Melanie Sloane left a private equity firm after helping push a plumbing company from $12M to a successful exit — and realized most small business owners are flying blind with the wrong financial setup. In this episode, she breaks down why having your CPA do your books is quietly killing your profitability, how to price your services without selling from your own wallet, and the three things every business owner must fix before they can ever sell.
Episode 15: How to Build a Business That Runs on Process, Not Panic, with Melanie Sloane
Leaving a W-2 job can feel risky, but for our guest, it opened the door to greater freedom, bigger impact, and a whole new way of working. In this episode, Mike and Zach sit down with Melanie Sloane to chat about what it looked like to leave corporate life behind and build Iron Horse Consulting around the kind of work she does best.
This conversation digs into the real difference between working in a job and owning a business. Melanie talks about the freedom that comes from controlling your own schedule, working in your zone of genius, and building a company around your strengths rather than someone else’s structure. She also shares why business ownership is not always the “safe” option people think it is, and why many owners need to rethink what security really means.
We also get into the financial side of growth: Why smaller companies often underprice themselves, how poor processes hurt profitability, and why clear reporting matters if you want to grow or eventually sell your business. Melanie also shares how she uses AI as a solopreneur, where it helps, where it falls short, and why human judgment still matters.
“Being my own owner, I can choose when I work on the projects that I work on according to the energy, the mental energy, that I have.”
“If you plan to exit your business someday, then your business eventually will run without you needing to be in the day-to-day.”
“If the owner isn’t engaged in the business, it doesn’t matter if they’re $500,000 or $50 million. They aren’t going to be a good fit.”
“If you have processes in place and you have consistency, then you will have more predictable profits.”
With over 15 years of progressive financial leadership experience, Melanie Sloane brings a wealth of practical knowledge to business owners seeking clarity and growth in their operations.
Melanie began her career in veterinary practice management before pivoting to the trades sector, where she developed a passion for transforming complex financial data into actionable insights. After helping scale an HVAC company from $5M to $20M in revenue as Director of Administration and successfully navigating its acquisition by a private equity firm, Melanie launched Iron Horse Consulting to extend this expertise to other ambitious business owners.
Through Iron Horse Consulting, Melanie provides fractional CFO and comprehensive bookkeeping services to growing businesses nationwide. She specializes in budget creation, financial statement interpretation, cash flow planning, and the development of key performance metrics, helping owners build sustainable enterprises with clear exit strategies.
Her quality-of-earnings evaluation services support clients at both stages of the acquisition process. For investors, these evaluations are a crucial component of due diligence, identifying both opportunities and risks before significant capital is committed.
For business owners planning an exit in the coming years, she conducts pre-sale quality-of-earnings assessments that strengthen financial presentations, address potential buyer concerns proactively, and support the highest possible valuation during negotiations. This preparation can significantly increase a business's market value and streamline the eventual sale process.
Melanie holds dual Bachelor's degrees in Business Administration and Accounting, combining formal education with real-world application. Her approach balances strict adherence to essential financial principles with the flexibility needed to support each business's unique goals and challenges.
Melanie’s mission is straightforward: to enable business owners to focus on what they love without being hindered by financial confusion or administrative burdens. She takes particular satisfaction in helping owners understand the meaning of various aspects of financial reports, giving them a deeper grasp of how their business is performing and how potential changes may affect future outcomes.
Working remotely with clients across the United States, Melanie serves as a trusted financial partner for business owners and investors seeking both immediate operational improvements and strategic pathways to successful acquisitions or exits.
Find Melanie Sloane Online or Text at 801-332-9698
For Investors & the Fund – Learn how the Fund works and book a call
For Borrowers & Deals – Get funding and support for your next investment
[00:00.2]
If you want your books in order, work with a true bookkeeper. Like, work with somebody who truly understands what it means to go through a sale. Your bookkeeper is not the one providing the reports. I can almost guarantee the bookkeeper is not willing to go through that level of service.
[00:18.9]
So make sure that who you're working with can support you in that. And hands down, one of the biggest things I think we see is a lack of processes. And you'll see that in the financials because you'll see a roller coaster. Profits go down, the owner gets hyper focused and hyper involved.
[00:37.2]
Profits go up, he steps out a little bit, starts to lose focus. Profits go down, he steps back in. We see a roller coaster. If you have processes in place and you have consistency, you will have more predictable profits.
[00:55.1]
Most people think saving money is the answer, but the truth is saving only gets you to zero. Join Mike and Zach as they flip the screen from saving to earning from zero to unlimited potential. Welcome to Save to Zero.
[01:13.6]
All right, everybody, welcome to episode number 15 of the Save to Zero podcast. We have a guest on today who I'm really looking forward to having on as a guest. She is in a mastermind with me. She came to my town here in the Rockies when he had a mastermind last year, and she was the only adult in a group of 15 people when it came to riding side by sides.
[01:36.5]
And somebody decided to hit a cattle guard and take one of the tires off of the, rented, side by side. So she was the adult in the group and coordinated everything. So everybody was okay. Am I right or am I right? Okay, well, there are some truths to that, like, adventure, but I choose life every day.
[01:59.2]
So we have Melanie Sloan from Iron Horse Consulting. She offers fractional CFO services. And we are going to talk, as we do in all of our episodes, about growth versus saving, because it's easy to grow, because you can grow infinitely, but you can only save to zero. Absolutely.
[02:17.9]
So, Melanie, after that intro, tell us what do you got going on? Tell us a little bit about your background. Let's start with that. How's that? Oh, sure. So I started offering fractional CFO services. I started Iron Horse Consulting after the plumbing and H Vac companies that I worked for sold to a private equity firm.
[02:38.9]
I stayed on with a private equity firm for about six months, and then I was like, yeah, this isn't for me. I'm kind of done with corporate. I prefer the small business. I also really liked being able to impact business owners and help them drive and improve their company.
[02:56.1]
So I had enjoyed what I was doing with that company. And, and I just felt like when you're in a private equity or working for a corporation, let's be honest, unless you're really up there, you just don't have as much impact. That's the reality of it.
[03:12.5]
You can do the greatest job that you can in your position, but really driving the company happens at the top. So I wanted to be back with smaller companies. And as I thought about it, do I go work with somebody else? Do I do my own thing? I was like, I'm going to go do my own thing. I want to help many business owners, not just one here and one there.
[03:32.3]
So that's really, really kind of where I started. Okay. As far as being in corporate, I feel your pain. I started my first company at AH23. And the reason for that is it was survival, because this don't always work together for me.
[03:49.9]
So I would not last very long. The last job I had when I was 23 years old, and, at that point I was running a group home for developmentally disabled men. And then I had worked in a psych hospital, before that.
[04:05.8]
And then I also counseled, sexual abused kids for a couple years. But in each one of those, our supervisors were not involved day to day. You only saw them once a week. So I could get along with them very well. If I had to deal with a supervisor every day, it would not go well.
[04:25.3]
You just don't have the freedom to make as many decisions as you would like sometimes. Yeah. No, you don't. Absolutely. So what has the W? Well, Zach, you tell us you were a W2 person for a while. What do you think now that you were W2 for all those years?
[04:41.4]
Because you're kind of the oldest guy here. What is your thought about W2 versus, owning your own company? Oh, it's completely different. I mean, when you're a W2, for better or for worse, you've kind of got that lane that you've got to stick in.
[04:57.2]
And that's something that I got really tired of, was just having no, what's the word? Like, it wasn't very motivating. You had, like, your lane to do, and you could make decisions. And, you know, they love to say, oh, you're empowered to do this and that. And what they mean is you're empowered to get permission to do something.
[05:14.4]
And it was just, it was just. It was so draining. You know, you'd work on things and, oh, but we can't do that right now. Okay, well then why did you ask me to put this whole like, proposal together for this project? And I just got so tired of it. And then when you're in your own business, for better or for worse, everything stops with you.
[05:33.3]
You make the decisions, you control the outcomes and yeah, I love it. Oh yeah, you eat what you kill. You don't kill, you don't eat. Yeah, it's very simple. So Mal, how has the transition been for you into W2? I'm sorry, into business ownership?
[05:50.5]
Kind of give us a 50,000 foot view of what was like for you. Oh, man. There are times that I look back and I am somebody who's a really conservative kind of a person. Like W2 gives you a little bit of security. Now, as a W2 employee, you can be fired or terminated almost for whatever reason.
[06:10.6]
But I always felt like as long as I perform really well and as long as I'm doing what I'm supposed to do, I'm probably not going to be let go. And then I became a mid level manager and I was let go, right. And I was like, oh, never mind, there's no more security here.
[06:27.6]
So I did at least learn that lesson. It's not as secure as maybe we think it is or as we want it to be. But then when I stepped out on my own, the freedom in my day to day was the first thing I noticed. Like there was one morning I remember going out and having coffee on my deck.
[06:44.5]
And it's not that I didn't have client meetings, it's not that I didn't have anything going on. But I had a half hour and I sat on my deck and I had coffee in the morning. And I was like, what? It's not like, I know I still have work to do. It's not quite the weekend where I don't have any pressure.
[07:02.4]
But, what is this? And that was probably the first thing I noticed. And that is such a tiny little thing. I will tell you. I am very, very busy. I don't go have coffee on my deck most mornings. But the ability to change and impact my schedule is great.
[07:20.0]
The other thing that I've lear is when you are in a corporate office, when you are working as a W2 employee in a business, your day is structured kind of at the demands of what everyone else is doing and what they need.
[07:36.7]
And your energy or what your brain might want to focus on in that moment may not align with what you need to be doing. So it's almost this Constant battle of, being motivated and motivation might be the wrong word, but being motivated to work on the thing that, that you need to work on, because ABC or you have this meeting coming up or whatever, regardless of whether that's where your brain is or not.
[08:03.4]
Being my own owner, I can choose when I work on the projects that I work on according to the energy, the mental energy that I have. So if I feel like today is a day where I have really good communication skills, I feel like my brain is working in that way.
[08:23.5]
I can craft email, can work on client communication, I can pull together processes because my brain is working like that. I can work on those details on days when I am numbers focused because I do love the numbers and I feel like I really want to get into the details, I can pivot and work on those projects.
[08:45.3]
So I like having that freedom and that flexibility to be able to do what I need to do in the timeframe that works for me. Does that make a little sense? Makes complete sense for me. The term that I've heard used before, and I use it lightly when I refer to myself is they talk about the genius zone.
[09:05.0]
So when you're in your area that you're focused on and you want to be in that area, that becomes, I guess, your genius zone. It's your sweet spot, it's where you want to be. And there are tasks that you have to do and there are tasks that you really want to do when you can be productive.
[09:21.5]
So for me, I try not to take any phone calls or meetings in the morning. I try not to do anything before 2 o' clock is what I aim for. And I just want to be in my zone with my phone off. I generally don't take calls or respond to emails.
[09:37.3]
And I want to be in that zone because that's when I can be most productive. Because I'm a morning person, I generally get up at 3:30 or 4:00 clock in the morning. So I like the morning. I'm not an evening person if I stay out till 9 o'. Clock. I mean, holy cow.
[09:54.8]
Thrown off with the universe. You're tired, Grumpy Mike. Is that it? Oh, cranky pants, big time. And I think too, entrepreneurs tend to kind of like, at least me, kind of get bored easily. And it's fun to wear all these different hats and like, oh, then I get to do some of this.
[10:10.1]
I get to do some spreadsheets. Now I get to call people. Now I get to do this. It's really fun to not have like a Tight job description that you have to follow and you can do all these different things all day. I love it when I want to dabble in marketing. I can go play a little bit in the marketing world.
[10:26.6]
In the real, like in a W2 job. They would never let the accounting person play in marketing. Let's be real. Exactly. Exactly. Right. Excellent point. Excellent point. Although, to be fair, they wouldn't let the marketing people dabble in accounting.
[10:42.0]
And I fully subscribe to. That's true. They probably would. That's funny. Zach and I are looking to take on a new team member and, the recruiting agency, sorry, the recruiting agency that we have looking for somebody.
[10:59.7]
They sent us over the wrong five videos, to look at. Because I'm looking at these people and they're all creative people. I'm like, who? These people aren't going to do well in the administrative task. They don't know how to color within the lines.
[11:16.3]
We need somebody who can help us do loans and manage checklists and stuff like that. That's not very creative. That's being somebody who's very organized and systematic and. Yeah, yeah, that's just not going to work very well. Right person, right seat. Yeah, exactly. Yeah. It's like me.
[11:33.9]
You don't want me working at the un. It won't go well at all. So let me ask, as a fractional CFO and with the, advent and more common use of, AI, how do you see that going?
[11:53.3]
How are you using it in your business? What is your favorite AI to use? Have you not jumped in yet so much? Answer those questions. I love Claude. Claude is my favorite coworker. Now, I use Claude not for uploading financial statements and interpretation.
[12:11.8]
Because I will tell you, AI doesn't do great with the data. Not yet. I think eventually it will. But if you upload your financial statements and you ask questions, some things could be off. So I'm very hesitant about leaning into that aspect.
[12:28.9]
But when I say that Claude is my favorite coworker as a business owner, as a solopreneur, the one thing that you don't have is coworkers to bounce ideas off of. You don't have anyone that you're collaborating with and you can say, hey, I'm thinking about doing this.
[12:45.1]
Does this sound about right? How does this look? How would you. You change this? There's nobody there to proofread things for you. So I really lean into that. I also am starting to use cloud. I'm a little behind in the AI. I'm not the first person that jumps into new tech.
[13:01.1]
But I'm starting to use it for like PowerPoint and slide presentations and document production. So as far as like I need to create this kind of a document and having it go through and create it and it will pull in my brand colors and my brand guidelines now and I'm really liking that.
[13:20.3]
And I think that as we continue to go that will also continue to scale. Now where we are now, AI is incorporated in QuickBooks and in many accounting softwares. There is a feature of AI.
[13:35.7]
There is what I find is again like many things with the data, it's not great, there are many errors and it still needs a lot of human touch points. But I think as we go, bookkeeping in and of itself itself is probably going to become less and less of a personal task.
[13:56.5]
AI will get better and better and better with that. So that will collapse the timeline that it takes to have your books up to date and accurate. I think that fractional CFOs will start to use it as a again as a second co worker to kind of balance that thinking.
[14:17.2]
Will it develop budgets? Will it do some of that forward thinking? Yes, to a degree. But it may not know the complexities of this plumbing business A versus a plumbing business B that are in two separate states and therefore have unique things.
[14:35.7]
So there's still going to be the individual knowledge and how the day to day works. That part is going to be still important, still critical, still need a person, the data aspect. I think AI will quickly catch up and be a support in the day to day.
[14:57.0]
Gotcha. That makes a lot of sense. That makes complete sense. So I'll switch gears a little bit because you said something, you said solopreneur. What are your thoughts down the road? Do you want to stay solo? Are you looking to grow?
[15:12.6]
Where are you going with that? My ultimate end all be all goal is I plan to grow and scale my company to a particular size and then I want to sell it and what that looks like. I don't have an exact plan yet that is still multiple years down the road.
[15:31.0]
But as I coach all of my business owners, if you plan to exit your business someday, then your business eventually will run without you needing to be in the day today. Right now, like I'm still small, I still have to be in the day to day.
[15:48.2]
But whether you want to turn it over to a child that's growing up and wants to be part of it, whether you want to sell it to somebody or if you just want it to Bring you money and you want to go do something else, you have to be able to step out. So you have to build it towards that goal.
[16:05.9]
Excellent point. Are you. As you grow it, and I understand you said it's down the road. Have you got a plan in place that by this date I should have this and by this date I'm aiming for this. So that you have a plan, or have you not found that out yet?
[16:21.2]
I have a final end date that right now it's like that would be my ideal. I'm only just over two years in, so I haven't bridged that gap yet. I want to see how this year goes to make sure that I'm on track with that final end date and timeline still being realistic.
[16:43.1]
And then, yes, I will build backwards to determine all of those details. Mel, what I'm going to do is I'm going to stretch your brain a little bit and I'm going to change gears again. So when I sold my first company, I sold it to a public company. And I know what that was like.
[17:00.4]
We actually had to sign because it was myself, a partner, and the buyer, believe it or not, we signed documents. That's in the old days when you actually signed everything. And, my attorney actually made us use blue ink to sign because then you knew it wasn't copied. This is back in 1998 when the dinosaurs still ruled the earth.
[17:21.0]
So when we signed documents, we had three complete sets. And they went from the floor to my knee, each set. And we each had to sign a couple hundred pages. Oh, my heaven. I had carpal tunnel and I had to do it three times. We had to sign each person's version. Oh, yeah.
[17:37.0]
It was a lot of fun, either signing or initialing. So I know what was involved in that. I know that, they were about to buy us at one point and they had a problem, so they had to put it off. And it was a real involved process. Selling to a public company.
[17:53.8]
What was it like working with a private equity company, you know, from a 50,000 foot view. So I can't tell you about the negotiation or the owner side because the owner was part of that. I can tell you about the due diligence side. So when we.
[18:09.8]
We had a broker that we worked with when we went through the sale. And so the company that was purchasing us would speak with the broker and the broker was kind of that middleman that filtered and buffered all of the demands or all of the needs.
[18:25.8]
And so they would filter it to us. I uploaded all the reporting, all the information and filtered it back through them. Now the really cool thing, or I think it was really cool, was because I had so much time with the company, I had such an extensive history and I knew where we had started and what had changed and impacted to where we were.
[18:51.4]
So some of those questions are, well, if your financials aren't where we want them to be for the full prior 3 years of data that they're going to pull, they ask you basically to tell the story. How did you get where you are?
[19:07.1]
Why are the financials supporting this story that you're telling us now? When we look at the numbers and that story wasn't supported two years ago. And so I was able to say, well, we implemented this process and we started offering this service and we started looking at this differently and we started measuring this.
[19:24.8]
And because we measured it, we implemented abc. And so I was able to tell the story of why the financials were the way they were as I filtered that information through. Now what does that look like? You still have to run your day to day. Right.
[19:41.6]
And nobody else in the company knows that you're selling. So your day to day runs. And then early in the morning, this is when we started going into the office at 4, 30 or 5. People didn't start showing up until about 7. So we had a couple of hours in the morning when day the leadership that was aware of the sell, they would meet, we would talk about the reporting, where we were at with different things.
[20:07.0]
And then in the evening after I went home, I continued pulling reports. So for me this was seven days a week and I was working 60, 70, 80 hours through that due diligence process because I wanted to make sure that I wasn't just feeding them reports.
[20:25.2]
I was telling the story that supported the owner and what we had actually accomplished. That was not easy. Definitely not. I was having flashbacks to the sale of my first company.
[20:42.8]
The second one is easy, the second was smaller, was much easier. But the first company, yeah, I was feeling your pain there because you don't want to spook the employees. You got to run the business. But then you're still trying to meet their needs and how quickly they need stuff.
[20:59.0]
And those companies generally can be very detailed and they want to move fast. Want an answer? I want it now. And because they're in their genius zone. Yes. At 2 o' clock in the afternoon and you're in your marketing zone. You're like, whoa, hold on now I'm doing something else right Now I've got to help employees, but I need it now. Yes.
[21:17.8]
Yeah, it's very much. And I. Even so, when we went through the due diligence process, we processed information quickly enough that they actually moved up our close date. And if you've ever sold a business, you know that's not very common. You don't move forward close dates, you move them back.
[21:34.9]
So they actually moved it forward because we processed the data quickly enough. But in that, we just kept saying, man, if we only would have known this and if we only would have known that, and if only, if only, if only. And that was really the key impactful thing for me, was all of those if onlys.
[21:53.0]
And what if I could help other business owners see that? If only. It's interesting you say that, because I've become aware in the last three months that Alex Hormozi has a partner. And I did not know that until I heard him on a podcast and I found out he was Alex Hormozi's partner.
[22:11.5]
And he actually has had not one, but two $1 billion exits north of a billion dollars. So when I heard Alex, like, I know him, right? Like we're friends. When I heard my homie Alex talk about him, when I heard him talk about him, he said the reason he hired him or took him on as a partner is Alex was very honest.
[22:37.4]
He said, because I've never built a billion dollar business before, I need someone that knows how to do that. Which was very cool, very humbling, and it was interesting to hear him say that. But the point of what I'm saying is, after he sold his first company, he said he learned with his second company, before he was ready to sell it, he would go to private equity as if he was going to sell it and have them run through all of their processes.
[23:08.3]
So he knew what the private equity was going to look for. So he knew where the weaknesses were. And then he shored those up. He would go to a different private equity and do the same thing. So that by the time he sold, he had everything ready, all the answers they were going to want, and he had, strengthened all of his weaknesses.
[23:27.9]
I thought that was brilliant. That's really smart. And this is why he sold a billion dollar company and I never have. And that's why he did two of them, and the rest of us are here, going a billion dollars twice, going for his third.
[23:43.4]
That's amazing. It is fantastic. And like, when I think about doing that, to go through that level of due diligence, Multiple times. Like that is a really heavy lift because it's not just, hey, here's my financials, and you walk away.
[24:01.2]
It's financials month over month over month and all of the data that goes behind them. It is the most intense reporting. Sorry, I'm having flashbacks. I loved it. I would do it again. My ops manager, my first company, the stuff that we had to go through in order because again, you sell them to public.
[24:24.7]
They had their CFO come in, they had two accountants come in and they were at our office and you're just giving them document after document and they literally, because it's a public company, they're going down to the penny. No, you have to explain why this is off. And I've spoken with people afterwards and they said, no, you can have some.
[24:43.5]
It doesn't have to be that detailed. You know, pennies here, there don't matter. And obviously it's a little more than pennies. But no, they wanted everything they want because we didn't have audited financials, in our company. So they had to go really, really, really deep.
[25:00.8]
Yeah, it was very interesting. Tell us, what type of clients do you think you work best with in terms of. Is there a specific size that you're finding? Is your wheelhouse, like, you know, an owner and 10 employees and a million and a half worth of revenue, or 10 million in revenue and 75 employees.
[25:22.3]
Where are you finding your sweet spot? Or have you found it? So I would say we're still fleshing that out. Where we are right now, based on the clients that I have and what I feel we work best with. First and foremost, if the owner isn't engaged in the business and if they aren't really caring about what the reporting is saying, what we're trying to coach them on, it doesn't matter if they're 500,000 or if they're 50,000.
[25:50.2]
Doll 50 million, they aren't going to be a good fit for us because otherwise, like, what are we? Why are we even here? So definitely needing engagement from the ownership team, whether it's whoever that might look like or whatever that might be from there, any clients that are above like 500,000, if we're talking trades based businesses, anything above 500,000 we can work with.
[26:19.8]
What is the ideal? Usually when they get to about 2 million, all the way up to 10 million is when they're leaning heavily into that fractional CFO place. After you get above 10 million, then you start evaluating, do I still need the fractional do I start to bring some of those pieces in house?
[26:43.1]
Maybe we're taking somebody from in house and they want to go back to school and we're sending them through school and we're using the fractional CFO as a mentor and double checking work so it kind of of it can change and transition as the company grows.
[26:58.9]
And the reason that I say the lower range of about 2 million is I really find that when you have an owner who is in the truck and they're trying to drive the day to day, you're really just driving revenue until you start bringing people on board with you and you really have two, three, five people that are also in the field working under you, you're able to maintain control enough that you are managing your financials.
[27:30.2]
It's easy to say, hey, we go to this supply house, this is the process that we go here and we do that and it's easy to manage that. But as you start to pull out of the field, you have less control over the profitability because now that profitability is reliant on the people that are in the field.
[27:49.4]
So you need somebody who's monitoring and managing those financials and able to interpret that data back to you that says this is what we're seeing and these are the impacts that you need to make. Have you done this? Have you changed this? What about this? Have we negotiated contracts with our vendors and our suppliers and where are we getting the best rates?
[28:10.1]
And really helping advise on that side in addition to building budgets and helping with that, forecasting so that you don't end this year the exact same you were last year. Or what we really see is the revenue scales and the profitability disappears and we want to prevent that before we have that happen.
[28:33.0]
Absolutely.
[28:37.2]
If you're losing money, you could go fishing and make more money. Yes. Nothing is better. Yes. It would be better to stay home than lose money. Yes, absolutely. Or as I always say, and it may not be the kindest way to say it, but it's like I paid that client for the opportunity to come do that work.
[28:57.5]
Yes, yes. Yeah, that's true. Yeah, look at it that way. And it's a lot. It changes how you think about it, for sure. Is there like when you work with, you've worked with so many different businesses at this point, is it, is there like a common theme of a couple things that, you know, when you start working with a new business that you find most of them either don't have in place or maybe even it's People that want to work with you, but they might not be ready for it one way or the other.
[29:21.1]
Like, what are some of the biggest gaps you see? Some of the, really the biggest gaps that I see is what I would consider a shortfall. A lot of businesses have their CPAs doing their books and like, I might get banned here, but I will tell you, CPAs doing bookkeeping creates challenges for me.
[29:45.2]
So when we are helping with a fractional CFO standpoint, there is managerial accounting. We set up the books and we look at the books on how to manage and run your business. Managerial accounting books will give your CPA the detail they need to file their taxes.
[30:06.3]
CPAs do books according to taxes. I don't know a single person that went into business to pay taxes to the government or to have the government tell them how to run their business. You mean I've been doing it wrong all these years?
[30:22.3]
I don't want to pay taxes. We all have to pay our fair share. But when, like you didn't start your business to say, the government's going to tell me how to run my business. You started your business with whatever concept and idea you had and that's your passion and that's what you want to do and drive.
[30:40.8]
So set up your books to manage the business. And CPAs don't really set it up like that. So then when we come in and when we're asking questions about different aspects of profitability, well, they have their direct wages, which are the guys in the field lumped in with their office wages, which are the people in the office.
[31:02.4]
And now we don't really have clarity. Well, the CPA and the irs, that's totally fine. Wages are wages. Right. To run your business, you care about that separation. So we're just creating detail in a way that you can read it or that we can help you read it to run the business.
[31:23.0]
And that's one of the biggest shortfalls that I see. It's interesting you say that because I know a guy who at one time was pretty big in, the real estate space. He has since exited it to a large degree. And what he said was that he always had three sets of books.
[31:42.8]
And what it was is it was the same data, it was just parsed out differently. So he had a set for himself, a set for his accountant, and his asset for when he went to the bank, because they need different information.
[32:01.2]
He said now. And he made this eminently clear. I'm not telling you that you fudge any Information, you just find out how they need to see it. So what you're doing is you're giving this person a hamburger medium well, this one rare, and this one well, that's it.
[32:18.0]
You're just giving them the hamburger the way that they want the hamburger. And I thought that was a very smart thing. I had never heard that before. Built and sold two businesses on my third and hadn't heard that before. So I thought that was very interesting.
[32:33.5]
You'll hear people talk about making their books or making their business bankable. And part of that is how is the data presented? And yes, the IRS wants to see things differently. They don't care about as much data in detail.
[32:49.9]
What does the bank care about? The bank cares about where you're at, where you like some of that history and where you're going. What are the projections? So there is different detail that you need in the business and how you run the business and who you're talking to. Exactly.
[33:08.5]
That makes complete sense. So my understanding, are you also part of a mastermind, Opus and Gold? Do you get involved with that as well? I am from a supportive role. So I'm not part of the Opus and Golds group itself, but I do work with them on a couple of occasions or throughout the month for some various financial coaching with their clients and talking through some of those aspects.
[33:37.9]
They will do like some in person events and if I attend those events, it's usually to do some financial training for their clients or whoever is at that event. Like at this last event that they did, we did a whiteboard session that helped people understand how to price themselves properly.
[33:58.4]
Like how do you create your price structures to make sure that you're staying profitable as you grow? Because Chuck in a truck, one man in a truck just doesn't need the same dollars per hour as somebody who has an office of 10 people.
[34:17.5]
The office of 10 people has different overhead than somebody who has an office of 60 people. So there's different structures. And how do you make sure that you're scaling that properly? I'm just curious if you can talk about that pricing a little bit more because I've got.
[34:33.4]
I, know a lot of other business owners and it seems like a real common theme that people have is they're undercharging for a lot of stuff and they're death afraid to raise their prices because, oh, what if I lose customers? And like, what do you, what do you see with people when you guys talk about that, that pricing and how that works for people?
[34:53.4]
There are, there is a lot of hang up in our culture about pricing and it comes from a variety of different ways. So one thing that you frequently see from a service expert or a salesperson person is that they sell as though they were the ones buying.
[35:13.8]
And so they're selling with their own wallet is kind of what you've heard or what the term is. And the fact is that that may be true. The person you're talking to might be on a very similar budget, but you don't know their finances. And I'll be honest, some very wealthy people that I have known in my life live in very modest homes and yet they want the home maintained very well and will spend the money necessary to do so.
[35:44.3]
So why would you, if they have the money, why would you sell with your own wallet? No, you make the recommendations according to what the best recommendation is and they can choose the level of service that they would like to receive in the same vein.
[36:01.8]
So then as, as you start to teach them and they start to learn and grow outside of this, then when you good service experts and they go out and they start their own business, they now understand, okay, so I'm going to recommend the best service and I'm going to give my clients options.
[36:18.2]
But then they don't understand that just because they are one person and their overhead and their take home is very minimal, they don't need a lot of money. That doesn't mean that they should underprice the quality of service they're providing.
[36:36.4]
There is a quality that they provide and that has value. So don't price yourself too low because you don't have the overhead and you don't think that you need it. Recognize that the market will support this level of price structure and you provide that level of service.
[36:58.1]
So why can't you request those prices? There is the same level of pricing there. Absolutely. What I find is that I, as a consumer, I won't go with the lowest bid. Yep.
[37:13.4]
I assume that the lowest bid is also the lowest quality. Yes. Something's wrong with it. Yes. It could be the lowest quality or they're going to say, oh, I didn't understand. No, you need to add this on if you want that.
[37:28.6]
So you get the Nate and switch. Yeah, exactly. Oh, you want, oh, you want a bun with that hamburger? Well, that's why it was only 12 cents. Oh, and you want a bottom. I thought you just wanted a top, you know, and no, absolutely, I don't want to go with the lowest price.
[37:46.7]
Yep. What do you find? I'm Sorry, Zach. Go ahead, bud. I was just going to say, going along with that, I think that a lot of people, especially like you said, when they're just Chuck with a truck, people value the fact that they can call them and speak to the owner and they're not getting passed between all these different things.
[38:03.2]
So there's a lot of value in being a small company that can give good service. I mean, that's how Mike and I do our lending. And that's another reason why we aren't the cheapest. And that is exactly it. There is value that you don't even think about just by being in that nature.
[38:20.6]
And why wouldn't you charge appropriately? Now, I'm not saying overcharge. I'm not saying go be the highest price like there is. There is value in that, though. And make sure that you're charging appropriately for your time and your value. Absolutely.
[38:37.5]
This way I think of it, I'm giving up part of my life which is finite to do this. I want to make it worth it. Now, ultimately, I don't know what the dollar value is on a minute in someone's life, but the point is, make it worth my while. Otherwise I'm not interested. I know with.
[38:54.4]
Zach and I are, in our lending business, if somebody calls and they say, we want a $40,000 loan. Yeah, no, thank you. Appreciate the opportunity. We want six $80,000 loans. No, thank you. Appreciate the opportunity.
[39:11.1]
It just takes as much work to do an $80,000 loan as it does to do a million dollar loan. Well, I'll do a million dollars. We do 150, $200,000 loans all the time. We like million $2 million loans because they take just as much time. Time, but they have more zeros on them, so they have more interest that they're going to pay and more points.
[39:31.0]
And it's just. It's more profitable. So. Yeah, absolutely. And it's funny because you talk about price and people. I think of this and I forget which company it was. So don't quote me on this. I want to say it was Rolex. And somebody asked why they don't advertise in, they don't advertise in Time magazines, magazine or something like that.
[39:55.3]
And the CEO simply said, well, because our buyers, our customers don't read Time magazine. Have you ever seen a Lamborghini ad on tv? No. No, you haven't. It's not.
[40:10.7]
They aren't advertising. It's not that they aren't selling. It's where is their Customer base. And honestly, by advertising on the super bowl, are they really reaching their target audience or is their target audience in a different place and time?
[40:28.3]
Well, on the super bowl, they're worried about, you know, people that are watching the super bowl in the last couple anyway. One I can think of in particular is they're worried about Taylor Swift and whether she's still in a relationship with one of the guys in the city. Chief. And that's the big lead up going to the Super Bowl.
[40:45.6]
Who cares? Yep, that's who's watching the Super Bowl. Very true. Yeah, who cares? What do you see in smaller companies is their biggest area that they could improve in order to increase profitability and have the books the way that they need in order to be able to sell in five, 10 years down the road?
[41:09.7]
Oh, those are multiple facets. Multifaceted answer here. Okay, let's hear it. So, one thing, if you want your books in order, work with a true bookkeeper. Like, work with somebody who truly understands what it means to go through a sale, what those books need to look like and what they're going to be asked.
[41:36.0]
When you go through that sales process, your bookkeeper is not the one providing the reports. I can almost guarantee the bookkeeper is not willing to go through that level of search service. So make sure that who you're working with can support you in that. The second thing, when you go to sell, they want owners that can step out of the business and the business can still run well.
[41:58.7]
The only way the owner can step out of the business is if you have processes in place. And hands down, one of the biggest things I think we see is a lack of processes. And you'll see that in the financials because you'll see a roller coaster.
[42:14.1]
And what happens? Profits go down, the owner gets hyper focused and hyper involved. Profits go up, he steps out a little bit, starts to lose focus. Profits go down, he steps back in. We see a roller coaster.
[42:29.5]
If you have processes in place and you have consistency, then you will have more predictable profits. And in order for you to step out, you have to be able to prevent that roller coaster. And processes get you there.
[42:45.0]
The second part of that process is accountability. And I know that's kind of like a scary word, but you can put a process in place all day long, but if your people aren't following it, you might as well have not even written it down.
[43:01.4]
So you have to have accountability to those processes. And we can have hearts and we can be compassionate and we can respect real life variances, but we have to have some real processes in place, accountability to that.
[43:17.6]
It helps protect your financials. You've got somebody that's working in your financials and now you have a platform that you can actually talk to somebody about. Okay, I think this is great. I think we did a great job. I appreciate all the information, Mel. Absolutely.
[43:34.0]
If any of our listeners, the 6 billion that we have, if any of them want to get ahold of you, what's the best way to do that? And we will put it in the show notes as well. Awesome. So I do have a website. It is ironhorse.consulting.
[43:50.4]
there is no.com or other. Just ironhorse.consulting. or you can text me, I'll even give you my phone number. It's 801-332-9698. Either way is perfectly acceptable.
[44:08.3]
Okay, fantastic. All right, well, we really appreciate having you on. I knew this was going to be great and it was. Thank you very much. I really appreciate the opportunity. Opportunity, absolutely. Thank you for your time.