Meredith Nicklas - From Aspiring Doctor to Transformative CFO and Fractional Finance Leader
Jun 21, 2024
Alimond Studio
Unlock the secrets to transforming your business with the expert insights of Meredith Nicklas, the CEO of CFO Solution. Imagine having a seasoned finance leader, with experience at companies like Marriott and Brightview Landscapes, guiding your small business through financial challenges. Meredith's journey from aspiring doctor to finance expert brings a unique perspective on the importance of understanding your financial health, making sense of historical data, and strategizing for future growth.
Discover how Meredith’s experience as a fractional CFO is revolutionizing the way small businesses operate. We'll explore the freedom and diverse exposure that come with being a fractional executive, along with the hurdles of educating business owners about the value they bring. Hear a compelling success story that highlights the transformative power of thorough financial analysis and planning, and glean top-tier financial advice, including the importance of monthly book closures, proactive forecasting, and mastering key financial metrics. Meredith also shares invaluable lessons from mentorship and self-driven learning that have shaped her career.
We also dive into the future of finance with a look at technology and AI's role in streamlining tasks and enabling quicker business decisions, while still emphasizing the irreplaceable human judgment needed for strategic choices. Learn about managing unseen business risks, from proper employee classification to the critical need for insurance and background checks. Finally, gain practical advice on how to turn your passion into profit, ensuring your business thrives and grows sustainably. This episode is packed with actionable insights that every small business owner must hear.
Unlock the secrets to transforming your business with the expert insights of Meredith Nicklas, the CEO of CFO Solution. Imagine having a seasoned finance leader, with experience at companies like Marriott and Brightview Landscapes, guiding your small business through financial challenges. Meredith's journey from aspiring doctor to finance expert brings a unique perspective on the importance of understanding your financial health, making sense of historical data, and strategizing for future growth.
Discover how Meredith’s experience as a fractional CFO is revolutionizing the way small businesses operate. We'll explore the freedom and diverse exposure that come with being a fractional executive, along with the hurdles of educating business owners about the value they bring. Hear a compelling success story that highlights the transformative power of thorough financial analysis and planning, and glean top-tier financial advice, including the importance of monthly book closures, proactive forecasting, and mastering key financial metrics. Meredith also shares invaluable lessons from mentorship and self-driven learning that have shaped her career.
We also dive into the future of finance with a look at technology and AI's role in streamlining tasks and enabling quicker business decisions, while still emphasizing the irreplaceable human judgment needed for strategic choices. Learn about managing unseen business risks, from proper employee classification to the critical need for insurance and background checks. Finally, gain practical advice on how to turn your passion into profit, ensuring your business thrives and grows sustainably. This episode is packed with actionable insights that every small business owner must hear.
Speaker 1:
My name is Meredith Nicholas. I am the CEO of the CFO Solution, which is a fractional CFO services firm, and how I help my clients is really stepping into their business as a part-time financial leader to help them kind of take that function off their plate so they can focus on their business.
Speaker 2:
On bigger things. Yeah, how did you get into this? Were you always in finance?
Speaker 1:
I was. Yes, I've had over 20 years experience as a finance leader in various companies, mostly public firms or large companies. But my unique experience is that I have worked out in the field right not at corporate or at headquarters of these companies. I worked out with branches or hotels because my background is in. I worked 15 years for Marriott and then six years for Brightview Landscapes, but out in the field as a regional vice president.
Speaker 1:
So I have I've always been part of like embedded in the business as a financial leader, and I find that that's what I'm really drawn to is working with the operators on how to improve and grow their business. So stepping out and going into a business on my own where I can help other business owners do the same thing, I'm just really drawn to that. So that's why I'm here. What do you find so rewarding about it? I think when you have those moments with a business owner that maybe has struggled with a piece of their financial health, of their business and you can translate it into a language that they understand it's not accountant talk and that light bulb goes off and they're like, oh, I never thought of it that way or I didn't realize that's how it worked. It's really rewarding, and then when they're like, this is actually going to help me run a better business.
Speaker 2:
It's really exciting, yeah, so explain to me a little bit about the benefits of bringing on an extra person in into these businesses and how that works.
Speaker 1:
Yeah, so I think there's this spot with small businesses where they get you know an owner creates the business and they're wearing all the hats all the time.
Speaker 1:
Yeah, but they're going to get to a size where wearing all the hats is too much for them and they can't really grow the business anymore because they're caught up in the minutia of all the functions, right, hr, operations, finance, sales, all of it. So this is where the point you want to. It's a great point to bring somebody like me in Pick that function that maybe you don't love, and you want to take off your plate and go find a fractional Like the HR things.
Speaker 1:
Right, absolutely. If HR is not your thing, you don't love that part of what you do, then go find a fractional HR executive. If it's finance, because a lot of people will tell you like I'm not a numbers person. So go find someone like me that can come into your business part-time, take over that finance function for you and then help you as a true like a business partner right, and help you lead your business and kind of give you I say I can give you the cliff notes of your finances right. So instead of you having to study everything and understand it, I'll review it, I'll understand it and then I'll tell you here's what you need to know and then we can make a strategy, like if we want to take a different direction with the business.
Speaker 2:
So are you reviewing, like, hey, these are what your sales were last year, this is what or even what they were last month, and this is the pattern that's happening, yes, and kind of can guide them in the direction either way, right?
Speaker 1:
Yes, yeah, a lot of times I think business owners are reactionary when it comes to their finances and they'll close the month and they're like, but I didn't make as much as I thought I was going to, and they don't necessarily understand why and they don't have time to dig into it, right, because they're moving on to the next month.
Speaker 1:
Right, Because they're like I got to go sell, I got to make next month happen. So someone like me, I can come and I can show you your history and that's one of the things I do for my clients is I come in and do kind of a financial analysis on the health of your business and I'll look at the last four quarters, the last three years however long you've been in business and do an analysis and tell you like here's your trajectory, here's things that have shifted in your business. So if your margin's gone down, I can usually pinpoint why and then we can talk about that. Is that money you invested? Did it pay off, and is that where you want to invest it? Help them make those decisions. And then I can also use that history to build them a forecast and say, if you continue to make these type of decisions in your business, this is where it's going to go. Is that where you want? Is that the goal?
Speaker 1:
And if it's not, then let's make a different plan, let's put out a different strategy, and then I can re-forecast, based on the new strategy, to achieve your goals.
Speaker 2:
And what kind of businesses specifically? Excuse me specifically, are you kind of drawing in?
Speaker 1:
Well again, my history is in my background's all in hospitality and in commercial services and I also do a lot of work right now with. My major client is in health and wellness, so she designs spas all over the world and I help her with the financial modeling behind those businesses. But that's not, I mean. I guess the good thing about finance is it's fairly agnostic. Right, I can step into any business and really understand the financial metrics that drive a business, so anybody could use me frankly, yeah.
Speaker 2:
Take me back to like your high school college days. Is this something that always like? Where you in math class being like numbers make sense to me? I'm a numbers person. Tell me a little bit about the path that got you here.
Speaker 1:
I mean, I've always enjoyed math but I honestly, growing up, always thought I would be a doctor. I talked about it all the time. I did like I shadowed doctors. I volunteered at hospitals when I was in high school Like that was full on what I was going to do Went to college my undergrad at Colorado State as a pre-med student and somewhere in my sophomore year I was studying for a chemistry exam and I was like I don't think I want to study for another seven years. So I went and took an aptitude test for the very first time ever and my results came back surgeon or accountant.
Speaker 2:
And I said well, I've already rolled out surgeon, so I guess I'll go enroll in business school and I shocked my parents when I called them and told them I was changing my major.
Speaker 1:
But I'm how was that? How? Parents, when I called them and told them I was changing my major, yeah, but I'm, how was that? How did they take that? I mean, I think they they just wanted me to find something that I would be happy doing. So I think they were just more shocked because it was such a change. It wasn't like I had waffled at any point in my childhood, so it was just out of the blue. But I think obviously now the career I've had, they they know it was right choice and I do too, and I honestly, I've loved it. I do enjoy numbers and I guess I just didn't realize that.
Speaker 2:
Yeah, as much as you thought right.
Speaker 1:
Yeah.
Speaker 2:
Yeah, yeah. So what are you doing for marketing and advertising to get those businesses in the door and to get your ideal clients?
Speaker 1:
So right now I'm just doing a lot of social media, reaching out to like the local groups that have small businesses right, where they're trading resources and advertising each other. That's really where I'm reaching out, because I do think that my ideal clients are probably in those groups. But I am going to start doing cold outreach, so I'm hoping to mine some data for the businesses that are the right size for me, because it has to be the right big enough right.
Speaker 2:
Small like not too small, and not too large, right yes, I think I've identified.
Speaker 1:
Probably annual revenues in the range of three to 10 million are probably a sweet spot for me. If you're much smaller than that, then you're going to struggle to build me into your budget, right than that, then you're going to you're going to struggle to build me into your budget, right? Sure, you're not quite ready to bring in that level of a resource yet, and after you get to 10 million you're probably at the stage where you might want to bring in a full-time person.
Speaker 2:
So I would say 10 to 20, it's probably you could you could use me or you could move full-time that that in between zone, yeah, but you sounds like you've found like a little niche market in the in between zone.
Speaker 1:
Yes, what motivated you to kind of go out on your own? I think, um, like everybody who goes out on their own right, there's some freedom there to make your own schedule to work when you want to. Um, but honestly, it is real more about being able to touch multiple businesses and different companies and owners, rather than just focusing on the one corporation that I was working for.
Speaker 1:
Right yeah, and it makes you understand more businesses as well, yeah, and it makes me a more rounded finance professional too. The more businesses I can see, the more things I'm going to run into, and that makes me better at my job.
Speaker 2:
For sure, yeah. What challenges are you seeing in this industry these days?
Speaker 1:
I think the fractional executive role is so new that a lot of companies, particularly smaller businesses, don't really understand what we are and what we do. So I think educating business owners on the benefits of a fractional executive and really what our role is in their company, that's probably the first hurdle that I have to get over and describe that to us a little bit more fractional executives, yeah.
Speaker 1:
So again, it's for those business owners that need to take one of the functions off their plate, or maybe multiple functions, because they're just gotten to that size where they can't do it all anymore. So you bring in these people that have discipline, experience I guess I want to say right, a whole history in HR or history of professional finance, so that they can bring that knowledge into your business and kind of level up that experience.
Speaker 2:
Yeah, do you have a favorite story, like a favorite success story? You said you were helping somebody open up their spa business. Is there something, a particular story, that you were able to help somebody with and how it changed their business and how did that feel?
Speaker 1:
Yeah, I have a client right now that she's had her business for 18 years and she's been successful at it, but she's you know, she sees the end, she wants to retire at some point and she kind of has an idea of what she'd like to sell her business for in eight years. So we sat down and we talked about well, based on your history, this is what you'd have to do in the next eight years to really be able to sell your business for, for what you're wanting. And I went back and I showed her her historical finances and how she was spending money, because she'd never really looked at her finances that way. I find a lot of people in that position. Sometimes it's more about do I have cash in the bank? If I do, then I must be doing okay. But there's so many other metrics.
Speaker 2:
So they really turn over like their whole file of history to you?
Speaker 1:
Yes, yeah, yes, I generally want access to your accounting system, which is like 100% of the time is QuickBooks. Yeah, right, so I dig into that. I run the financial reports so that I can look at, kind of, I do a vertical and a horizontal analysis, which means I'm looking at how much did you spend in office supplies as a percent of your revenue and how did that change over the years. I also look at how your revenue grew or shrank from year to year and do that kind of analysis and let's talk about why that happened. Right, was there some occurrence that year that just drove your sales down? Or did you have a family emergency or you know situation where it took you away from your business and that's really why there was a decline?
Speaker 2:
Yeah.
Speaker 1:
Let's take out those anomalies and then talk about really like how is that an ongoing entity? How do we grow that business forward?
Speaker 2:
Wow. So you were able to help her kind of get an eight year plan to move on and for her to do something else.
Speaker 1:
So she can see the steps she needs to take. And she told me she's like, honestly, nobody has ever reviewed my financials with me the way that you have and made her understand, like why her margins fluctuate from year to year, and really like she was always worried about cashflow, always worried about whether she had enough money in the bank. And once I was able to show her, like, how to look at that not just is there money in the bank, but like who do you still owe from your vendors and how much money do your customers owe you? Taking that all into fact, how much runway you actually do have in cash.
Speaker 2:
Yeah, are business owners like eyes wide open looking at this? Wow, yes, absolutely.
Speaker 1:
I think it is very eyeopening for for a lot of people, cause if you don't have an accounting background or a finance background or even business um, business school right. I think some of this stuff is just you've never been taught it, so you've kind of been learning it on your own and bringing someone in like me I can kind of um educate you more and make you a better expert in your business.
Speaker 2:
And dive a little bit deeper. Yeah, yeah, if you could say, like your top three to five business advice financially for businesses, like what's the top things? They should really be paying attention to, things that sneak up on you that you just don't realize, like, oh, I really spent a lot on office supplies this year.
Speaker 1:
Yeah, I would say make sure that you are closing your books monthly. So, whether you have a bookkeeper that's doing it, make sure that there's a timely close and you're actually looking at it so you understand what your results were from last month and if you can pull a forecast together. You want to know where you're going too and if, if you're out selling, do you have enough in your pipeline to feed where you're trying to go? Right? So understand that metric. So be more proactive about driving your business rather than reactive.
Speaker 2:
Yeah, did you have somebody that mentored you kind of through this process? Like you said, you were working for Marriott for a while and another company. Was there somebody that kind of really sparked this interest for you and kind of took you under their wing to show you, or was it more kind of self-driven?
Speaker 1:
I think branching out into the consulting and small business side of it, that was more self-driven. But I will tell you, my time at Marriott has made me the leader by far that I am today. I can't say enough about Marriott.
Speaker 2:
I've heard Marriott just has amazing training programs they do.
Speaker 1:
They have great management training programs, great training for service, customer service for their associates and their managers. Honestly, I took all that Even as finance and accounting. I took all of the customer service training. So, yeah, I can't say enough about them. Frankly, I never thought I'd leave them. I just got approached with an opportunity that I couldn't turn down. Um, so after 15 years I left, but yeah, I would. Um, I would highly recommend anybody that, particularly if you want to a career in hospitality.
Speaker 2:
They're a wonderful company to work for, yeah, I've heard great things about them and what they've taken from learning there and translate it into their business. Now, right, absolutely yeah, that amazing training, yeah, so where do you see this is relatively new, correct for you, yes. So where do you see it all going? Do you see growth? What are your goals?
Speaker 1:
I do. I mean, I think in the short term I want to get a full client roster and feel like I'm really contributing right to my clients and helping them grow and seeing success with them. But ultimately, you know, if I get big enough, I can bring other people in, other finance professionals that I know, and build a firm so that we can handle even more clients.
Speaker 2:
Yeah, what advice would you have to somebody maybe getting into this field, Maybe someone graduating high school college that that might want to get into this field?
Speaker 1:
I would say, if you're coming out of high school or college is is go work in in companies, go get field experience, because, I don't know, I guess in my opinion I don't think you can be a fractional executive until you've worked in other organizations that already have kind of the processes and the framework built so that you understand it and learn it right. So a lot of what I bring to my clients are things that I've seen in my previous jobs. And when you talk about a company like Marriott that's been around for I think there are probably close to 90 years now, maybe more, I would guess Right.
Speaker 1:
So there's a few things they've figured out at this point.
Speaker 2:
Right, and while everything seems to be going well, right.
Speaker 1:
I think they've mastered the art of growing a business. Yeah, so there's processes that they've ironed out and granted. Technology changes, you know, policies change and they move with it. But there's a lot of that foundational knowledge that I gained by spending that time as an assistant controller and a director of finance at Marriott that you just take with you into every business and it's like well, if we standardized it right and made it more of a process in your business, I think you'll see it flow much easier.
Speaker 2:
Yeah, how do you think technology and the tools with AI and stuff has affected your business?
Speaker 1:
You know that's interesting because I just had this conversation with a group of CFOs yesterday, last night, and talking about how AI is going to change our discipline. I definitely see it coming in and helping with the more transactional level, like the coding of your transactions and the general ledger level of detail. We also talked about how it could help in financial modeling. So if you can give it three years of your company's history and ask it to do your forecast, could the AI generate an accurate forecast? And there was actually somebody in the group she tested it with one of her organizations and she had somebody on her team do a forecast and she had AI do it and it actually came out pretty close. Wow, that's kind of scary and interesting.
Speaker 1:
Yes, both at the same time. Right, I don't know that. You know, I think there's a lot of concern that AI is going to take jobs. I think it will make some jobs a lot easier, but I don't think, within business, you're ever going to be able to fully automate everything. Right, there's going to need to be some level of you're ever going to be able to fully automate everything. Right, there's going to need to be some level of discretion, personal influence on the business and judgment. Exactly Right, because AI can only make an opinion based on the data that it has available, right, right, but it can't make kind of a judgment call to your point.
Speaker 2:
Yeah, I mean, there's only so much. I mean you need to have the human eyes look at it and say, okay, this, this does look good, but is this really where we want to go? Yes, right, yeah, so, but aren't those tools somewhat helpful in streamlining things too and making things faster and more productive in that sense?
Speaker 1:
I mean, if you think about it, if you can get an AI or any type of software that can automate processes in your month and close, because I know there's businesses that take 30 days to close their month. So can you imagine not knowing how you ended May until the end of June? Well, if there was something that went wrong in May, you now just went all of June without doing anything about it because you didn't know what happened, right? And then you're rolling into July, right, and so you got to make a change quickly. But if you can shorten your close process to like three to five business days, so you're getting that information that much faster, you can make a decision in your business that much faster and change the results. Yeah, interesting, I think AI can really help in that area.
Speaker 2:
Yeah, so you're looking to grow? I know you're starting. Are you looking to bring more people on as you grow? Is this something that you want to create your own team with?
Speaker 1:
I would love to do that. Yeah, I would love to get to a point where I need other financial professionals, whether it's at a controller level or a CFO level. If we get to the point whether it's at a controller level or a CFO level If we get to the point like right now, I don't offer bookkeeping. I have a bookkeeper that I'm partnered with and we refer business back and forth, but that's not part of my core services. But I might get to a point where I want to be all inclusive.
Speaker 2:
Right, yeah and explain. I know we touched on it a little bit, but really the benefit of having someone like you come on is huge for these businesses, right? I?
Speaker 1:
mean well, I think so yeah.
Speaker 2:
I mean, as you're explaining this to me and I have lots of friends that are business owners I'm like oh, light bulbs are going off on how much a business owner is doing right, and to take that off their plate is really beneficial and would make their business more successful. Right, and to take that some off their plate is really beneficial and would make their business more successful, correct and honestly.
Speaker 1:
Sometimes just sitting down and having a 10-minute conversation with a business owner, I can hear things about their business and I'll ask a question like have you ever thought about this? And a light bulb goes off then and it might change a decision that they make. So, yeah, I can. Just I can find results in that little of time just to get them to think about their business differently, because they're so caught up in running their business that they haven't been able to take that step back and look at kind of other options or even risks in their business. That is part of what a CFO job or a CFO does is. My job is to identify risk in your business and help you mitigate it Right. So a huge topic that actually came up with a group I'm working with earlier this week was the idea of 1099 employees and a lot of companies that's. Their first step when they bring people on to help them is to hire them as a 1099, because it's very cost effective.
Speaker 2:
Which is for those that don't know what a 1099 is.
Speaker 1:
Okay, yeah, so a 1099 employee is basically well, I shouldn't call them employee because they're not. They're basically a contract worker for you. So they give you a W-9 tax form with their EIN on it and you pay them like they are a vendor for you as opposed to an employee.
Speaker 1:
That's probably the best description and it's easy, right, because you don't have to deal with payroll taxes and withholding and all of that, and it is generally more cost effective for a business to do it that way. However, there are our IRS guidelines and Department of Labor guidelines that stipulate when you should be an employee versus, like, a W-2 employee versus a 1099. And so if you're using your staff, your team, as 1099s and you get audited by one of those departments and they determine that they really should be W-2s, you're going to pay penalties, you're going to pay back taxes and a lot of fines I was actually talking to so that's a risk factor. It's a risk factor. So I may come into the business, find out that you're paying everybody 1099 and we may have to have a conversation about that. It doesn't mean you have to change it. You just need to understand that that's a risk in your business, right? And what risks are you willing to take?
Speaker 2:
Right. Yeah, that's amazing that you can give them so much advice in a department that they're not paying attention to, or because they're just so focused on running the big picture Right that all these other kind of you know bricks in the system kind of fall apart Right.
Speaker 1:
Yeah, absolutely, you know. Another great example is kind of fall apart, right. Yep, absolutely, you know. Another great example is if you're a service business and your staff goes into people's homes or into their place of business. You have workers' comp insurance, you have general liability, right All of the business insurance that you need. But have you considered do you run background checks on your employees? And would that have changed your insurance premium if you did run background checks? Because your insurance company may care about that right and if you're hiring people that have you know maybe not a great background.
Speaker 2:
But somebody recommended them and it was a friend of a friend, right.
Speaker 1:
Yeah, absolutely, and I get it. The background checks cost extra money, but you have to weigh the risks and the rewards. I mean, talk to your insurance broker or company and if it's going to save you significantly, it might be worth the extra expense of running background checks.
Speaker 2:
Looking into. Yeah Well, this is so fascinating to me in such a little niche market that I have not heard much about. So this is so amazing to hear and interesting to learn. As we kind of wrap up here, are there any last parting words you'd like to leave us with? It can be a mantra. Business advice.
Speaker 1:
Yeah, well, hopefully I've given a little bit of business advice if anybody was listening. I think my tagline for my business is turning your passion into profits, because I'm really focused on those people that have built a business around something they're very passionate about, and now let's work together so I can help you make it more profitable for you.
Speaker 2:
Right, yeah, yeah, I love that. Well, meredith, thank you for being here today and thank you for sharing your story with us Absolutely.