Toxic CFO

"When I first started my business, I made a little simple financial model.

It really wasn't impressive, but I could use it at least to track what was going on.

Then I hired a Fractional CFO.

They completely rebuilt my model and now it's much more sophisticated.

Which is great, only now I have no idea how to use it.

Now I just rely on them to run it and tell me what's going on.

I have to ask their "permission" if I want to add anything to it,

But mostly, I sorta just stay away from it."

This is an all-too-common tale I hear from founders.

And I'll be honest;

It makes my blood boil.

Onboarding a Fractional CFO can be so powerful for a company.

But it can also create a damaging dynamic if founders aren't careful.

Both from honest mistakes,

And from unfortunately adverse incentives.

First the mistakes:

Many founders want to delegate the financial model away to a FracCFO because:

• The hate Excel or Finance in general

• They don't feel they have the skills to run it

• They have the skills but don't have the time

• They have no idea where to start with modeling

• They are insecure about the model they've built

• Or any number of other reasons.

And FracCFOs are often happy to oblige because:

• It is much easier to slot all the founders you work with into your favorite model template

• You can use all the sophisticated Excel formulas and features that make things easier

• You can be much more sure there are no mistakes or errors in the model

• You've got a load of experience on modeling best practices

• It's a zillion times faster and more efficient for the CFO

And all of these are understandable reasons.

But there are also some more nefarious reasons. Namely:

• Offering financial model templates that look good but are impossible for a founder to use is a great lead magnet for new clients.

• Creating and maintaining a financial model that the client doesn't understand is a great way to hold clients hostage.

And THIS is what gets me truly angry.

Here's my controversial opinion as a seasoned FractionalCFO and modeling instructor:

FOUNDERS should own the financial model for as long as humanly possible.

FracCFOs and others are welcome to help them maintain it and update it with Actuals.

We can offer suggestions on how to better build a module or a better formula to use.

When the model gets gnarly enough, we can even take it over - but only so long as we maintain or guide the model's design based on what feels most comfortable and makes most sense to the founder.

But divorcing a founder from her model

Essentially separates her from the most powerful tools she has to make decisions for her business.

Making sure clients learn finance and can guide the ship on their own might not make for the most effortless FracCFO practice,

But it makes the best founders

And the best startups.

And THAT'S

What we should all be here to do.

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