#002: Challenge Your Clients to Keep Them Around 10x Longer
Hey my friend! 😎
Welcome to The 5 Minute Fractional CFO.
Here's 1 actionable tip to help you start, scale, or optimize your fractional CFO firm.
This edition will take you about 4 minutes to read.
In this edition, I'm going to share 3 ideas to help you start challenging your clients so they stay with your firm up to 10x longer.
As a fractional CFO, one your biggest challenges is establishing yourself as a person that brings transformation.
When your clients see you as someone that brings transformation (new ideas, different perspectives, growth) instead of transaction (reporting facts), you become indispensable. You become a trusted advisor that they can't live without.
The best way to transform your clients is by challenging them.
WITHOUT CHALLENGE, THERE CAN BE NO TRANSFORMATION.
Unfortunately, most fractional CFOs never learn how to challenge their clients. So they never move beyond being transactional. If you stay transactional, you'll get "friend zoned" which means they won't be willing to pay a premium price for your services very long.
The primary reason fractional CFOs get stuck in the transactional friend zone is because they don't challenge their clients.
There are a few reasons why.
Most fractional CFOs:
Don't now how to push back on "bad" ideas in a respectful way
Aren't sure if it's their place to challenge their clients
Assume that the client has already considered anything they'd offer up
Lack a framework for challenging their clients
Here are 3 ideas you can leverage to start challenging your clients.
Idea 1: Give them homework.
Giving your clients homework forces them to get engaged in their financial strategy.
This shouldn't be anything complicated. And it's important that they're an active participant in their financial strategy anyway!
A few months ago, we had a client that had problematic gross profit margins. We gave them a homework assignment to identify 3 vendors that they could renegotiate terms with. They came back to our next monthly call with new terms for 2 vendors which resulted in a 3.5% increase in GPM.
Idea 2: Have them identify 3 alternatives to a bad idea.
Your clients are likely visionaries. Visionaries sometimes come up with ideas that you know aren't great from a financial perspective. But how do you communicate that message to them in the right way?
When I first started, I would 1) tell them it was a bad idea and tell them how I'd do it or 2) I wouldn't say anything because I thought it wasn't my place or 3) assume that they had already considered my ideas.
Instead, challenge them like this: tell them you're worried that their plan might not be the best because (insert 30k foot view reasons here) and ask them to brainstorm 2-3 alternatives that you'll help them think through.
Idea 3: Hold them accountable.
We all need accountability.
But CEOs often lack anyone that is actually in a position to hold them accountable.
With some work, you can become that accountability partner for your clients:
At the end of each CFO call, make sure there are clear and specific goals and tasks that you and your client agree to.
Make going over those goals and tasks part of your regular call routine.
Knowing that you're going to be following up with them will help solidify you as an accountability partner with your client.
TLDR: Challenging your clients is an important step in becoming transformational with your clients.
Having a few intentional ways to challenge them will quickly move you along in that journey.
That's all for this Friday. 3 ways to challenge your clients.
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