Beyond the Bank Balance: When Does Your Growing Business Need a Real CFO? with Brit Summerill

Speaker A: Welcome to the B2B Growth Blueprint podcast where we talk with entrepreneurs, founders and leaders at B2B services, tech and SaaS companies to learn the systems and processes they've used to create success for their business. And we'll also learn from marketing and sales experts to provide insights to help you grow your business. I'm your host, Mark Osborne and the podcast is brought to you by Modern Revenue Revenue strategies and their 10x ROI B2B growth guarantee schedule. A free diagnostic call to learn the fastest path to double your B2B revenues in just 90 days. Hello and welcome. Welcome to another episode of the B2B Growth Blueprint podcast. I'm your host, Mark Osborne and today I'm very excited to welcome my guest, Britt Sumrall. Now Britt is a partner at NOW CFO where he works at the front lines of financial transformation for high growth companies. Navigating critical inflection points. He served as both the CFO and controller for a wide range of public and private organizations, helping leadership teams move from reactive gut driven decision making to disciplined data driven financial strategy. His expertise spans complex accounting environments, including SEC reporting, cash flow forecasting, capital structure strategy, and the cleanup and reconstruction of broken financial systems. What sets Britt apart is really his ability to step into companies at the exact moment things start to strain under growth. When the numbers stop telling a clear story, when projections are built on shaky assumptions, and when founders realize they've outgrown managing by a bank balance. He helps rebuild the financial foundation so companies can scale with confidence, withstand scrutiny, and be ready for investment acquisition or even a founder exit. He works with companies from startup up through 60 million or more in revenue, helping them avoid costly cleanup scenarios, build financial clarity, and position their businesses for long term value creation. So Brit, welcome to the show.

Speaker B: Well, thanks for having me. It's good to be here.

Speaker A: Yeah, absolutely. So we've got a bunch of really interesting topics to talk about today, but before we get into that, why don't you give our audience a little bit of a picture of your background. What were the twists and turns of your career that brought you to where you are today?

Speaker B: Yeah, it's kind of funny if you asked anyone from my high school, uh, do you expect Brit to become an accountant? I think they would say no. Uh, uh, I was class clown back in high school and okay, you know, I'm a very personable person and you know, when most people think of an account, they think of somebody that hides in the dark and, you know, is, uh, very antisocial. I'M the complete opposite. So initially I was looking to go into law. Um, and, you know, after a while, you know, being in school, in college, I was like, you know what? This. This probably isn't for me. I don't know if I want to be an attorney. Uh, so I kind of jumped around. I was like, you know, end of the day, I'm looking to. To make money. I'll go into business. Uh, where. Where, you know, I. I wasn't sure yet, but ultimately, uh, I ended up falling into accounting. Always really good with math, always really good with putting together puzzles. Uh, so it just kind of seemed like a fit when I took a few classes in college. And then, you know, from there I. I went, got my master's in accounting, and then I, uh, you know, worked at a CPA firm. Started out in the mortgage side, uh, as an auditor. And, uh, if you remember anything from the past, uh, that collapsed. Yeah, kind of a. Kind of a big shocker going from having, you know, a lot of, uh, mortgage companies is clients to three overnight. So that, that was a fun turn. But at the same time, I was like, you know what? I want to try my hand on what I felt was a little more complex, uh, transaction. So I. I moved over to our sec, uh, side of the practice. This is in Salt Lake City. I'm originally from Utah. Uh, and then from there, uh, you know, I. I was an auditor. I did all of that. Kind of got to the point where it's like, do I stay with this or do I want to move on? And I wanted to get to the other side. You know, one of the bad things about being an auditor is you tell them everything that's wrong. You don't necessarily tell them how to fix it. You just tell them what they're doing wrong. Um, yeah, so I wanted to get to the other side and be able to help people. And that's where I switched over to now. CFO. Um, I've been with the firm for, geez, almost 14 years now. I've been a partner for, I think, 12 of those years. So, um, you know, I've, you know, when I came over here, it was. It's kind of a shock going from being on one side to the other. Um, but I got thrown at everything. Construction, manufacturing, you name it. Nonprofits, public companies. Uh, and most of the time it was just cleaning up the mess and putting the puzzle pieces back together. And then we get to the fun stuff after that. But, you know, really good at doing that. And, uh, I've Been with now cfo and you know, we're growing. When I started, I think we had five or six offices. And now we've, We've, you know, expanded nationwide and also, uh, have an out in Nepal as well. So it's been quite the, uh, quite the change and moving up from, you know, being on that side to being on this side, and it's, it's been pretty fun.

Speaker A: That's super neat. And so you, you mentioned something which was, you know, you. That you were the class clown and not something that, not someone that people would have expected to go into, you know, sort of accounting. And I've heard it said more than once that like a, uh, CPA with a personality usually winds up becoming a cfo, uh, because they can actually connect those numbers to what it actually means about the business. Uh, and, and that's one of the things that I, I see that's always, you know, so interesting is when businesses start to make that transition, uh, from just sort of keeping track of what's happening in the past to actually building sort of a financial strategy. And I know that you work with a lot of businesses at that inflection point as they move from. Well, we've just been keeping track of things and now we want to move to sort of beyond, and I love the phrase beyond just managing by bank balance, but actually having sort of a financial strategy. Talk to us a little bit about sort of what that inflection point feels like for founders so that they can recognize when they're there and not wait too long, uh, to make some of those choices. And then what are the, some of the things that change as they, uh, move through that inflection.

Speaker B: Yeah. And, you know, every industry is a little bit different, but I would say, you know, a lot of these founders are living very, you know, there's inadequate cash flow management, there's. Everything's being done manually. They don't know their margins. And they're usually in that, you know, well, how much money do I have in the bank? And that's kind of how they judge things. Right. And I would say that's usually from, you know, startup to about anywhere up to as high as $5 million in revenue. You'll see those type of clients, um, the reason why it's not good. It's a lot of times they'll be doing things on a cash basis versus accrual, uh, which makes it really hard to be predictive on, on what, you know, what, what's actually going on in the company. They're not looking at KPIs, the key port performance indicators around their industry. It's just basically how do we, how do we get through to the next week and, and still have the cash? Right. That's a pretty normal thing, I would say. When companies really start hitting over that 5 million mark, it starts changing. Um, you start looking at doing revenue recognition, doing cash, moving from that cash to accrual. Um, if they have inventory, it starts getting a little bit more, you know, a little bit more sophisticated. Um, but they still don't have any controls in there. And I would say once we hit about, around that 10 million mark, that's where you start seeing controllers come in. Um, that's where that need comes in. And I've seen people not do this until they're 20 million and they're still working off of that 0 to 5 type scenario. Right. Uh, which causes a lot of problems. I mean, so typically when we get into that, you know, 10 million plus, that's where we're starting to do things. We're trying to automate things. You know, QuickBooks might not be the right fit anymore. You might need an inventory system, you might need to automate a lot of the things. And you start looking at, you know, your talent. It's not just, you know, well, if I go down the hall, I can go talk to Susan or I really like their personality. It starts turning into metrics. Um, that's where we're starting to judge metrics and say, you know, it's not about what I think is right in my head, but what are the numbers actually show me. And so that's where we get into a little bit of issue of where the books haven't been cleaned for a while. And we get to that point and then we get into cleanup and, you know, it's, it's a, it's a big, uh, undertaking to move them to that next process if they're not doing it step by step. So I, I suggest really, you know, if you're around that 5 million mark, you should be really getting off that cash basis and, and trying to, to run like a real company and trying to look at some of your KPIs, even if they're just basic KPIs.

Speaker A: Well, and as you're, as you're describing this, like the, I'm getting the heebie jeebies and the hair in the back of my neck is standing up because it just sounds so stressful, uh, to think about a company that's, you know, managing the complexity, uh, of that without More of a structure to how they're doing it and really, you know, trying to do, you know, as you say, napkin math dressed up as strategy.

Speaker B: Right.

Speaker A: Uh, and that there's really a lot of risk in not fixing it on time. What are some of those, you know, kind of hidden costs of, you know, waiting too long to fix these things, uh, that the companies might not be thinking about? They're like, well, it's a little stressful, and I'm sure it would be better, you know, had a CFO and had some of these things cleaned up. But what are some of the things that they're not thinking about that, uh, could come back and bite them?

Speaker B: Yeah. You know, I run into a lot of companies, just give you an example, that think that their most profitable, profitable, uh, product is one that they're selling the most, but they're not really looking at the margins. And, you know, when you start looking at things like that, and it's like, well, you know, the one that's over here, you. You don't think is a big deal, but you're actually making a lot more money on this than you are over here. So I would say that there's a lot of wasted, uh, resources that happen in that. In that time frame of where they think they need to go, because they're really just bootstrapping and they're flying by the seat of their pants, and there's duct tape on the wheels. Right.

Speaker A: Yeah.

Speaker B: Ah, trying to hold it together. And so, you know, the big issue on our side is always the cleanup. Uh, there tends to be a lot of cleanup that has to happen on the back end. If you're trying to get funding, if you're trying to do an M and A deal and your books aren't in order, I mean, that becomes a massive undertaking alone. Uh, the other side are controls. I mean, when there aren't the controls put in place or, you know, or you got internal controls, you got process procedures, a lot of times what happens is you got Susan in accounting stealing from you. You know, you don't know where things are. Things go missing. Uh, or it just comes down to pure visibility. Um, the lack of visibility in these companies is huge. Right. And, you know, they're just trying to think how to get past, and B, they're not really thinking about how do we really take this, grow it, and employ more people. Right. And so I would say on that side, there's a lot of opportunity costs that's missed. Um, sometimes it comes down to the taxes when they. They're doing their taxes, they're using the same person that they used when they first started. Now they're doing multi state, um, they might have some international. That person doesn't understand it. So there's actually taxes paid that they don't understand or there's penalties, these accrued that they uh, weren't. Weren't expecting. Right. Because they weren't looking at the taxes per state on their salt taxes and, and paying out proper allocations.

Speaker A: Yeah, well, and what you raise up there is such an opportunity because you know, I've heard lots of companies talk about, you know, they're growing broke, like they're busier than they've ever been. They've got more clients, more projects, more things. But it feels like there's less and less money available because when they don't have that visibility into where their real margins are or what contributes to solid cash flow that allows them to reinvest in their business, then they make some false assumptions about where they focus their resources and their time and where they hire and what they build on. Uh, so that they're actually building against the weakest aspects of their business instead of building against the stronger aspects of their business business. Uh, because they don't have that, that visibility and that clarity that comes from having those things out for them.

Speaker B: Yeah. And I would say this too. I mean even on that spectrum, those companies tend to go out to try and get lines of credit and can't get it because their books aren't in order. Right, right. And so it's, it's one of those things like how do you get that buffer and get to where you need to be and then they start taking, you know, hard money loan type situations and uh, have to, have to go off of their AR and you know, more expensive financing. Right. Where if they just had it together, they, they could, they could go fix it. Right. Or at least have a buffer there.

Speaker A: Yeah. When you also mentioned something a moment ago which was, you know, sort of it's really hard to go into an M and A activity or you know, get any sort of outside investment even you know, from like a loan without these things in order. And you know, there's this statistic that 50% of all entrepreneurs, business owners will have to sell when they weren't planning to sell, uh, either because of disease or divorce or disagreement or. Right. You know, some reason. And there's even you know, really sort of like really positive scenarios where as private equity moves into the lower middle market, more and more people get unexpected phone calls of we think you have a great business and we'd be interested in, uh, talking about. And so if they're not prepared for that scenario, they really can't take advantage of those opportunities. Likewise, if their, uh, books aren't in order and they find themselves in one of these more distressed situations, they're again, not able to take advantage of those opportunities. What are, you know, some of the ways that they can at least have that sort of foundational work done. So that should the worst happen or the best, uh, happen, they're prepared for that.

Speaker B: Yeah, I like to, you know, sometimes we like to say if, uh, if somebody gets hit by a truck, I always say, what if somebody wins a million? You know, wins the, wins the lottery.

Speaker A: Yeah, right.

Speaker B: They're not coming back. That's, you can have the best relationship in the world. They're, they're like, yeah, I'm done. Um, no, you know, there's a couple things in there. I think the other statistic is 70% of those small businesses that try and do an M and A deal fail in the M and A deal. So you even take that 50 down to 70 and then cut it again. Um, so, you know, part of it is, is just being able to tell the story. Do your books actually tell the story of what's happened? Um, so from my side, it's like documentation. How well are you documenting? Do you have everything? Always treat it as if you were audited, you would be ready to go. Right. And part of that is looking at your accrual based accounting and make sure that that's up to par. Um, because there's a few things that'll kill a deal. One of them is accounting every time. I mean, if those numbers don't make sense, there's no quicker way to get off of that. The other one is if that business owner is so involved in the day to day that you can't separate that person from the business. You know, are they doing all the accounting? Are they the, the marketing? Are they the sales team? You know, is there, is there a succession plan? Are there other people underneath in the company? I actually gave a talk on this the other day on how to build a successful, uh, you know, executive team in an M and A process. And that's one thing you have to think about, like, okay, if I'm the founder, how do I step out and put a CEO in charge? How do I get a coo? And you know, if your company's so small that it doesn't make sense, well, are there other people? Is there A factory manager, is there somebody that could take over and this business would survive? Um, but the accounting side, that, I mean, yeah, that's, that's the big killer. Right. A lot of times people are, don't understand what their company is actually worth. And you know, when you think about it, it's their baby. Right. So their, their expectations are always, you know, the top here. And in reality, you know, if you're not making money, bottom line, or you're trying to do things according to tax and just cut your taxes, that business is a lot less valuable at the end of the day. Right. You want to show profit, you want to show that there's something here. You know, you want to show that you got great margins. Those are the type of things that are going to get somebody in and say, okay, this, this business looks like something I want to buy. The other side is automation. Right?

Speaker A: Right.

Speaker B: Uh, have you invested in technology? You know, do you have your ap, you know, is everything a manual check? Right. It's very. If it's very, that's also going to be a harder one to sell versus somebody that's automated. A lot of stuff have, have it all in place to be able to hand it off to anybody and be really ready to go. So I would say from that side, no bigger way to lose a deal than walk in the room, not know what your company's really worth, and the numbers don't tell the story that's in your head.

Speaker A: So I have a somewhat controversial take. I'd love your sort, uh, of feedback and opinion on this and that. You know, so many companies just sort of think, well, as long as we're growing, things are good. Uh, and, and I've actually seen this, and I'm curious if you've seen this as well, that companies that are sort of growing just by kind of stacking tactics on top of each other and running people into the ground and running them ragged and that growth that isn't built on a system, they're actually lowering, uh, how much they're worth because their margins aren't strong and they don't know what's happening. And in fact, a smaller business could actually be worth more than a larger. From a top line revenue perspective, business, when it's run chaotically and doesn't have those systems in place, that really leads to success. Have you seen that to be true?

Speaker B: No, totally. I mean, like, look, if your margins are off, I mean, I would say this, those smaller companies you tend to see, you know, you focus on revenue. Your first goal is to get revenue in. Um, I don't remember who, who wrote the book, but, uh, you know, you're looking at, you know, profit first. I. There's. There's a book that's out there, right? Um, and looking at it that way, you know, when a PE comes in or investor comes in, they're wanting to see that you're in line with your industry. Do you even know what your industry does? Right? If, if you're in a service industry, you're looking anywhere from 40 to 60% margins is a normal margin for, uh, gross margin. The other side of that is, you know, you know, what, what's the bottom line look like if you're not above 10%, you're not closer to 20, you're not attractive. Right? So I get in there and I've seen this happen where it's like, hey, we really want to buy your company. They come in, they start looking at the margins and like, man, there, you got to cut. You need to trim a bunch of stuff. And the other side of that is usually they're employing their, you know, their family members. They got, uh, you know, yeah, the wages are extremely high for what they should be. So that's why I always say, you know, look at, you look at your key performance indicators, like, go through, you can Google search, you know, what, what should a company in my, you know, we got AI now, right? You can, you can look in there. It doesn't always tell the truth, but go back and fact check and look around. But, you know, what should my margins be in an industry like this, in, in, you know, this state or in this county? Like, what, what should that look like? Talk to your banker. If you have a banker, a lot of those bankers, if it's bigger bankers I know, they got that, that backup and tell you how you can stack or talk to someone like myself who can, you know, do some benchmarking, come in and say, you know, what, what do you look like to your competitors? Where can we improve? That's really the key. A lot of people run around, they're just doing business, and there's no, there's no target. Right, right. And so the biggest failure you can have is, is not to have a target. And that, uh, that goes with your budgeting. You know, when you do budgeting, the whole point of budgeting isn't like, oh, what's going to be 100% accurate? It's how are we compared to it, right? What are we shooting for? Uh, and that, that's kind of going into forecasting. Too. Like, where do you want to be? I, I talk to a lot of, uh, companies, and they'll, they'll tell me, well, yeah, next year we're going to be, you know, we're going from 5 million, we're going to go up to 8 million, uh, in revenue. And it's like, oh, where, where's the growth? Where's that coming from?

Speaker A: Right.

Speaker B: Have you thought about the overhead cost? Like, how many employees does that mean you need to bring in to do this? Right. And, and so there's always a thought of, oh, yeah, we're going to do this next year. But they don't look at all the other factors. So the whole thing is, is really planning it out and being strategic. And I, I think as a business owner, you're just trying to fly at the seat of your pants, and that's really what small businesses are. Right. You're flying by the seat of your pants. You're just trying to get to the next week. But they're, you know, if you set those targets, you actually could set yourself up for success. Right. So, you know, you have something to look forward to. Did I hit the mark? Am I off?

Speaker A: Right. Well, and then that starts to give you a sense of how much are you actually in control of your business versus flying by the seat of the pants and.

Speaker B: Right. And are you working for your business?

Speaker A: Right.

Speaker B: Or is it working for you? Yeah, and I think that's a problem. Right, though, like, hey, we're bootstrapping. I'm going to do the accounting. I'm going to do this, I'm going to do that. And it's like, why don't you focus on what you're good at in the company?

Speaker A: Yeah.

Speaker B: Uh, whether that's sales, getting the deal, whether it's working on the production, hire the right people behind you, where you lack. And I think that's a big thing. A lot of people are afraid to hire people outside that they don't understand. That is an area they lack. And sometimes people get yes men around them.

Speaker A: Yeah.

Speaker B: Um, that doesn't work. Right. You need people that. It's like, God, I'm really good at doing this, but I'm horrible at public speaking. I need somebody that can be a face out there. Right. And then. And then stack on that way. That's the way it should be.

Speaker A: Yeah. Well, Brit, you're obviously an expert in a lot of really interesting topics that, you know, we could spend all day talking about, but I got to be mindful of your time. But before I let you Go tell us. You know, who exactly do you work with and what's the real benefit that they get from working with.

Speaker B: With you? Yeah, uh, I mean, you kind of mentioned it. We, we work with clients usually on a regular basis up to about 60 million. And the reason why I say that is typically you don't have a full accounting department, you don't have a full time cfo, you don't have a full time controller. Uh, it could be even bookkeeping in there. So for us, it's. It's where, you know, a company is growing or they're pivoting. There's something that has happened in the company that has got them to move, that say we got to fix it.

Speaker A: Yeah.

Speaker B: A lot of times it's that dumpster fire, right? Where it's like, hey, we're well behind, but we still want the visibility. So we'll come in, catch them up, start looking at visibility. When it gets over 60 million, we tend to do big projects. Right. That could be an M and A deal that's gone bad and integration gone bad. I've done a lot of those. Could be system implementation. I mean, really, it's like, look, if there's something where you're lacking, it's worth talking to someone like myself.

Speaker A: Yeah, well, and it gives again, as we talked about. Takes away so much of that stress, uh, that comes from not having it and provides so much more opportunity for running your business. Better to really maximize the outcomes that you can get and be ready for those eventual conversations around an exit or M and A.

Speaker B: Well, and I would say, what's the

Speaker A: best way for folks to get. Oh, yeah, oh, yeah.

Speaker B: One. One more point. Nobody comes to me for accounting. They're coming to me for visibility.

Speaker A: That's right. That's right. So, um, well, what's the best way for folks to get in touch with you, Britt?

Speaker B: I would say either email or call me. So my email, uh, address, uh, is B. Somerhill Now CFO.com, just like the name is spelled up here, uh, in my name tag here. Or they, uh, can give me a call at 669-225-0207. If you forget all that, just go to our website. Our corporate will get you to me.

Speaker A: Fantastic. Well, Britt, thank you so much for taking the time to join us today. I learned a lot. I'm sure our audience did as well.

Speaker B: All right, it was great talking to you. Thank you.

Speaker A: Talk to you soon.

Speaker B: All right, bye.

Speaker A: Thank you for joining this episode of the B2B Growth Blueprint. Podcast. We hope you've gained insights to grow your business. If you enjoyed this discussion, please rate comment like on your favorite platform and share to others who will find it useful. Do you know a CEO, uh, founder or leader at an early stage B2B services tech or SaaS company who would like to be a guest and share their story? Send us a note. Let's schedule a conversation.