Ryan Page, The Backpocket CPA

Speaker A: Welcome to the Exceptional Sales Letter Podcast with Darren Mitchell. If you're a sales leader looking to take your leadership to a whole new level, then this is the podcast for you. We'll be exploring tips, techniques, and strategies to help you take your leadership to the exceptional level and, uh, allow you to enjoy more money, more meaning, and better sales results. Welcome back to the Exceptional Sales Letter podcast, and it is my absolute pleasure. Uh, and I was sharing with this gentleman before you press record. I think this is the first time in nearly 950 episodes that I've actually had the opportunity to talk to a qualified accountant, uh, a actual CPA. Mr. Ryan Page, founder at Back Pocket CPA. Welcome, my friend.

Speaker B: Hello. Thank you. Uh, yes, Accountant in the Wild. Here we are.

Speaker A: I must say, coming in from Nashville, you mentioned just before you grew up in, um, California and moved out recently, uh, five years ago to Nashville, uh, when you jumped on a zoom just now, I'm thinking, mate, you don't look like the quintessential accountant. Do you get that often?

Speaker B: I do. I think that's what makes us a little unique, too. Uh, yeah, I. I don't want to say anything, uh, too much because, I guess, I don't know, I will let it kind of come out as it goes, but a lot of people say it's weird to have an accountant that can, like, talk and hold a conversation or kind of break things down, but. Yeah,

Speaker A: well, and. And an accountant that. And this is not being disparaging to accountants, but. And I know a few of them. Um, but the. The stereotype that we have for accountants is they wear the. The shirt and they've got the. The pins in their pockets, and they're very, very specific and particular. Um, but, uh, mate, looking forward to this because I know that you're not the average cpa, so, um,

Speaker B: got my T shirt, and. Yeah, it's about it.

Speaker A: That's it. That's it. So let's. Let's delve into this. So I'd really, really like to understand a little bit about the backstory for Ryan in terms of where's it all started and we'll get into the nitty gritty and how this relates to sales, um, shortly. But where did it all start for you, Ryan, in terms of did you wake up one day and said, yeah, I'm going to be an accountant, or did it sort of evolve over time?

Speaker B: It was, uh, before waking up one day, it was December 28th, 1992. I was born, and, uh, I had CPA on my chest. No, I I, I've heard a few people make some funny jokes off of that, so I figured I'd try.

Speaker A: Destined to be a cpi?

Speaker B: Yeah, no, it was, it was college, honestly. Just my dad was a CFO and so I figured if I got stuck, I could ask him for help and, uh, leaned on him. I kind of had like the, the built in mentor, I guess, to help me through a lot of the pieces where people are like, this makes no sense. Uh, so, yeah, that, that kind of just helped get me through the early days and I mean, still helps a lot when I'm unsure of what to do. Just having, um, my dad to be able to bounce ideas off and I think that's really where it all started

Speaker A: and going through. I mean, it helps to have a person in the family that has some financial now. And certainly as a cfo, it would be a great role model for you to follow. But it's interesting how many people perhaps don't follow in the foots of their, of their parents in relation to, um, careers. What was it about? What was it about finance and accounting and, and they've gotten the stuff we're going to talk about today in terms of revenues, profits and margins and stuff. And the importance of that, that really drove you.

Speaker B: I think it's the puzzle, honestly. It's like, it's the challenge, the, the beginning challenge of like, all right, this doesn't make sense. How do we make it make sense? Um, and then now, I mean, it's evolved into like. Of course I've worked at big companies and I felt like a cog in a wheel. And now I do what I do because I like making an impact for smaller businesses. So I feel like it's honestly like a cheat code being able to like, look at any messy financial situation and be like, okay, this is the way we're going. Um, and clean it up and then make clarity of it and then translate the numbers to the layperson. I think it's, it's, um, a great cheat code. After sales, of course.

Speaker A: Well, I mean, as we say, as we say, Ryan, nothing happens until a sale is made. So

Speaker B: in

Speaker A: any business, uh, you've got to have a focus on sales because if you don't have the cash coming in, then,

Speaker B: yeah,

Speaker A: why do we need an account?

Speaker B: Yeah, that's something I've learned slowly.

Speaker A: So you mentioned, you mentioned that you've had experience in the big four, so. And you're now focusing on smaller enterprises and working with agencies. And I know you also work as a fractional cfo. Um, what were, what were some of the things that you learned through the big four experience that has now helped you to, I guess, translate that into being of great service to the market that you currently focus on?

Speaker B: Yeah, I think one of the biggest things I learned, which is I'm sharing this in an upcoming, uh, post on social media, is that, uh, everything is held together with spreadsheets and duct tape. No matter how big they get, it seems like it's just always like, holy cow, how's this stuff all working? And it's some type of spreadsheet somewhere maintained by a bunch of people that's been passed along for legacy, uh, forever. Um, yeah, but I, I mean Honestly, working at PwC, um, and being like an auditor across, I don't know, dozens of companies, I think one of the best things that I learned is just like processes as a whole. What does it mean to have a good process? And you see them across all these big companies where there's multiple steps, multiple people involved, um, and so just being able to understand that, then compress it down to like you and me, um, I think is, is one of the biggest things. And another thing is like work ethic. I think, uh, as much as it sucks being in like PwC and being in a grind in public accounting, uh, for a period of time, like, it is a clear differentiator when it comes to like hitting the market.

Speaker A: Yeah, yeah. Because it's, um, it's interesting. As you were talking about that and mentioning spreadsheets and duct tape being held together, I was just reflecting on my own experience in some big corporates, uh, because I spent 20 plus years in big corporates here in Australia in telecommunications.

Speaker B: Yeah.

Speaker A: And as a sales leader, I often wondered how they came up with prices for certain products and services and, and how they determine whether it was profitable or not in terms of margin. I know we're going to talk about that today, but in a big organization like that, where there's lots of moving parts, how hard is it to actually understand the true cost of say, an auditing service at PwC or some sort of accounting practice in a big company? Because it seems to me there's so many moving parts and there's so many elements and not many people be across every single component. How do you bring all those together?

Speaker B: I mean that is fascinating. Um, aspect of just like when they get so big and it's like, how do we actually know? Um, you have hundreds of locations and you're consolidating everything all the time. It's just like I don't know. Um, but I think it comes down to just breaking it down to its component parts. So if you talk about a, uh, like 100 locations, each location is doing one specific thing. So then how do we optimize the one location and then how do we consolidate all of that up? Um, and then it's like you, you kind of are stacking the pieces together. Then when you think about like manufacturing a widget or something, like you're just, you're building it all these different spots, you're attaching different costs, you're recording all these transfers, yada yada, and then, yeah, it comes up to pricing and market.

Speaker A: Yeah. Because I've always wondered, uh, in that regard how much financial literacy is taught within the organizations. Particularly when you've got people who have influence or positions of responsibility where they have to make, whether it be marketing decisions, product decisions, sales decisions, how they make those and whether they've got the real data, uh, or, or how many of those decisions are made by gut instinct or what they think is going to be profitable for the business.

Speaker B: Yeah, yeah. I mean speculation. I've never led one of those big companies, but being the person that's like been an analyst or something like at a bigger company, uh, it's a lot of times a like point in time activity of like we think this is right and then go, go, go do that and then come back and try to just like reevaluate it over time.

Speaker A: Um,

Speaker B: and that's the bigger org, the smaller org is uh, lick your finger and stick it to the wind.

Speaker A: Well, I guess a lot of it is, is test, test and measuring as well. And that, that goes for bringing products to market. Um, the cost to serve post sales support and all that sort of stuff. A lot of it's probably going to be dictated by the market in terms of whether they want, there's the need for this particular product or service. Um, I'm really intrigued and you kind of alluded to this a little bit, but I'd love you to go a little bit deeper as to why the market now that you work in, in terms of agencies and smaller business and not the big corporates. Was there something that was driving you? Did you find that there was a specific problem that wasn't being addressed that you felt that you could address and that's led you to working in the industry and across the, the market that you do. What's, what's, what's been the real catalyst there?

Speaker B: Uh, it happened over time. Um, so I, like we said I worked at PwC then I left there and went and worked at a Fortune 500 company in an accounting department. And uh, I was just, I was corporate accounting but it was still like one person and one in charge of one small area of a financial statement. So it was like, it just felt meaningless. Uh, I'd make like $50 million mistake on a journal entry and it was like whoops, like let's fix that next time. And it just like, I don't know, it just started to feel like there was uh, no purpose in the work I was doing. Um, and so I just wanted to take high level accounting, um, or the understanding that I was um, that I got to, with financial statements and everything and processes and bring that to smaller businesses. So it was really just making an impact was the initial catalyst and it's just evolved over time to um, be like a tighter and tighter um, person that I want to serve and work with.

Speaker A: So on. On that part let's, let's get into the, I guess the nitty gritty because there'd be people listening to this who are running their own business and they're probably thinking well I've got, in order for me to grow market share I've got to have products and services in the marketplace. I'm going to price it accordingly. I'm going to focus on my top line revenue. What are some of the key challenges that you see in the market today where perhaps people are not either educated enough or they're not focused on the right areas that is costing them dearly.

Speaker B: Um, I think maybe two things and this touches into your world a bit is ideal, um, client and like I think you said people want to just do more and more sales and often that means like oh I can serve everyone but I think it's like the opposite nowadays. Um, and you think of like building referral partners or, or talking to anyone on social media, like you need to get more narrow with it. So then it's like hey, Darren thinks of me when I, when he comes in contact with a female um, led creative agency because like that's more memorable than like Ryan does bookkeeping and so do like the 50,000 other bookkeepers. Um, so I think, I think there's the specificity on like who you want to work with, um, that then also like will lead to then more sales. But then once you obviously are getting more sales like you have to optimize uh, the way that the sale is flowing through your financial statements, flowing through your P L. Um and said, said differently or a Little bit deeper is, um, instead of focusing on just like, hey, I need to get 50,000 of sales this month, it's it focus more on the margin. Um, and I'll think of it as a percentage. Like I should be generating 50 to 60% margin on every sale that I make.

Speaker A: And

Speaker B: if that formula is broken, then the company is going to have probably some cash flow issues.

Speaker A: Mhm. So I want to talk about financial literacy, but you mentioned a couple of special things there. One, one is the ideal client. And interestingly, m. You, you specialize. Well, According to your LinkedIn profile, you specialize in female LED agencies. Yeah.

Speaker B: Yeah.

Speaker A: So can you talk a little bit about. Because you mentioned then, hey, I just don't want to be known as a bookkeeper. Right. In other words, I don't want to be all things to all people. Although you probably could be, but that doesn't allow you to specialize and it doesn't enable you, uh, to create, I guess, your unique differentiator in the marketplace. Can I ask you, because this will be pertinent for people listening to this about how do I create my own unique value prop and who is my ideal client? Can I ask you why specifically did you select that niche, that market?

Speaker B: Um, yeah, I selected it because I've worked with a couple of them and ended up liking them the most. Honestly, that's one aspect. My wife is a creative entrepreneur and is, I would say confident and very creative. But she doesn't want to think about finances really at all. Um, and thinking about that kind of makes her crazy and upset. And so, uh, I love showing up for her in that way. And so I think trans, basically, I've worked with my wife on it, I've worked with other strong females on it. And I think there's something, um, rewarding and impactful about like being the, like this feels weird to say being a man, but being like the strong rock for other creative women, uh, to, to be able to like, know that their finances are taken care of. To know that. To know that, uh, yeah, to know their finances are taken care of and that everything is like under control.

Speaker A: And, and you, you, you're still married.

Speaker B: I'm still married.

Speaker A: Wow.

Speaker B: Yeah. Well, I'm not, I'm not like being weird about it.

Speaker A: Oh, the reason, helping

Speaker B: them understand their money.

Speaker A: Yeah. Ah, well, I just, and I just say that, um, I say that respectfully because often there are people that says, you know what, I'm not going to work with my spouse because particularly when it comes to money, I'm not going to do that. But it seems that it's working well. So, um,

Speaker B: well, we're not partners, uh, and I don't mean that like partners in our, uh, in my firm or anything, but we're like more of. She, she's like, does some social media work and um, graphic design and that type of stuff. And so she has a similar profile to my icp.

Speaker A: Nice. Nice. Yeah.

Speaker B: Uh,

Speaker A: I love that. And the key message for people hearing this is you've got to get really, really granular on your ideal customer profile and then everything you do is aimed at that. And it's interesting that a lot of teams and a lot of companies try to say we've got this great product and everybody can use it versus no, no, I've got these great products and it suits that particular niche in the marketplace. And that's all I want to focus on. Which means if I become a specialist in that area and if I know that backwards, then I can be of more service. And the clear differentiation is I then become the go to person for that niche and that's what. Yeah,

Speaker B: yeah. And so the, the part that I'm trying to take deeper now is like, what is the specific pain or problem that I solve? Um, and this is the part where I feel like I'm testing a lot more. And what I have pulled out of various relationships and conversations is um, what I'm calling the financial intimidation kind of aspect. Financial intimidation gap. But what I've noticed after, I mean, just talking with someone else who does like positioning, uh, stuff is it just, it feels like it's hard for someone to self select into that. Like they're not going to be like, ooh, pick me, pick me. Like I'm intimidated by my money. So it's going to be like a, uh, it's a quiet pain, it's a, it's a, something that's deep inside of them but they're not outwardly expressing it. So now I'm trying to just figure out like, how do I turn the dial on? What's the actual pain we sit in?

Speaker A: And that comes through obviously analyzing that marketplace, looking for trends, looking for themes and asking really deep questions. And part of that obviously as a foundation is to build trust with that market, to think that, hey, this is not about judgment, this is coming from a place of service that um, I'm here to help you remove any impediments to get over that financial intimidation gap. But if we can identify what the core problem is, and this comes back to the fundamental element of sales. And at its core, it's actually problem solving. But before you can solve the problem, you've got to be able to identify what the problem is

Speaker B: and

Speaker A: even more importantly, have your ideal customer, uh, recognize that that's the problem they have that they need to solve and they want to solve.

Speaker B: Yeah.

Speaker A: Which means you've got to talk their language.

Speaker B: Yeah. And I think you've mentioned here a few times, like, financial literacy. You've said that a few times. And that's kind of like an aspect of, of of it, but it's like I'm not fully, like, trying to teach people how to, how to do this. Right. Like, I think, um, the core of it is like, they don't want to, in a way.

Speaker A: Yeah.

Speaker B: Like they want to know they're taken care of. They want to know the basics of it. So it's like I can't lean into financial literacy, but like, yeah, the intimidation piece is something I've been playing with lately.

Speaker A: But if you become, if you become like the trusted partner, the trusted advisor, you have the financial literacy. So I don't necessarily need to be an expert in that. But I think what you're talking about, um, and I'd love to get into this in a bit more detail, is when you identify what that financial intimidation gap might be, and it could be the difference between, say, top line revenue and either net or gross margin. Right. So you might think we're doing well. We're selling these, this product or these, these widgets or these services. We've got customers coming in, but I'm not seeing it on the bottom line. How. Why is it that we continue to feel like we're on a hamster wheel? Right. There must be something wrong there. So what are some of the things that you look for that you, you could be the, uh, I don't want to say the savior, but the, the trusted partner that can give people guidance and advice on where to focus their attention.

Speaker B: M. From a, from a sales perspective, I don't know. But from a, like, looking at the financials, like, what could be the, the. The. If I had to pick, what could be a solution to that problem? Um, it's often like utilization, uh, or like a staffing mix that is the bulk of the issue. Um, they're just either not. Or pricing. So it's either they're not pricing high enough or they're, uh, too expensive in the cost to deliver.

Speaker A: Yeah. So that's. And that's what I, that's what I love because I'm not I'm not wanting to say, hey, you're the sales expert, but you've got a very specific view of what to look for within, I guess, the fundamentals of a business. And you can see, you know, what your product is placed here, your cost is here, you've got X number of people. So there would be some, I guess some benchmarks or some principles that you look at to say, well, probably focus on the wrong thing or the solution to the problem is not throwing more people at it, for example. Right. So

Speaker B: yeah,

Speaker A: can we talk a little bit about then? Um, just like margin versus ah, revenue.

Speaker B: Yeah. So I mean revenue as a whole is, is the number that everyone likes to quote. It's the uh, hey, I signed a new $5,000 a month client. Um, and it's new and exciting and those stack fast. Uh, but the number that no one talks about is margin in that's uh, how much is left after servicing the project. Um, and I believe that's like way more important and like I said, needs to be fundamentally the same across every dollar that the business earns. Um, to ensure healthy business. Um, and the target margin like rate for agencies is like 50 to 60%. So basically 50% of every dollar you earn should be considered gross profit or delivery margin and then um, available to service the rest of the business.

Speaker A: And then you've got to include things like um, taxes, um, employment costs and all that sort of stuff. Um,

Speaker B: yeah, so I basically will do delivery mark. So revenue minus the cost gets the delivery margin. That should be 50% of every dollar. And then I usually break the P L into like five other categories. There's advertising and marketing, labor and benefits, general and administration, um, travel and entertainment and professional services. So then I'm always looking at those five as a percentage of, of income to then like um, every month, every quarter, every year this year versus next year. I'm always saying like, okay, if general and admin is 10% or 15% of income, like that's a problem. We need to be pulling our rent expense down. Our like utilities, random crap that we're buying for the office or home. Like that's a problem. If labor is too high, then um, obviously we need to figure out how to solve that. Uh,

Speaker A: does that target margin of 50 to 60%, is that irrespective of industry or have you got specific industries you're focusing on?

Speaker B: That's digital? Um, marketing agencies. I would say marketing agency, industry or professional services. I would even say a marketing agency and accounting firm are pretty much the same. I'D say any professional services, really, where you're utilizing labor to deliver the service, um, should be 50 to 60% margin.

Speaker A: And how hard is it then, Ryan, for companies where perhaps they might have gone into a market to try and get a foothold in a particular market and they've gone in far too low and they've almost now got themselves shackled because it's hard to increase prices and they get a reputation, um, at that price point. How do they change that? How do they, like, in other words, how do we increase our prices without reducing our reputation?

Speaker B: Uh, either fail or you, uh, incrementally bring in the next ones at a higher rate. If, like. And I'd say, honestly, it depends on how far below the market are you. But I mean, if the business is unsustainable, I'd rather, uh, get back to the rest of the market and not fail, than fail as a business.

Speaker A: M so when you're thinking about, um, specific benchmarks, so you've got a founder of a digital agency, they may be relatively new to the marketplace. They may not know what they don't know. They're thinking, I'm just going to go out and do stuff, um, specific, specific elements or specific benchmarks that you might, um, help install in their business to give them every opportunity of succeeding, quote, unquote, whatever that means. Because even if it's like Australia, there's still a high percentage of businesses that won't necessarily see beyond the first 12 months or the first five years.

Speaker B: Yeah.

Speaker A: So when you're looking at this particular market that you're in, what are some of the specific benchmarks that you put in place that you focus on that gives them every opportunity of being, well, surviving first of all, but then eventually being able to thrive?

Speaker B: Um, well, you know, I'm going to say margin, gross margin, 50%.

Speaker A: Well, that might be the number one thing. Right,

Speaker B: That's. I mean, it's up there. Yeah, there's. I, I still would track the billable revenue and we're, again, I think if we're thinking like, within the first year, I'm not going to go throw a million KPIs out there because I don't think it's needed. It's more of, like, optimization at that point. But if you're, if we're just like, getting a foothold, I mean, we, we need to know our billable revenue, we need to know the delivery margin. Um, and then each of those five items as a percent of income, I think are like, good, uh, baselines and benchmarks. Um, you can strategically break them, but otherwise, like, they should be relatively consistent. Um, and then I think, like, some of the basics that are applicable across many industries, that's just like cash on hand. Like, let's say three to six months of cash. Um, I think like a good pulse on cash flow as a whole is. Is obviously important. That's pretty elusive for a lot of people. But, um, yeah, like keeping a pulse on that. It's sort of just the fundamental things that are going to like, get you past year one and beyond.

Speaker A: I love that. And one. One question that pops into mind, because I had this conversation last week with actually a sales team, and I was trying to teach them a bit of commercial acumen. It's amazing how many people don't know the difference between cash, um, or revenue and cash flow. So from an accountant's point of view, as a cpa, when you talk about cash flow, what is cash flow in layman's. In layperson's terms? Because it's different. The margin is different to revenue. Um, how do you. How do you as a CPA define what cash flow is and why is it such an important thing?

Speaker B: Uh, that's a good one. That's very hard still, too. But, uh, uh, I. Let's see. Let me break this down. I would think of it as like, let's say profitability minus debt cost. That's probably going to be the essence of a lot. A lot of. Of debt and distributions. The essence of a lot of small business, uh, uh, financials,

Speaker A: because they don't nest. They might. They might be asset rich. They might actually own, uh, or have equity in a building that they're in, or they're operating out of home and they think everything's looking great. But they might have equipment or a physical location, but they may not necessarily have that cash on hand that they can draw upon in cases where there's an emergency. It's like an emergency fund. Yeah. If something happens, for example, like Covid, like I was just talking to somebody before who was a, um, she was a. She was a. Not a beauty therapist, but she. She runs. She runs. She ran a business that was tattooing eyebrows for women. Right. And she had studios all over the place. And all of a sudden Covid shuts down and businesses had to physically shut down. So you've got,

Speaker B: uh,

Speaker A: assets, but you got no way of generating income, which now impact on profitability and cash flow.

Speaker B: Yeah, yeah. I mean. I mean, at that point it just. It's gone. It vanishes. Right. So it's like what do you. Yeah. Are you, are you saying that like, if you take profitability, less debt service and distributions, like. Yeah, I mean. Yeah, that. I think that still holds. Based on what you're saying. If you cut out the revenue, then that means you're cutting out the cot, some of the cost, uh, your profitability is going down and negative and then you still have the debt service and you still probably have the distributions.

Speaker A: Yeah,

Speaker B: um,

Speaker A: yeah. And that, and that's obviously

Speaker B: there's like accounting elements, accounting financial statements. Like, okay, the true definition of cash flow is like operating cash, financing cash, investing cash, like the three various components that are going to stack up to get you your, your net cash. But I think a lot of those are abstract.

Speaker A: Yeah. And, and so for, for a small business owner, uh, or for a sales leader looking at how do they, how do they create a pricing strategy? I think what we're talking about here is you've got to have a general understanding of commercial acumen.

Speaker B: Yeah.

Speaker A: Not just focus on the top line revenue because you might be selling a product or a service for a fee, but that fee is actually not generating long term profit and therefore cash flow. Which means the very family of the business is no longer healthy. And it's not. Yeah,

Speaker B: yeah. I mean, you're right. Yeah. Because I mean, if you're not. It kind of makes me think about what you said a second ago with the like KPIs, I guess, or what other things are important. And like the collection rate I think is another thing. Like, yeah, if you're sending out bills but you're not collecting things, like your sales are outstanding for too long, then like you're, you have a cash flow problem. So, um, keeping a pulse on accounts receivable is, is very important. Um, made me think of also churn. Like churn is another very important KPI or metric to keep an eye on. Um, because like, I mean, you get one new client in and one out. Like you're just, you're, you're on the treadmill.

Speaker A: Well, and it might be net zero, but it could also be negative because that new client may actually be worth less than the client you've just lost. So,

Speaker B: yeah,

Speaker A: got to keep your eye on the pulse. So as a, as a fractional cfo, um, I'm interested in some of these things because, um, there'll be a lot of people listening to this who are perhaps not an expert in finance and they haven't been taught, but they've got to have a general sense of an understanding of what profit Means what? Um, like an even things like ebitda, earnings before tax and appreciation and stuff like that. And if we don't do that then when it comes to selling a service. Because what I wanted to ask you around, around all of this and particularly as a role as a cfo, uh, a diffractional cfo, do you get involved in some of the, I guess the tactics and strategies around pricing and insofar as there might be some agencies that because they operate in a very competitive market, they may find there's a tendency or an expectation to discount. And uh, what do you see as a cfo as the back pocket cpa. The dangers of discounting as distinct from maintaining margin and maybe losing that particular deal at the expense of getting a deal but at reduced margins.

Speaker B: Yeah, I mean it points back to knowing the margin on the front end so that like if you are going to do a discount then you at least know what you, you at least know where the project's going to land, uh, when you service it. So I don't, I'm going to say I don't love discounting as like a, a ah, strategy I guess, but I do think it can get some people through the door. Um, but I think it's clear it needs to be clearly shown on the financial statements too. So then you can see like uh, this is like a one time discount or something or they're all in one spot. So then you know like okay, that's incremental margin that we can get if we need.

Speaker A: Yeah,

Speaker B: um, some. Because I do see a lot where people are like oh, we just buried in the invoices and like we don't know how much we're giving as discounts and all of a sudden there's just like, like yeah, thousands of dollars of discounts.

Speaker A: Well, and that says to me, I mean you've got to know like even, even if you coming in as like the financial mediator, um, or the financial um, cfo, you still have to have people within the business who knows their numbers. Yeah. Because it's ultimately their business and you're there to provide a service and, and probably to keep them accountable. But also be the voice of reason that discounting doesn't work. Margin erosion doesn't work. You've got to think in it. I think it comes back to what you talked about before in terms of your ideal client and saying,

Speaker B: well

Speaker A: what, what is the value that I bring to the marketplace and what do I think that's worth? And yes, you've got to do some Research and think, well, what does a market think that's worth? And then price accordingly. But, uh, I would suggest, certainly to sales teams that they don't implement a price discounting strategy and they maintain margin and turn that into a value conversation. In terms of what is the product and the service that we're providing, what's the value to the customer of that? But have the customer articulate it.

Speaker B: Yeah, I mean, I think that's a good strategy. I think the, um, only place where I say I use discounting is, like, testing things. Um, like if I get on a call and I know that they're not going to go for, like, my core offer, then I'll modify it a bit and like. Yeah, just to be like, if it's someone I want to work with and I. Yeah, then I'll just modify the offer a bit and. But yeah, it's, uh, zooming out to what you said. I agree.

Speaker A: But it wouldn't be, Ryan, you getting on a call and discounting your core offering. You'd be saying, well, if you want me and if you want these services and if you want this value, then this is the price, this is the investment. If you don't want that, then we can take this out, this out, this out. And therefore, that's the value. But if you're not prepared to pay for this, you're not getting that. So you're not, ah, you're not discounting what your core offer is. You're holding true to what the value is. You're saying, well, if you're not, if that is too much for you to pay for, if you don't think it's valuable, then give me. And this is why I ask people all the time, what's your budget? Because I'll fit a service into a budget if that's required. But I'll also challenge them on how much work have they done to come up with that budget. Because I want to test what do they see as perceived value. Right,

Speaker B: yeah. Hm. I like that. And yeah, you're right, it's. It's no, no discounting without removing, like, features or changing the amount of work that's required.

Speaker A: Yeah,

Speaker B: because I mean, that. That right there is the recipe for reduced margin.

Speaker A: So on that point, I'm sure that there are some agencies that you work with who, who are in highly competitive marketplaces where they might have to compete for on tenders, um, or they might have some sort of competitive process they have to go through. What sort of role do you tend to play in and how do you help them maintain their, I guess their focus on protecting that margin at the expense of giving away too much or discounting or doing these things we've been talking about.

Speaker B: So the way that we play into that is just knowing the cost structure. So it's like, hey, if we're going to have to get competitive on this, let's estimate what it's going to, what, what it's going to take for us to deliver this service and then we'll build on top of it. And if we can't get to our target margin, then we, we, I'm going to say we don't do it or we strategically say like we'll do it at 45% or something. Um, but I try to like very, very. What's the opposite of frequently very little do that

Speaker A: infrequently.

Speaker B: Infrequently, that's the word. Very infrequently do that. Um, and then I think another thing that comes to mind is like uh, one of our clients pinged us yesterday or the other day and said like, hey, this, this uh, prospect, they're not ideal but they want to uh, they want to work with us on a shorter term project like a month. And I'm like well what are we going to do for them in a month? Like that kind of is just a waste of time. Like we're going to get them onboarded, they're expecting to get results in their social media in a month. Like they're just, there's a clear disconnect in like value from the beginning. So it's just a waste of time. So I think it's just like the, the cost component and then the sounding board component of talking through like decisions like that.

Speaker A: And can you talk a bit more about that? Because what I hear there is um, the agency might think well this, this, this particular prospect might sit within our ideal customer profile avatar. But the time frame is, is irrelevant and I need the voice of reason. So you talk a lot about data driven decisions and the role that you play. And it could be you're the sounding board or you could be the financial advisor for want of a better term, or hold the mirror up. How important is the role that you play in helping to educate an agency owner on the data driven decisions? Not getting I guess sucked into the allure of this is a fantastic customer. But you know, a month is nowhere near enough time to actually do any and develop any momentum. So the role that you play in driving the thinking around data driven decision making how is important for that, particularly when you've got agency owners that maybe are not as educated as you are.

Speaker B: I mean, in my opinion, it's very important because it's like the. It's like, why, in that scenario, why enable our whole team, like, incur all these costs, uh, make everyone stressed out for them to just churn in the next month, like, it's, it's a waste. Even though, like, oh, we can make 10 grand, but like, yeah, we're just, we're gonna earn. We're gonna build 10 grand. But, like, who knows? Are we gonna collect it? Are we gonna, like, all these various things? Um, yeah, you know, as I say that too, it makes me think of another time where, um, one of my clients, this happened right before they came to me. They, they verbally, uh, signed a new client. They were going to pay for them to go to Dubai. So they booked their trip, they went to Dubai, they delivered the service. Then it came. Then they decided to send the invoice, and they got ghosted, um, on, on the service and reimbursement for the trip. And it's just like, things like that where that happened. And then the next year, they're doing something similar, like, hey, we've not collected on this invoice for three months. You said we're following up. Like, this reminds me of what you did in Dubai. And they're like, oh, yeah, like, I'm not gonna get burned like that again. So, again, like, voice of reason or mirror of like, hey, you're doing the same behavior, um, and you're notoriously a creative person who's, um, not aggressive with getting your money, but, like, we're not going to do free work here.

Speaker A: And that. And that comes down to really understanding the true value and holding on to this. This, this service is not for everybody. And it's going to be from some very specific people and organizations. And there needs to be some rules around engagement. So, for example, you'd look. And hindsight's a beautiful thing, right? You think, well, logically, if you're going to go to Dubai, then the client pays for me to go to Dubai, and that's done up front. They book it and they give you a deposit, and then I'll do the service and then the reimbursement after the service is delivered. Not all ahead of time. I mean, that's just logical. But if you're a creator, you think, oh, my God, I get excited to buy and,

Speaker B: yeah,

Speaker A: and it may be. And there'll be people listening to this, and I'm in This category as well, that you like to think most people are good people

Speaker B: and ah,

Speaker A: you like to give people the benefit of the doubt that they will do good so they will follow through on the promises that they make.

Speaker B: Yeah.

Speaker A: And this is what I'm trying to instill more and more in sales teams and particularly sales leaders is. Yeah, that's great. You can still have great positive projections onto people but you've also got to have some rigorous rules and regulations around what services you provide and what the value is and you do not compromise on that. Which means you need to know your numbers.

Speaker B: Yeah, love that.

Speaker A: You need to know it. You need to know it. So

Speaker B: I think there's uh, as you say that it makes me think of more KPIs and probably some stuff on the front end too around uh, like pipeline I think is pipeline and like when's it going to convert? I think those, those are like very important for uh, the health of that agency too or any business.

Speaker A: Well, as you're talking I'm thinking that that example we said, hey, we're going to have this month long engagement and it might take, I don't know, let's just say two or three people out of the agency for a month for that amount of revenue. But are we really setting ourselves up for failure where we can't deliver, uh, what the customer's expecting because the Runway is not long enough. But the cost that the agency owner may not necessarily have front of mind is if I have two to three people focus on this account, it means that they can't focus on more longer term opportunities which are probably going to be more profitable in the long term. So we have to learn to say no.

Speaker B: Yeah. Yep. For sure.

Speaker A: So how hard is that? Well, how hard has that been for you to say no and how hard is it for your clients? Clients

Speaker B: I learn am. Well, I think I'm going to say I'm always learning that lesson. Uh, but in the last few months, um, stopped working with my biggest client too and start to again say no, free up my time, uh, to focus on more of like the ideal client type person. Um, so yeah, I mean it's obviously hard to turn away from, from uh, getting paid. But yeah, I think it's, it's necessary and it's almost one of those things like I feel like every time you do it's uh, a new stripe on your entrepreneur belt of just like, I don't know, becoming a better leader and a better business owner of just like there's more opportunity out there and

Speaker A: There is, there is. And the great, the great thing about that is that as an entrepreneur, as a business owner, uh, as a sales leader, ah, as a cfo, as a CRO, as a CEO, the mindset has to be that there is an infinite number of potential customers out there and the market is not confined to a, uh, finite number of potential customers. Right now, if your attitude is there's only so many customers I can provide service to, then you're going to be quite fixed in than your thinking. And that may lead to you providing services at a reduced margin because you want to keep them because it makes you feel safe versus, you know what? I'm going to say no to this client. It may have a negative financial impact in the short term, but I know that doing that, it will actually create opportunity for me in the long term, which over time is probably going to be better for me, but better for the market as well.

Speaker B: Yeah. And I know that I have three months of cash from my KPIs and so I can like float this, uh, and make sure I'm doing the right activities to like rebuild the business in a better way.

Speaker A: Yeah, that's it. That's it. And that's, that's pivoting. That's pivoting and that's continual, continual investment in yourself and continually investigation in terms of what's the market I should be focused on. Um, and am I, have I yet identified my client avatar?

Speaker B: Yeah.

Speaker A: So moving forward, um, I'm conscious of time because it's getting quite late for you. Moving forward, how do you, how do you see, how do you see the markets that you operate in evolving? Um, are you, are you filled with optimism? Do you find that the agencies you're working with are starting to get more business savvy, which means the work that you do can be more targeted, more strategic and you may now become true business partners. Or how do you, how do you see the future of, um, of fractional CFO but also small business?

Speaker B: Um, I think yes, they are getting more business savvy and they're getting, and it's because they know their numbers. Um, it's just a different level of confidence, like they're already confident owners, but then you just put like the data behind it, then it's a different ball game. Um, the future of agencies is weird right now, um, because the services are changing so fast, um, that it's sort of just like, I mean it's just trying to figure out where things land and how pricing changes and yada yada. So it's it's, it's weird, but I, um, mean, everything is sort of just always shifting as it is. So,

Speaker A: yeah,

Speaker B: we'll find a place and. Yeah,

Speaker A: love it. Well, mate, best of luck. As you continue to dominate the, uh, the market in the US and your journey of entrepreneurship and helping agencies help, um, and I guess the continual journey of helping people improve their financial literacy, um, the thing that I got out of today, and it's helped me that when I'm talking to sales teams and sales leaders in particular, not only do they need to know their numbers, but it's not the top line revenue number they need to delve into and really understand what the profitability of the products and the services are that they're selling. And if they don't know that, then start to ask them really critical questions internally so they can have a better understanding of what they're playing with. Um, because sometimes in big organizations they simply don't have because that information is kept away from them. They're told

Speaker B: this

Speaker A: is the price and that's it. And they don't get to ask those questions. So it's been really enlightening. So thank you.

Speaker B: Yeah, of course.

Speaker A: For people who'd like to learn more about you and follow you on your journey and connect with you individually, where's the best place for them to do that?

Speaker B: Uh, best place is LinkedIn. Uh, Ryan Page on there and uh, happy to connect and chat with anyone or, uh, give you some margin tips or anything. Pricing review.

Speaker A: Talk about, uh, having three or six months of cash on hand.

Speaker B: Well, it's one thing to talk about, it's another thing to build it.

Speaker A: Yeah, it sounds great in theory, but when you actually come down to doing it, it's like the, there is a bit of work that has to be done and maybe, uh, some reprioritization that needs to be put in place as well.

Speaker B: And honestly, uh, maybe you kind of start to feel like an idiot for sitting on a lot of cash, but

Speaker A: I

Speaker B: don't know, it's security.

Speaker A: But that's why they need people like you that can come in and provide a, uh, different lens and educate them so they can become better business people and maximize the opportunity of that business thriving because they're adding value to the marketplace.

Speaker B: Yeah,

Speaker A: brilliant.

Speaker B: Yeah,

Speaker A: mate, it's been a pleasure having on the podcast. Thank you so much. If there was one, um, last piece of advice you wanted to leave people with that perhaps we haven't covered.

Speaker B: Uh, um, something I feel like I've been saying a lot lately is like, don't compare your step one to someone else's step two or three. Uh, so just like, kind of run your own journey, and, uh, you're doing great.

Speaker A: Love it. Love it. So the power of comparison is, is it's. It's fraught with danger. So do not compare yourself with anybody else, because everyone's got their own journey and everyone's on the same. On the same hero's journey, but we're all at different stages. So, um, yeah, great advice, mate. So thank you so much. I know it's, um, pretty late there in Nashville, so, um, I greatly appreciate you jumping on and all the best for your future.

Speaker B: Yep. Thanks. Enjoy your lunch.

Speaker A: Thanks. Thank you for listening to the Exceptional Sales Letter podcast. I trust the information this episode has been helpful in your journey towards becoming exceptional. And remember, please take the time to rate the show. Subscribe to the show so other people can find it. But also, if I can help you, jump in my calendar Calendar, go to leadwithdarren.com and let's have a conversation about how I can help you along your journey to being exceptional.