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  • Writer's pictureYaakov Citron

Bringing Out Your Business’ Best Through Fractional CFOs with Gershon Morgulis

Updated: 3 days ago

Welcome to the Solo2CEO Podcast. We are fortunate to have our guest for today, Gershon Morgulis. He is the founder and principal of Imperial Advisory, a business consultancy that provides CFO services for companies of various industries, acting as advisor to CEOs and CFOS about matters relating to day-to-day operations to long-term strategic planning.

Gershon, tell me what you do. 

I run a company that provides part-time CFOs to growing businesses. We work with and for CEOs where we help them make better and more informed business decisions.

What is the importance of a CFO to a small or medium-sized business?

Business owners face challenges in different areas. At the start, they may work well in marketing, but that does not mean that they are good at everything. As their business grows, they add to their responsibilities the job of a CFO, which could be very taxing for them. They realize the need to have someone who will take the role of a CFO. That is where our services come in.

How would someone know when it is time to get a fractional CFO?

Foremost, as a business owner, you should have access to basic information. If you do not have basic accounting data, you may need the assistance of an accountant, a bookkeeper, or a controller.

If you have the information and are unsure how to go about your business, it is sensible to talk to someone on the finance and strategy side. That is where we come in.

What is the importance of having accurate business data?

We often hear businesses claiming to use certain business software, but the data in it turns out to be incorrect due to wrong data entry or automation errors.

Inaccurate accounting information results in the data being unsuitable for making informed business decisions. In essence, while this approach may help with tax filing, it does not necessarily accurately align revenue and expenses.

The first step to a successful business is having true business data. For start-ups, we work with designing the plan. You start doing something you love, and your business is fun at the start. As time goes by, running a business relies on proper operational and financial data, because it is tough to make decisions without them.

How would you describe a business expense?

When starting a service-based business as a sole proprietor, your main focus is the income and what your accountant advises regarding expenses. It is not unusual for some business expenses to mix with personal ones. For example, the use of your car for business activities. You might need to reimburse the user for their mileage and travel expenses.

For larger businesses, you should recognize your true expenses to avoid mispricing and non-consideration of significant business expenses.

How did your business come to be?

I studied in a business school and eventually worked in a corporate setting. I had a variety of jobs in government finance and government bonds. People would come to me for assistance in their strategy planning and business modeling. I enjoyed working with people especially so that I felt that what I was doing for them was helping their business. It was a rewarding experience for me.

It came to a point when I had to find a new job. I tried doing a full-time job by making myself a business consultant. Soon after, my clients started calling me their CFO, and that started my journey.

I became friends with a former CEO/CFO of a billion-dollar company. He was doing consultancy for businesses. We worked together for clients and became partners. We built the business by bringing in other CFOs.

What are some of your learnings in your journey of building up your business?

I learned that business owners should be mindful of using their brains and trusting their gut feelings. I experienced hiring people who were not the “right” people, thankfully not from the CFO side but from the administrative side. Over the years, I hired a variety of people, some better workers, some were not. I learned that the problem could be sensed during the interview. Try not to hire out of desperation — don’t ignore red flags.

If you are doing projects, be careful about the scope of services. Recently we found out that going for a low offer can be a lot easier for people to commit to because for them it is not a big commitment, and they tend to not make a long commitment.

How Do You Price Your Services?

There are three ways of pricing services - hourly billing, flat-rate billing, and value-based pricing. Previously we have been doing hourly billing, but we are transitioning away from that. We are now switching back to flat-rate pricing. Our rates are calculated based on our extensive experience.

We aim to eliminate risk while solving the issues that hourly billing brings. We recognize the risks it entails, and we implement strategies to mitigate them.

If you want to do value-based pricing, you have to come up with a plan to identify what is valuable to the client. The challenge with value-based pricing is when other players in the market provide comparable quality products or services and are charging for half-price from what you are charging.

Let’s talk about marketing. How do you introduce yourself to clients?

A major part of marketing is getting to know people who need our service. But more than that, it is getting to know the people who know these people. It is just like a networking business.

We hire companies that help us find leads and book them on our calendar. Also, we are starting to utilize traditional online marketing.

People who engage with us from any channel - whether networking, leads, or online marketing - follow us on LinkedIn. These are ways for our networking contacts, real and potential customers always to keep us in mind.

How do you utilize videos as your marketing strategy?

We have a webinar series on financial-related topics and top disciplines of interest to our client base. It is an ongoing education series we give once a month. This is a tool to educate people about what we do.

We are working on turning some of our video clips for social media use. We are setting up our YouTube channel, and on LinkedIn, WhatsApp, and other social media platforms so our followers can see more information from us.

What is more interesting is that people who speak on the webinars also tend to become referral sources.

This is so far our experience with videos, but we have not used video ads and promo videos yet. I like videos, but I am always hesitant to spend marketing dollars because I am a conservative type of person.

Making videos for clients saying we are amazing would not impress them. Since our business is a trust-based service, putting on an educational video series is valuable. That is what our webinar series is all about, they are made to educate our target referral sources and to create and build trust with clients. To build trust and credibility, I think client testimonials on videos are a great help.

What Are Some Tips You Would Give To Businesses Who Are Not Ready To Hire A CFO?

You have to know your numbers - your business financial data. If you don’t know your numbers, you cannot do long-term planning. As you start your business, it might work for one person for now. But as you grow, things may be complicated and more business risks may arise.

You can take risks, but you have to understand the risks that you are taking. You have to know if something is not right and not wait until it becomes a catastrophe. If something does not seem right, do not wait for it to become a big problem. We have been working with businesses with long-standing mistakes, some in trouble and some doing great.

Businesses should look for red flags, like losing money consistently and borrowing to pay employees. While it is possible to recover, you should not wait for things to be really bad, because the recovery can be harder and painful.

How Do You Look At Business Revenues And Expenses?

You have to understand your business revenue and expenses. See how much money is left after deducting direct costs related to core services. The excess can be allocated to cover marketing costs. Marketing can be seen as a future investment. But you need to see if you have available cash to fund this.

The money left after deducting core service costs from your revenue is what you use to pay for various expenses, including interest on loans, overhead, and your salary as a business owner. Any remainder after these is your profit, or there may be other uses for it.

The key is to understand if you are getting enough income after revenue and core service costs to support all the aspects of your business. If your revenues cannot cover your salary, then your business is operating at a loss.

Why Would A Business Hire A CFO?

If you lack something important for running your business, I think hiring a CFO is necessary. This becomes obvious when a business reaches a point where it recognizes the need to have valuable insights for it to grow, improve, or succeed.

There are decisions that a business owner may need clarification on, so it is beneficial to have someone else provide input and perspective. We take care of the financial aspect, while he can focus on where he excels - motivating people and focusing on their core competencies,

Also hiring a CFO can mean safeguarding your business and its potential. Imagine the value of recognizing and mitigating risks before they become major business problems for you.

What Are Your Thoughts on Hiring And Delegating Tasks?

I enjoy learning from people who know a lot and are generous to share. That is why I have a partner who has decades of experience, more than I have, and has lots of wisdom. One time my partner suggested that I get sales training. That’s when I hired someone who taught me an amazing process that helped me make great sales calls.

One of the first hires I made was a couple of interns. I also brought someone to help me with basic finance work. Ultimately, I hired people to do marketing for the business.

Every day when I go to work, I think of tasks that I can delegate to my staff. It is important to know because my business is expanding. While it is true that you are great at doing tasks, you cannot do all things by yourself. That is why I assess who has the knowledge and skills to handle specific tasks.

I delegated some day-to-day marketing responsibilities to my staff. I still involve myself in making marketing strategies, but I want to entrust that role to others soon. I want my team members to grow by letting them do the tasks that I know they are capable of.

We are now in the process of transitioning responsibilities to other team members. We aim to train our people to be effective in their roles. As our business is evolving, there will always be tasks that I need to attend to, but to effectively scale a business, I need to empower others because no single person can effectively handle every aspect of a business alone.

How would clients get in touch with you?

There are several ways to get in touch with Imperial Advisory.

Thank you very much for taking time out and coming to the show.

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