Ep. 491 - Jennifer Barnes, Founder Optima Office - Unlock Financial Clarity: Secrets Business Leaders Don’t Want You to Know

Summary

Podcast Summary: Ep. 491 - Jennifer Barnes, Founder Optima Office - Unlock Financial Clarity: Secrets Business Leaders Don’t Want You to Know

Introduction

In Episode 491 of the "Second in Command" podcast, host Cameron Herold engages in an insightful conversation with Jennifer Barnes, CEO and founder of Optima Office. Optima Office specializes in providing fractional financial and HR support to businesses, offering services such as fractional CFOs, controllers, bookkeepers, and recruiting. This episode delves deep into the essential aspects of financial management for mid-sized companies, highlighting strategies to achieve financial clarity and stability.

1. The Role and Impact of Fractional CFOs and Controllers

Jennifer Barnes begins by outlining the flexible nature of Optima Office's services, emphasizing that every company's financial needs vary based on their size, structure, and growth trajectory.

• Customized Engagements: "There’s nothing so typical because some companies might want, they might not need a CFO yet, they might just need a strong controller... [00:00]."

• Fractional Leadership: Barnes explains that a fractional CFO focuses on strategic planning and forecasting, while a controller handles historical data and financial processes. This division ensures that companies receive both forward-looking strategy and accurate financial reporting.

2. Understanding Financial Statements: P&L vs. Balance Sheet

A significant portion of the discussion centers on the often-overlooked importance of the balance sheet compared to the profit and loss (P&L) statement.

• Balance Sheet Importance: "The balance sheet is the most important tool to look at because there's things that get missed... [11:53]."

• Common Misconceptions: Barnes provides an example where a company might misinterpret a large insurance expense in February by not spreading it across the year, leading to a skewed perception of that month's financial health.

3. Importance of Cash Flow Forecasting

Both hosts agree on the critical role of cash flow management in preventing business failures, even for profitable companies.

• Predictability: "How much predictability do you have? Can you predict your margins? Can you predict your cash?... [20:14]."

• Practical Steps: Barnes outlines a 13-week cash flow forecast as a best practice, ensuring businesses can anticipate and prepare for upcoming financial obligations.

4. Optima Office's Services and Pricing Model

Jennifer Barnes elaborates on Optima Office's unique approach to service delivery and pricing.

• Hourly Pricing Over Fixed Fees: "What I find with fixed fees is that the company is always trying to make more margin... we just do hourly at Optima, it makes the most sense... [21:03]."

• Comprehensive Offerings: Beyond financial services, Optima Office also provides HR consulting and recruiting, offering a holistic approach to business support.

5. Building and Managing Finance Teams

The conversation highlights the strategic role of fractional CFOs in assembling and overseeing efficient finance teams.

• Leadership in Finance: "Any good CFO should be looking at all the staff resources under them and saying, how many hours of week do I need of this task... [23:25]."

• Optimizing Roles: Barnes emphasizes the importance of assigning the right tasks to the right roles, ensuring that high-level strategic planning and day-to-day financial management are effectively handled.

6. Real-world Examples and Success Stories

Jennifer shares compelling stories illustrating the transformative impact of Optima Office's services.

• Reconciliation Challenges: "We've got one. I won't even mention the professional services company... [25:09]." Barnes describes how her team rectified significant reconciliation issues that could have led to a company's downfall.

• Construction Company Turnaround: "A construction company was losing a lot of money and they couldn't figure out why... [26:00]." By revamping pricing strategies and implementing efficient cost tracking, Optima Office helped the company regain profitability.

Conclusion

This episode underscores the indispensable role of accurate financial management and strategic planning in business success. Jennifer Barnes of Optima Office provides valuable insights into how fractional financial services can offer flexibility, expertise, and cost-effectiveness for mid-sized companies. For CEOs and entrepreneurs aiming to achieve financial clarity and sustainable growth, the strategies discussed in this episode are essential listening.

Key Takeaways:

• Fractional CFOs and Controllers provide tailored financial leadership without the overhead of full-time positions.
• Understanding the Balance Sheet is crucial for accurate financial oversight and decision-making.
• Cash Flow Forecasting ensures businesses can anticipate and navigate financial challenges effectively.
• Optima Office's Hourly Pricing Model offers flexibility and scalability to meet diverse business needs.
• Strategic Financial Management can prevent business failures and drive sustainable growth.

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For more insights from top COOs and business leaders, visit COOAlliance.com.

Transcript

[Jennifer Barnes]

Yeah, I think one of the biggest things is, well first we're not. There's nothing so typical because some companies might want, they might not need a CFO yet, they might just need a strong controller, 20 hours a week. They might have their own in house staff, they might need us to do everything. So that could be 20 hours a week of a bookkeeper staff, accountant level person, that could be 16 hours a week of an accounting manager, 12 hours a week of a controller, and then maybe six to eight hours a week of a CFO. Or they could need six to eight hours a month of a CFO and then 20 to 30 hours a week of a controller. So it really depends on each company's organizational structure and how big they are, where they're going. But typical, if I was going to say an average is probably a business between 3 and 20 million who has some pain points where they might have a full time controller or bookkeeper who they call controller. And those are great.

[Cameron Herold]

Welcome to the Second in Command podcast produced by the COO alliance and brought to you by its founder, Cameron Herold. In the second in command podcast, we talk to top COOs who share the insights, strategies and tactics that made them the chief behind the chief. And now here's your host, Cameron Herald.

[Narrator]

In today's episode, we're covering a critical area for every business understanding your financials and getting the right expertise. I'm talking with Jennifer Barnes, the CEO and founder of Optima Office. Optima Office helps companies like yours by providing fractional financial and HR support. Think fractional CFOs, controllers, bookkeepers, and even recruiting. It's about getting the expertise you need, but on a part time basis that fits your business. In this conversation, Jennifer explains the key differences between a CFO looking forward at strategy and forecasting and a controller focused on historical accuracy and processes. We talk about why so many companies, even profitable ones, struggle with understanding their numbers, especially pain points like gross margins by customer or product. We also get into why the balance sheet is often the most overlooked but crucial financial statement, potentially hiding liabilities or misleading you about your P and L performance. And we cover the absolute necessity of cash flow forecasting and how ignoring IT, even at 100 million in revenue, can lead to serious problems. Jennifer shares insights into how fractional services work, including their hourly pricing model, which offers flexibility, and how they help companies build and manage their finance teams. We even touch on some horror stories and how they helped businesses avoid disaster by getting their financials in order. If you're a CEO, CEO or entrepreneur looking to gain predictability and stop flying blind when it comes to your company's finances. They this episode is a must listen.

[Cameron Herold]

So, Jennifer, welcome to the Second Command podcast. Thanks so much for sharing with us. I really appreciate this.

[Jennifer Barnes]

Thank you. Appreciate you having me.

[Cameron Herold]

Yeah. Looking forward to learning from you. You've been a partner of the CO alliance for a few years now. Your COO has also been a member of the CO alliance. And then I've also been around kind of the fractional CFO space for a long time. But I want you to talk to us about kind of the core of what Optima Office does as a business. So we understand a lot of people have never heard of the idea, of course.

[Jennifer Barnes]

Well, everyone needs the head of an accounting department. Everyone needs you to lead somebody to lead and manage an accounting department. So that's what we do, but on a part time basis. So fractional controller, fractional CFO, which is really just means part time. Right. 10 hours a week, six hours a week, 20 hours a week. And then we provide everything else from all the bookkeeping, accounting managers, all the low level people as well, all the back office. And then we also do human resource consulting. So everything from the handbooks and all the risk and compliance issues that somebody might have, we help them hire, we do recruiting. I don't know if you knew that, but we are also a recruiting firm. So it was something that just naturally fit in with our model because we hire a lot of accountants. We have about 100 W2s here at Optima. And for recruiting, we charge an hourly rate to recruit, which is about 10 to 20 hours at 100 bucks an hour. And then we do 5% upon hire and 5% after 90 days. So it's really inexpensive and we're super good at it.

[Cameron Herold]

Amazing. And is that, do you just do the account or the recruiting for the finance department or you don't go across the organization, right?

[Jennifer Barnes]

We do, yeah. We can do anything back office, of course. We can do leadership roles, we can do certain sales roles. I mean, we're not going to be able to hire a physician, for example, right here. But most roles. Yeah.

[Cameron Herold]

Is the accounting and finance space kind of the sweet spot though?

[Jennifer Barnes]

It is NHR and operations.

[Cameron Herold]

Yeah. That's interesting. I didn't know that. And we'll actually have to plug in some on that too, because that's a really, really interesting sweet spot. And I like your pricing model too. I really like your pricing model. It's interesting. I even started my whole consulting practice when I left 1, 800 got junk 17, 18 years ago now, which is crazy. I started as a fractional coo. The reality was that most companies couldn't afford me full time, but they couldn't afford to not have me there part time. That's kind of my idea of what a fractional CFO is, is if you're a $5 million company, you might have called someone a CFO, but really they're a controller with a big title or they're a director of finance with a big title. What's a true CFO bring into a company?

[Jennifer Barnes]

Yeah, I get this question a lot because almost all roads lead to people really needing a controller. But at first they say I need, I need a CFO or need a bookkeeper. And so the biggest difference is a CFO looks forward. They're not looking in the review mirror much. They're literally looking at where are we going, how are we getting there? Strategy advice, forecasting, analysis and kind of slicing and dicing what's going on in the company and helping it become more efficient, more profitable. And then the controller is looking in the review mirror. How are our financials, how are the historicals, which kind of data should I give the CFO to help them make decisions? The controller manages a month end close process. So really making sure that the books are clean, they have financials that are timely and accurate. There's a great controller is going to have a roles and responsibility checklist. A great month in close checklist. What is everybody on the team doing daily, weekly, monthly? How do we make sure that the output, the data that we're relying on as CEOs is accurate?

[Cameron Herold]

Got it. Okay. So in typical engagement, I know typical is hard because there's so, you know, you could kind of go anywhere in the whole finance and HR side of the business. What is a typical kind of engagement look like and what might a company, if somebody, a CEO or a CEO is listening right now, what are the couple of things that maybe are swirling around in their head that might be a sign that they should be talking to you and looking for, or at least looking into a CFO opportunity?

[Jennifer Barnes]

Yeah, I think one of the biggest things is, well, first, we're not. There's nothing so typical because some companies might want, they might not need a CFO yet, they might just need a strong controller, 20 hours a week. They might have their own in house staff, they might need us to do everything. So that could be 20 hours a week of a bookkeeper staff, accountant level person. That could be 16 hours a week of an accounting manager, 12 hours a week of a controller and then maybe six to eight hours a week of a CFO. Or they could need six to eight hours a month of a CFO and then 20 to 30 hours a week of a controller. So it really depends on each company's organizational structure and how big they are, where they're going. But typical, if I was going to say an average is probably a business between 3 and 20 million who has some pain points where they might have a full time controller or bookkeeper who they call controller. And those are great. And they're not getting their financials on time. They have no idea what their balance sheet means. And so nobody's really explaining it to them and sitting down and saying, we need your assets to grow. All these balance sheet accounts need to be moving. We need to start reducing liabilities, unless of course, we're using it for major investment type of activities, you know, capital growth and increasing their structure of the company. And really they're seeing some pain points. They one of the biggest things we see pain point wise is they don't know exactly what their gross margins are by customer product service. And so they really need to understand. I have a benchmark of 40% gross margin. Let's say.

[Cameron Herold]

If you haven't read my newest book, the Second in Command, go grab a copy right now on Amazon and you'll learn how to unleash the power of a coo. And if you already are a coo, you'll learn how to really build an incredible partnership with your CEO.

[Jennifer Barnes]

Yeah, well, some projects or customers are 20% or 10% or they might be losing money and the company has no idea.

[Cameron Herold]

They have no idea.

[Jennifer Barnes]

And other, you know, might be getting a 70% gross profit or 80% gross profit. And so there's such a disparity between what the profit margins are. Gross margins are of every company and product. And so people need to know that they don't know what, they're flying blind.

[Cameron Herold]

So is that. Yeah, it makes sense. I actually did a video with a couple of clients yesterday just around that whole idea of revenue and gross margin. And some companies, it seems like it's always like, grow revenue, grow revenue, grow revenue. I'm like, you could actually decrease your revenue and focus on growing your gross margin and reducing your overhead and you'd actually have more, more profit and an easier business to run. So it's interesting that you actually can kind of, kind of approach it that way. So if a company is considering bringing on a fractional cfo, how would they decide what to look for, how would they decide to pick you over some of the others that exist in the space? Because you guys have done an unbelievable job with scaling it.

[Jennifer Barnes]

Yeah, no, thank you. I think it's oftentimes about personality. And so if a company only has one or two CFOs for you to choose from, or they might only have three or four controllers and they don't have the right industry expertise, they don't have the right software expertise, maybe their personality, I mean, sometimes it's like dating, right? You want to like your controller cfo, you want to make sure that you guys are on the same page and you respect them and you appreciate their advice. And so that's not there. It's going to be those, those conversations are painful. So a company that has enough size on them where if a controller were to quit, they're not scrambling, their people aren't overworked. And so if their staff members are putting in 50, 60 hours every single week and you become a new client, probably going to not get the attention that you need. And so here, for example, at Optima office, we have 35 controllers, another dozen plus CFOs, and then we have about 20 to 30 staff accountants, bookkeepers and accounting managers. So we've got a lot of capacity. We always over hire. I know that that phone's always going to ring or my email's always going to Bing. And so I've always taken a ton of risk and hired more than I usually need, knowing that we're busy. We brought on 146 clients last year. And so that's a pretty, that's a pretty big number. We didn't have to turn anybody away. We were able to personalize every single company to the right controller, the right cfo, and again, industry, software, location, personality. There's. It's like human Tetris.

[Cameron Herold]

Yeah. You said to me one time that a company needs to look at their balance sheet before they look at their P and L. Can you explain that? And I know that for the vast, vast majority of entrepreneurs, and when I talk about entrepreneurs, I talk about kind of the small to medium size, not the true corporate CEOs, but a true, hey, I'm starting a company, I'm going to build a company that entrepreneur, 99% of them have no idea how the balance sheet works or what it's for.

[Jennifer Barnes]

I know, and it's a shame. I love to help them. I mean, part of the reason I love being in this business is because I truly feel like it helps our business the overall business economy. Right. If people understand their financials and they're able to grow and scale profitably, then they're able to hire more. And that's just good. That's just good for business. Every business. I think the balance sheet is the most important tool to look at because there's things that get missed. Just an example. Let's say a company's Insurance premium was $36,000 a year, and they pay the whole premium in February, and they put that on their P and L and they expense it. Well, then they start, and then maybe there's a couple of other dues and subscriptions or other things that they're just doing cash accounting. And they expense all of it in February. Plus February has less business days than most other months. So then they're like, oh, my God, I had a crappy February and we lost all this money and this and that. And I'm like, no, you didn't. You have to take that 36,000 divided by 12. Your insurance cost was actually $3,000 for February, not 36,000. And so the other 33,000 of that 36 goes on your balance sheet as prepaid insurance. And if a company is strictly looking at their P and L and they're not noticing things like that, then they're making a big mistake. So there's also payroll liabilities. You look at a company, maybe they have 30 to 40 employees, they give two to three weeks of PTO out. And of course, this doesn't work if you have unlimited PTO. But. But let's say they give two to three weeks of PTO out, they can have a 50,000, $, 60,000 payroll liability that's not on the balance sheet. And if four or five people were to quit, they have to pay that out. And all of a sudden, if they've got a cash flow forecast, which every business should have, you know, they have to have a. They have to write a big check, and they weren't expecting that. Well, if you're accruing it and you're paying attention to it and it's on your balance sheet and you're aware of the liability, then there's no surprises. And so we do a lot of balance sheet cleanup, where every single account on the balance sheet has to tie to a statement or a schedule, it should be moving. And if the balance sheet accounts aren't moving, let's say they move once a year, they adjust for depreciation and other things, or maybe they don't move at all, then the balance sheet's wrong and then 100% sure the P and L is wrong. So you don't want to look at the P and L and then be relying on incorrect information.

[Cameron Herold]

Hey, it's Cameron. I hope you're loving today's episode. Quick question for you. Does your company have a strong leadership training program in place to grow the skills of everyone who manages people? If you want to help yourself and your company grows, get everyone who manages people learning from my invest in your leaders online training program. There are 12 core leadership skills that I cover online and they're all going to really grow. CEOs pay me $78,000 a year to coach them one on one and now you can all benefit for 1% of what they pay me. These are the same leadership skills that I created and certified everyone in at 1-800-got junk when I was there as CEO. Go to investinyourleaders.com today and use promo code podcast10 before the end of the month to get 10% off each manager you sign up. Now back to the show. Well, it makes sense that if you've got these accrued liabilities or accrued assets, you're making short term decisions to the kind of detriment of the of the company. Right? That, yeah, if you think you've had a really bad February, people will tend to cut back when reality is March is going to look screaming good and they're not even going to understand why. I had an issue years ago when I started the COO alliance eight years ago, I did a million dollars in revenue for it in the first year. And that was in addition to my normal business. I'd forgotten that I had all that additional revenue coming in. I wasn't really looking at my, my P L monthly at all. Didn't really care to excite all this cash coming in. But I also spent a bunch of it on a house renovation, only to find out I owed 35, $350,000 more in taxes than I anticipated. I'm like, holy shit, why didn't I know this stuff? That's the kind of stuff a fractional CFO would have known and would have been kind of giving me the heads up on, wouldn't they?

[Jennifer Barnes]

Right? Planning and strategizing, preparing.

[Cameron Herold]

Yeah, talk to me about the, the cash flow. I mean, when we were building one, 800, got junk. There was one point when we almost bankrupted the company at $100 million in revenue, even though we were very profitable and had been for five years. And it's because we didn't understand cash Flow. And we then started getting a rolling pro forma cash flow statement on a daily basis. And at times it was twice a day because we had to borrow money from Brian's mom just to meet payroll. Fired 22 people. Yeah, it got really scary. Really quick, walk me through what a typical process is that a company should look at with you guys of getting a, you know, a budget and then a rolling pro forma cash flow and, and probably just getting one every month to know what they're, they're going to be facing for the next 12.

[Jennifer Barnes]

Yeah, of course. And I think that starting with the P and L budget. So what are you expecting for 2025? If anybody listening does not have a 2025 budget already put together, at least put something that you think is probable, put it on paper and then measure against it. Once you have your P L, then you can go with a balance sheet forecast. You know, how many, what, what are your assets and liabilities right now? What do you expect that they're likely going to be towards the end of the year? And then you use that information for your cash flow forecast. You need to know the timing of receivable receivables. You need to know how much debt, if you have, when your debt payments are, if you've got those big insurance premiums that you have to pay for, you know, is it once or twice a year, big annual dues and subscriptions, maybe you've got some big capital purchases. And so if you're not planning and preparing for those things, then again you could have a big surprise and be in the hurt locker. So I would say best practice is a 13 week. So 1/4, you always want to at least 1/4 cash flow forecast up to date. And, and you can change it every day. Just make sure you're putting it together. You know, how much money do you think you're going to have in, you know, what are your customers going to be paying? Or do you need to do savings transfers you need to take out from your line of credit? What does that look like? What payables do you have? What are your payroll costs? You put all that into your cash flow forecast and then you can see what, what does the next quarter look like? And hopefully it's positive. But if it's not going to be positive and you've thought of everything that's going to possibly go in and out of your bank account, then you at least have time to prepare and say, okay, well maybe I need to get a line of credit. I might even need to get Alternative financing.

[Cameron Herold]

Yeah, let's say you're not where we were. Yeah, we had, we had $5 million in cash, spent it on bonuses, taxes, a renovation, an office move and a glass stairway. Spent the 5 million, went to the bank to get a credit line. They said, no, we can't loan to you because you don't have any money. We're like, yeah, we just spent all this money on this stuff. And they're like, well, that was dumb. If you'd come to us, we would have given you a $5 million. We didn't understand. And they're like, you have no idea how to run a business. We're like, yeah, we're 100 million dollar business number two in Canada. We actually didn't know how to run a business based on the numbers. So I think it's such a core skill that entrepreneurs learn and their teams learn. It's interesting to me that I think most businesses fail not because the product is bad or because the service is bad. It's because the business and the leadership team doesn't understand the basic economics, the basic budgeting, the basic cash flow and the basic margins of running a business. Would you see that as probably true?

[Jennifer Barnes]

Yeah. And I think if it all boils down to predictability, how much predictability do you have? Can you predict your margins? Can you predict your cash? Can you predict what your receivables are going to be? Do you have goals? Are you measuring against them? And so if you're not predicting correctly or predicting at all, which is what we find oftentimes, then you're just kind of flying by the seat of your pants, which many of us entrepreneurs do. But the more information that we have, the more that we can predict, the less it's just willy nilly, the more it's actually calculated.

[Cameron Herold]

And this stuff, fear, I think for a lot of entrepreneurs is that this is going to cost them a lot. But it doesn't have to cost them a lot to have all this data and these answers. Can you walk us through how a business like yours typically charges what the typical types are?

[Jennifer Barnes]

Yeah, I would say many of our competitors, they might do a fixed fee engagements and what I find with fixed fees is that the company is always trying to make more margin, they're always trying to cut corners or find ways to streamline and then you're not getting that benefit. And so what I've always done at both my companies, Optima being my second, is charge hourly because we don't know what a company is going to need in three Months or six months. They might need to hire one person full time at a staff level. They might just outsource everything to us. They might double or triple in size. They might acquire a company or merge with another. And so there's so many variables. I just do, we just do hourly at Optima, it makes the most sense. You know, bookkeepers start at 65 an hour. And then, you know, on up, CFOs are 265, 275 an hour. And so everyone, all the 100 employees that we have, they have certain rates that we charge for their time. And what I don't like is when a company will say, oh, the controller's 150 an hour, multiply that by 2,000 to 80. Oh, I have this $300,000 person like, no, you can't look at that that way because you're not hiring us full time at one level. And you don't need anybody full time at one level. And so they might have $140,000, $150,000 budget for accounting. And that actually goes a really long way with us. So we can give them a little bit of CFO time, We can give them controller time. We can even get them an accounting manager, some HR and a staff person like, hey, if you've got 10 to $12,000 a month for accounting, gosh, you can get quite a bit with us. So you really want the right person doing what they're good at at every level. And just because, you know, you think I want one person doing everything because I want to train them and I want them to be with me for 10 years, well, that's, that's kind of a crapshoot. But you know, that person is not going to be able to be that cfo. They don't know how to strategize and plan and think of those high level things. And then they don't want to do the bookkeeping or the staff level work. They don't want to do data entry, expense entering, bank reconciliations. And so then they end up wanting an assistant or. And so then you've just got two people who are, you don't need 80 hours a week of those two people. And so then their budget gets blown out.

[Cameron Herold]

Your cfo, like a fractional CFO that comes into company, can actually help the company with the recruiting and the onboarding of building out the finance team as they scale. Right? If you were coaching them over the period of a couple of years, you could probably help them build out that team and almost replace themselves. Couldn't you?

[Jennifer Barnes]

Yeah. I think any good CFO should be looking at all the staff resources under them and saying, how many hours of week do I need of this task, of this activity? How can we streamline? How can we be more efficient? This is what a step, this is what a good accounting department looks like. And so that starts at the leadership level, looking at, they're the captain of the accounting department and they might say, I only need, you know, you only need me eight hours a week, but let's get you a controller, 20 hours a week. This is what they're going to do and this is how I'm going to manage them and make sure that they're getting me the right information that I need so I can sit down with the CEO monthly and go over the things that we might need to do differently, what's going well, make changes. And then these are the activities that the staff people should do. That's almost more of a controller task, managing and running the accounting department. And then the CFO should just be pretty high level. You know, interestingly enough, I get a lot of questions. Oh, I need that CFO to know NetSuite. Like, why do you need your CFO to know NetSuite? They need to know how to manage the controller. Who's going to be in NetSuite?

[Cameron Herold]

Yeah, exactly.

[Jennifer Barnes]

Pay that hourly rate for them to be in the accounting software.

[Cameron Herold]

So when it's almost like the entrepreneur or the leadership team needs to sit down and first say, what are the outputs that they need to get? And then let you guys decide what are the things that need to happen to get them to those outputs? Correct.

[Jennifer Barnes]

Right.

[Cameron Herold]

What's the, what are a couple of the big kind of horror stories? What are some of the big ones that you guys have helped companies maybe unwind or fix?

[Jennifer Barnes]

You know, we've got one. I won't even mention the professional services company. That's, that's all I'll say. But we've had to go back to 2016 to unreconcile all the. There's some trust accounts and there's some major issues that they're, that they're having that they didn't reconcile properly. There's a little bit of commingling. And so I had to get a team of five. And we're. I think we're at 20, 23 right now. We're trying to do one year every three months on schedule to just get everything cleaned up and organized. But, you know, if they didn't fix it, they could be out of business. I mean, that's a really important, important thing. I would say another one, a construction company was losing a lot of money and they couldn't figure out why. And they said, well, we're pricing our jobs properly. And so, well, you're not taking into account your overhead burden. You're not taking into account the cost of labor. And so you need to understand your average cost per person. You need to apply that to each job because your jobs need to be time, labor and materials. And then you need to do a WIP schedule, which is work in progress. And so if you don't have the what percent complete are each of these jobs and what, what was your true margin? And so they're thinking, oh, we're pricing it right. Like, you guys are not pricing this right. And so we just completely revamped all their pricing, all their proposals, looking at their backlog, looking at, you know, what they, how they should be applying all their overhead allocations to their jobs and then really looking at wip. Especially with the construction companies, if the people in the field aren't talking to the accounting department every single week, then they might not be managing change orders. There's a lot of bad things that can happen. So now we've turned it around. They've been a client for a few years now and they're like, I, we would have, we would have gone out of business. Thank God we, we have you and you know, now we're actively managing Whip.

[Cameron Herold]

And yeah, no, but it's the classic example where a company cannot afford a full time CFO. Like they can't afford to go pay $300,000 a year to have a real CFO, but they can't afford to not have you guys on the back end kind of managing. Is that fractional? Jennifer Barnes, the CEO and founder of Optima Office Partner CEO alliance, thank you so much for sharing with us. Really appreciate the time.

[Jennifer Barnes]

Thank you, Cameron. Glad to be here.

[Cameron Herold]

That was amazing.

You've been listening to Second in Command, brought to you by COO alliance founder, Cameron Herold. If you enjoyed this episode, please be sure to like, share and subscribe to us on Apple Podcasts, Spotify and our other podcast streaming platforms. For more best practices from industry leading COOs, visit COOAlliance.com SAM.