be small, and we wanted to make sure that we were, they were giving enough energy to all of their services. So you’re right that a lot of times organizations, when they are starting out, and when they get to the 10 to 50, they get stuck, because what got them all that revenue in doesn’t necessarily mean that now that they’re call it teenager years, they’re not going to get to be able to adulthood if they don’t start to think more strategically about how their salespeople are working. And, you know, coming from a CFO,

Carol (host):
I mean, I love that. It sounds like you really do get into the business in all the different facets, and

Kathy (guest):
You know that’s also a good point that you’re saying, because there are, there are 100 different ways that you can structure a commission or a plan for your salespeople, but it’s good to have someone on board that is able to model that financially on a spreadsheet and figure out, in a safe environment, in a safe way, okay, if we make this decision, what is it that could go wrong, obviously, you have to stress test these things and what is it that could go right, and then figure out now we have a couple of, let’s say we have three or five models that we figured out that make the most sense. Which path do we want to take, and which one is the best for everyone involved? And in that particular scenario, obviously, I am not a sales expert. I know a little bit about the behavior, but it is so important that the person who is helping you do these models and figure it out has the conversations with those people, and that’s why I always say finance should not be in the ivory tower, barking orders at people. It should be working with the different parts of the organizations to figure out, what do we really need to do so that the business is healthy and sustainable? And you know, it can financially. It just makes sense, whatever makes sense financially and not just in the short term, but on the long term. And you need to have those conversations, and you need to have someone who can have those conversations and is able to have those conversations. I think that is really the core of why businesses are so frustrated, is because they’re expecting their accountants to have those types of conversations, but they’re not trained in it. God bless them. I love accountants, but they’re just not trained in it. That’s all.

Carol (host):
Yeah. So as a fractional CFO, as we mentioned, your world and the concept of fractional CFO has been around much longer than the other fractionals. What have you seen in your circles, in your clients, in kind of your interactions? How are the small businesses that you talk to understanding the benefits of this new movement, and how often do you kind of say now is the time we have to pull on a fractional XYZ?

Kathy (guest):
That’s a great question, because, you know, I’ve had this business for five years now, and I can see that when I first started, it still wasn’t as popular, but now it’s starting to be more prevalent. So there are businesses that understand now, what it is. Maybe not understand, but they have at least heard of this concept. And the way I get business is essentially through referrals, through other fractional people, fractional people like yourself, for example, fractional HR, because as you’re doing this workforce planning, you’re like, “Hey, maybe you need a CFO in your seat, right?” And the other way around, like, when I am looking at an organization that is going to grow. And I know there is this magic number of employees, 50 employees in the US. There’s all those different compliance kicks in. I’m like, “Hey, I know enough about HR. Just enough so I could be dangerous to know that when this kicks in and we are going to have 50 employees, you need someone like Carol on your side to figure out, what do we need to do,” and also, there’s a lot of compliance in HR. I mean, every single state has its own thing, and you need people who know that, who have that type of knowledge, to help you through it. So what I’ve seen is that businesses are starting to be aware of that. It’s because when you have one fractional person, especially if they are, if they’re really knowledgeable, they know that. And if you have one fractional person, you’re probably going to need another fractional person in other places in the business, whether that be CFO or sales, marketing, HR, operations, whatever it might be, because you have someone at the seat that understands the business at a higher level, sees what they needed, and they can bring someone in.

Carol (host):
Do you find that there are any kind of similarities or trends that once they bring their first fractional in, if it’s, in my experience, it’s usually a CFO or a COO, and what comes next? Do you recommend? Like, like you said earlier, you all got to get some good marketing people in here. Like, how do you see it kind of all prioritized?

Kathy (guest):
It really depends on what the business needs. And that’s why I said it’s hard to put these, like, blanket statements, because it’s so dependent on the business. It might be that they don’t really, that they have a good marketing agency. I’ve seen that sometimes they have good marketing agents, and they don’t really need that fractional CMO just yet. But it could be that they’re starting to have a lot more sales. So they need more salespeople. They need a sales recruiter, they need a sales director, and they also need someone who is going to strategically look at their sales organization. And now they need a fractional salesperson. That happens too, but it really depends on what’s happening in the business. A lot of times I would say that if you have a fractional CFO, you will probably, almost always need a fractional COO, unless you have one already, because operations is such a huge driver as you’re growing. Because if your operations are not up to par, it is going to be so, so, so very painful to grow. You have to make sure that you have the right people in place, obviously, with HR support if you have that, but also that you have the procedures, that you have the actual onboarding documents, that people know what they’re doing. Like, how do we structure this now? We have to put a people plan in place, and it’s just it is too much for someone. So a lot of times what they do is they have a fractional COO handle that, and if needed, they bring in a fractional HR person.

Carol (host):
Got it, okay. So, you know, one of the things I’m going to go a little esoteric here, there’s, as a CFO, one may think, well, she must operate with a scarcity mindset, because it’s always about, you know, holding on to what you can, and we don’t know if we’re going to get the business next, versus maybe a marketing person or somebody having more of an abundance mindset, where they’re like, “No, it’s endless. There’s enough to go around.” Do you find? And I know just having talked to you, and we’re going to get into your podcast in just a second, you really help almost coach business leaders a little bit to think in a way that’s going to be the healthiest for their organization. I would love to just kind of get your perspective around this whole scarcity, abundance mindset from the finance person, because I think your insights are very unique.

Kathy (guest):
You know, the thing that I always look at is data, like, the more data I have that actually supports whatever hypotheses I have, the more comfortable I will feel. And if I see, you know, it really like, for example, let’s say that we don’t know when the money is going to come through. Let’s say if I see a really good pipeline, and if I see a pipeline that is up to, you know, the next year or the next two years, and the marketing is working, if I see these things happening, I am going to be a lot more open to experimentation and what we need to do to maybe, you know, hire more people than if I see a pipeline that is drying up and issues on the horizon because the marketing isn’t as effective, or the salespeople aren’t actually closing the deals that they need to be closing. So it really, I will say that I do not have a fixed abundance or scarcity mindset. It fluctuates based on the data that I see happening in the business, not on “Oh, we need to. We need to go and make sure that the cost is cut as much as possible.” I will say that. Another thing is, I really do not like the term cost cutting. I like the term cost optimization. And the reason for that is I want to make sure that the resources that we have, the money, the people that we have, the assets that we have in the business. Maybe we have some equipment or something that they’re used to the greatest possible potential, meaning that we’re not underutilizing or overutilizing them, which is especially important in the people factor, because if you’re overburning your people, that is going to be a problem. So it really depends on what is happening in the business. I am very much data-driven in those terms.

Carol (host):
That is a very safe and wonderful answer. So if you could give any advice to our listeners, who are the they? You know, we’ve got listeners who are in PE firms, who are VCs, CEOs of small businesses, founders, owners, sometimes even executives themselves. If you could give them a piece of advice as a fractional CFO to ensure that their company is going in the right direction, or you’re going to give them maybe something to look at. What would it be?

Kathy (guest):
I will say, if you’re at a point when you think that you need to hire a fractional CFO go make sure that the person that you’re hiring, or thinking of hiring has the right type of experience for you. Again, not in terms of the industry, but in terms of the issues that you are working with. For example, if you are a very small business that needs to have a transition between cash and accrual accounting. Having someone who was a top CFO in a Fortune 500 company might not be in your benefit at this point because they have not seen that happening out in the wild. So, or if you’re doing M&A type of activities. Make sure that you find someone who has done M&A type of activities. So go look up their LinkedIn. LinkedIn is a wealth of information. Go look up what they have done, where they have been, and then have a conversation with them.

Carol (host):
Nice. Now that parlays kind of probably to your podcast. Tell us a little bit about your podcast.

Kathy (guest):
So the podcast theme is, “Help, my business is growing,” and it’s really targeted towards growing businesses. And you know, as I have said multiple times on this podcast already, everything that you do in your business, it eventually ends up in your finances. And I see that proven time and time again. So as I go into the business and I see these issues brewing on the horizon, in HR or operations, marketing, sales, whatever it might be, I know I can spot the issues, but obviously I’m not an expert. I don’t know how to fix that stuff. So that’s why that podcast was born, because now I can actually have interviews with people who are experts and know how to fix these things, and we were looking at it from a financial lens. How do we make sure that the business, again, is healthy and sustainable? And we are, currently, I believe we are at about 80 episodes in. So it’s been, it’s been a good run, and people have given some great feedback on the podcast. It’s been super helpful. And I use that when I have conversations with my clients and they have issues, whatever it might be, say, “Hey, go listen to that podcast. That’d be helpful.” And people really love that.

Carol (host):
Look at you. You have a library of experts telling them, if you have this problem, here’s what you do, and that’s really amazing, because I think both of our podcasts are really here to help that small and medium-sized business owner, trying to help them recognize where the pain is coming from, how to maybe ask the right questions, or at least be open to having somebody else ask you the right questions and to understand that for you to grow, if you want to be like your bigger competitor, I guarantee you, they are not doing all of the work. They are not being finance, their marketing, HR, sales. They’re not doing all of it. They’ve recognized that it’s important to find the right people with the right skills, and again, you don’t even need them full time. That’s the great thing about fractional so you can slowly start to give off portions of all of this stuff that you’ve been holding on to, so that you can see the bigger benefit of your business. So I really encourage our listeners to also go over, and I’m going to make sure it’s also in our description your podcast as well, because I think that that’s going to help a lot of people. And if you find something on our podcast or your podcast and you’re like, “I got to start calling some fractional people,” I’m sure both of us would be able to help any small or medium-sized business owner.

Kathy (guest):
Yeah, thank you for that. And if you go on my podcast, you’ll see that there’s a lot of fractional people guests on there as well. And we go very deep into certain topics, like, for example, I had a 45-minute conversation on how to run effective one-on-one meetings with someone. I mean, you know, I like to keep it actionable. And every single episode talks about, how do we make this actionable? And it ends with, now that you’ve heard all of this for 45 minutes, what is the next step that you can do that is actionable in your business, I’m always about taking action.

Carol (host):
That’s great. So what was the one question you wished I had asked you? And maybe I did ask it. But if you think of another question, what would you like me to have asked you?

Kathy (guest):
You know, I think we, we went through that, because one of the things that I’ve, I’ve always got asked is like, “Well, how would healthy finances in a business look like?” And I went through that in those five different stages that need to happen. But if anyone is interested, I actually have a video on my website. It’s called the Financially Healthy House Framework, and it really goes deep into those five different pieces, accounting, financial analysis, financial systems and processes, financial planning and strategy and then internal controls. So if you want to know more about that, you can go in there, but it’s a whole video. And I’ve, actually, I always like to play with my videos too. Because, you know, the name of the company is Newcastle Finance. So I put it in a castle theme, and I filmed that in Hampton Court in England. So you can, you can see a little bit more about the castle in Hampton Court if you’re interested in that. So it’s, it’s a little bit of a documentary, with a financial spin on it.

Carol (host):
Oh, that’s so fun. That’s amazing. Okay, so how can our listeners get a hold of you? Give them all your credentials. Where can they find you?

Kathy (guest):
So if you’re looking for me on social media, I live on LinkedIn. You can go find me there, Kathy Svetina, I’m the only one there. And you can find me at NewcastleFinance.us. That is my website.

Carol (host):
Excellent. Thank you so much, Kathy. And for all of our listeners, I want to ensure you that we are here to help you. Please consider Kathy for a fractional CFO. If you need any help with workforce planning, please feel free to reach out. We want to make sure that we bring you the competitive edge so that your organization can succeed. Thank you so much, Kathy.

Kathy (guest):
Awesome. Thank you so much, Carol. It’s been a pleasure.

Carol (host):
Thank you for joining us for today’s episode of the Fractional Edge podcast, we hope you had as much fun as we did in unraveling the mysteries of workforce planning and fractional executives. If you’re feeling pumped to unleash your competitive edge, don’t forget to hit that like button. Share with your fellow trailblazers and subscribe to ensure you never miss out on our electrifying episodes. If you want to dive deeper into the wisdom shared on today’s podcast, head over to our website, thefractionaledge.com where we can help you connect with guests, explore exciting collaboration opportunities, and subscribe to our newsletter. Until next time, keep your business soaring. Take care, stay inspired, and we’ll see you on our next podcast.