Dave Cain: Welcome to unsuitable on Rea Radio, the award-winning financial services and business advisory podcast that challenges your old school business practices and their traditional business suit culture. Our guests are industry professionals and experts who will challenge you to think beyond the suit and tie while offering you meaningful modern solutions to help you enhance your company’s growth. I’m your host Dave Cain.
I wouldn’t call myself a perfectionist by any means, but I always approach every task with the intention of giving it my best. But what happens when good is not good enough? Jeff Semple, president of the Canton in mid-Ohio region, of FocusCFO, is here today to weigh in on why, in today’s market, good isn’t good enough anymore and what business owners can do to get out of the weeds and back on track towards greatness. Welcome to unsuitable, Jeff!
Jeff Semple: Thanks!
Dave: Appreciate you driving down from the hall of fame city to Dublin, Ohio.
Jeff: Well, anything to play golf.
Dave: Well, you know, you could play today, I suppose. You got your clubs in the back of the car?
Jeff: I never go anywhere without them.
Dave: There you go. Speaking about golf, we’ll get into that in a minute, but I want to talk a little bit about your position with FocusCFO. You’re a market manager, market VP, vice president I don’t know exactly what you’ve got, area president-
Jeff: Area president. Yup.
Dave: -of FocusCFO, in the Canton, Ohio area. Give us a quick elevator speech on FocusCFO.
Jeff: Sure. I mean it’s really about a commitment to small business and helping small business owners, presidents, CEOs, be better than what they are. We’re able to take somebody that’s got a CFO who’s got 20 or 25 years of experience both in the financial and operational part of a business and set them in beside the owner of the business. Not to give everybody more homework to do, but to help them execute on whatever their strategic vision is.
Dave: You know, as a business partner, network partner over the years, I can certainly give you guys a testimony, as you’ve worked with many of our clients. What you bring to the table is really a unique solution, and so hats off to FocusCFO, able to do that in many markets around the state of Ohio.
Jeff: Well thank you. I think that we’ve got a tremendous group that are committed to the same goals and objectives … can we make a difference in the small business community?
Dave: And what is your background? You come from the manufacturing or service industry?
Jeff: Yeah, I sold my company back in 2003, which was manufacturing and distribution business. Since then, I’ve done a lot of different things. So I formed …, a CEO peer group, probably about seven years ago, so I’ve got 18 small business owners that I work with on a regular basis, and Focus was really a no-brainer because it’s the same target market, the same people I like to talk to every day. I’m lucky enough to be able to do what I like to do, which are to talk and help small business owners maybe sidestep some of the speed bumps that I tripped over many times throughout my career.
Dave: So you lived it, you can identify very well with your clients.
Jeff: Well, I would say it’s probably the reason my hair is white, right now.
Dave: Sure. That’s silver, isn’t it? I think it is-
Jeff: Well it’s still blonde if you look in the right way.
Dave: Blonde? Okay, well there you go. One of the things that I understand about your organization with FocusCFO is a lot of the clients that you work with, really it’s not in their budget to go out and hire a full-time CFO, and you guys offer a great solution to that, that may be a business needs you only a couple times a week, a couple times a month, you kind of develop a solution to that particular client’s industry.
Jeff: Yeah, our target’s really the size business that … from two to say 20 million dollars, that doesn’t need a full-time CFO, can’t afford a full-time CFO, but can certainly benefit from the experience level that the CFOs bring to their organization.
Dave: Okay. We’re gonna talk about, again, good isn’t good enough anymore today, and that’s an interesting situation we run into every day, but I know your background as an avid golfer, and let me give you an example where good isn’t good enough. The Master’s is in the rear view mirror, but Jordan Spieth was having the round of his life, and maybe one of the best rounds ever, and he hit the tree branch on 18, and good isn’t good enough there.
Jeff: Yeah, isn’t that the truth. I think that we always have to continue to evolve, as small business owners, which means we all only know what we know, and in many cases, every day is a new day, as a small business owner, we’re in new territory. How many times do you hear a small business owner say that he’s got to make a decision based on his gut, or he’s got a gut feeling of this or that? Which really just tells you he doesn’t have the information to make the decision he’s about to make.
Dave: Right. He’s wearing a bunch of hats, many hats, and he hasn’t had the time to decipher all the variables.
Jeff: Well sure, I mean you look at most people who start businesses, much like myself, you’re either a salesperson or a technician, and you hire a bunch of people around you that can help you every day to accomplish whatever those things are, but you’re caught in the weeds, and you really don’t have the chance to step back and take a look at maybe more of a strategic approach of what you need to accomplish, so you end up growing to a point where you feel that the team around you, although may be very good at being part of the team, as long as they’re being told what to do, you really need people that are going to be able to give you better ideas, better ways of doing things. That are gonna help propel you into either more profitability, better growth, better processes and systems in the business.
Dave: When we talk about CFO or a CFO, you’re always … your mind immediately goes to, we’re talking about financial data, but I know you guys bring other things to the table. It’s strategy, and implementation of that strategy, and maybe different metrics to the business that haven’t … that the business owner hasn’t seen before, just like you’d mentioned, we only know what we don’t know, and or know what we do know, and that stuff that’s out there just eats us up, and pushes us back into the weeds.
Jeff: Sure. So I mean when you’re able … the financial part is only one piece of the puzzle, and it’s really being able to tie the operation to the financials that allow you to have the proper information to be able to make better decisions, and part of that is that when you’re trying to run a business based on a financial statement, historical data, a smart guy told me one time that it’s like trying to drive a car looking out your rear view mirror. Sooner or later, you’re gonna bump into something, you just won’t see it coming. So it’s, from a CFO’s perspective, it’s developing the other side of the equation. The forward-looking information, projections, budgets, forecasts, driving internal cash flow, but really giving you real-time data, forward-looking information that’s going to be able to help you make those better decisions, and really the financial statements, then, just become a reinforcement of what you already know.
Dave: Information is king.
Jeff: Along with cash.
Dave: Along with cash. Cash is maybe the biggest king of all. Well, let’s talk about that, because business is, for the most part, we’re just kind of enjoying a nice ride, right now. Business is probably at the highest it’s been for the past five years around, depending on what industry, but we’re still seeing a lack of cash flow in the marketplace. Are you guys experiencing the same thing, seeing the same thing?
Jeff: Well I think in every business cash flow can always be a struggle. It can always be a challenge. Especially in an environment where things are growing maybe a little bit faster because of a little bit of luck, maybe a little bit of the economy. Whatever it is, but as inventories grow, as accounts receivables grow, I think in most small businesses, it can put a strain on cash flow, if it’s not being managed properly. Again, it goes back to having the right information to be able to make those decisions. I think as you take small business owners who are hardworking, smart people, what makes the difference between the guy that goes out of business, and the guy that thrives? I think, in a lot of cases, it’s the information that they have, to be able to make those decisions, the processes, and systems that they put in place that give them repeatability, and predictability in their business.
Dave: We’d mentioned about being stuck in the weeds, and that happens more frequently than I think we even admit. We even get stuck in the weeds from time to time, and we can relate. We work in that field, we know, we reach out, but some of the entrepreneurs maybe don’t have the resources that you and I have. We didn’t have a deep bench, you guys have a deep bench. An entrepreneur may not have that deep bench and maybe is not sure how to get out of the weeds.
Jeff: I would agree with you. I mean, a lot of times, again it goes back, we only know what we know, so how do we get out of the weeds is oftentimes we don’t know. We don’t understand the path to get there. Being able to have advisors, other people that are able to take a look at 30,000 feet, and maybe pull your head up a little bit and allow you to see what’s in front of you. I think that, as I had mentioned, I started a small business peer group, and with the 18 companies that we have in that group, it’s a chance for each one of them to step back and take a look from 30,000 feet, to challenge each other, to share experiences that will help each other avoid those stumbling blocks that they may see in the future, and works through some of the issues that they may have, and take advantage of opportunities, but it’s all about making better decisions.
Dave: Now as a member of FocusCFO, do you … you had mentioned the CEO peer groups, and advisory groups, is that a service that your firm offers, on a regular basis?
Jeff: Well, I think that, in most cases, all of us have been lucky enough to have a mentor in our lives, that have helped us through those processes, so I think that, as any business owner continues down his path, I think that having a mentor, having a board of advisors, having the right accounting firm, having the right attorney, the people that are going to help them through some of the issues and opportunities that they have, and they’re gonna face, that you don’t have to be an expert at everything. You just have to know who the experts are.
Dave: You know as … love to get time with someone that’s out among business owners, and living, feeling, seeing the problems. Helping solve problems. What are some of the maybe highlight some of the problems you’re running into with your clients out there. What are the business issues? Anything jumps to mind?
Jeff: People, probably.
Dave: People, talent.
Jeff: Yeah, trying to find enough talent, trying to find the right talent, get the right people on the bus, in the right seats, I think, seems to always be a challenge for, as we talk about small business owners. On top of that, I think it’s having the right information, the right dashboard so that they can make the right decisions more quickly. The thing about a small business versus maybe a midsize company, or a larger company, is their room for error is a lot smaller. In many cases, I think it makes it harder to run a small business, from that standpoint. When you’ve got a company that’s doing three, four, five, six million dollars, and there just isn’t a lot of room for error with some of the margins and the profitability that they have, and some of the cash flow issues, and trying to attract the right type of talent to that size business. So I think there’s, in a lot of cases, it’s harder to run a small business like that, and the challenges, although in many cases, may be the same as a larger business, they don’t have all those resources. They don’t have the room to be able to make a mistake.
Dave: Right, right. You’d mentioned cash as certainly one of the big issues. Always has, probably always will be, but there’s some underlying factors why that is, and maybe pick your brain a little bit, are you seeing companies that still are not really managing their accounts receivable?
Jeff: Yeah, you know-
Dave: Are we getting better? We getting better out there, or?
Jeff: Well I think in pockets, as you see, some people don’t feel that they have the ability to manage them any better than what they are, because you talk to a small business owner that says, “I can’t lose a customer,” and if I complain too much or push them too hard, they may go somewhere else. When realistically, everybody expects to be paid within terms, or within reasonable terms, and a lot of times it’s just the squeaky wheel gets the grease, and as long as you’re not complaining, and as long as you’re not asking, you’re not getting.
Dave: You’d mentioned, used the term, well we can’t lose that customer, but I’ve heard your colleagues speak, time and time again, about maybe that’s not the way to look at it. Let’s look at a healthy revenue. Are you seeing some of your clients that some of that revenue just is low margin, just not healthy at all? Or is that still one of the biggest issues you’re running into?
Jeff: I wouldn’t say it’s one of the biggest issues, but the business owner’s understanding of what healthy revenue looks like, that we’re here, it’s nice to have a larger top line business and a lot of revenue, but the reason the majority of us are in business is what we take to the bank every day, so understanding of how revenue impacts our bottom line, how it impacts our cash flow, and really the business model that we have in place.
Dave: You know, I think we went through a stretch where exactly that, everybody wanted to build their top line, and there was a big push to build the top line, and profits weren’t following, and I think you hit it right on the head there. That maybe is not the right strategy.
Jeff: Yeah, I think it’s all in what the owner’s vision is, and what they want, I would say, instead of an exit strategy, what their options strategy is, and where they want to go, and the reasoning behind it. There’s nothing wrong with reinvesting in the business to grow the business, but it’s a choice that you make, and so I think to grow the top line if profits don’t follow because you’re reinvesting in hiring better talent, or you’re investing in equipment, and fixed assets. Whatever it is, as long as there’s a return at some point in time on those investments, then it’s a choice, versus a reaction.
Dave: Sure, and like you said, to start off, good isn’t good enough anymore. Maybe those metrics and the strategies in the past were good, but not working anymore.
Jeff: Yeah, so as you look at … like I said, as small business owners, we’ve got to continue to evolve, and I think there’s a reason that the best business owners or CEOs are lifelong learners. As you look at what happens in business, what’s happened to the surveying industry, with the drone technology, what happened to Sears, and not changing as fast, or understanding how the industry was going to affect them, what Amazon’s done to retailers. So I think that we have to understand that if we don’t continue to evolve, that we could end up just like those guys.
Dave: Sure. I’m still trying to figure out what happened to eight tracks. Did you use to have a little eight-track player?
Jeff: I’ll tell you what, I’ve got a few I can sell you.
Dave: Oh, you do? What tunes did you get on the eight tracks? Anybody good?
Jeff: I’d have to ask my dad, they’re his.
Dave: There you go, there you go. Small businesses, the ones that you had mentioned, and I don’t like to use the word small business, ’cause that’s maybe a different discussion, but the companies in, like you had mentioned, two to 20 million space, we constantly hear access to capital, along with having a tough time finding talent, but access to capital is still an issue. Are you finding that, in the marketplace?
Jeff: Not as much. I think that, as long as there’s a plan in place, and we’ve got the right talent, we’re able to instill confidence with the banking relationships that we have, I think that with the right reporting structure, yeah I think that we’re able to get the type of capital we need, but in most cases, I would say that the first place we need to look at is our business itself. The first place our cash should come from is-
Dave: It’s maybe there, and we don’t know it, ’cause we’re stuck in the weeds.
Jeff: Yeah, sure, it’s sitting in the warehouse with dust on it, the museum part of our inventory.
Dave: Yeah, can’t get rid of it, by golly. Had it forever. Gonna keep it.
Jeff: Right. But as long as we keep it, the bank says it’s a good thing, so it’s collateral.
Dave: That’s right, that’s right. So if Spieth doesn’t hit that branch, is he birdying and setting a record?
Jeff: He was birdying and setting the record.
Dave: He was setting the record. Nobody climbs Mount Everest on their own, and I think you’ve pointed that out with some of the comments you made, but in the few minutes we have left, let’s talk about how you can help my business, how FocusCFO can put a plan in place to help my business be better than good. Let’s go great.
Jeff: It goes back to, again, we all look at our business through our past experiences, and what we’ve experienced to that point, and in many cases, and we are in a new spot every day. We may not be a financial expert. We may not be an operational expert. We may be a good salesperson, or we may be one of the other two. At the end of the day, having somebody that can help put the processes and systems in place, that are going to allow you to make those decisions, because everyone we make has a price tag attached to it, being able to make the right decisions that are going to allow us to move in the direction that we want to. Yeah, I think that, given the information that we need to be able to make decisions, I think that the success rate in small business would increase. I think that, as you look at small businesses, the biggest reason, I think, you see so many failures, is the lack of information, the lack of understanding. But being able to have somebody that can help you understand how you make money, why you make money, and really tie the operation to the financial statements that allow you to be able to make those decisions.
Dave: Great, and what we want to do is put our listeners in contact with you, and certainly, they can probably the best way is to look you up on the web, FocusCFO website. I’m sure your mug’s on the picture. Just click on that, and you’ll pay him a visit, do the little assessment. Doesn’t cost anything, I’m sure you’ll just do-
Jeff: We just sit down and talk.
Dave: Just sit down and talk, and see what direction, you’re part of the strategy, and again, trying to get me from good to better, and best.
Jeff: Absolutely.
Dave: So our guest today has been Jeff Semple, president of the Canton in mid-Ohio region of FocusCFO. Jeff has been here sharing some great ideas about some of the services that FocusCFO provides to help a company grow in these tough times. It’s been a fantastic conversation, and it’s one I believe business owners can’t hear enough about. Listeners, I hope you enjoyed today’s episode as much as I have. If you did, please give us a thumbs up, leave a comment, or share this episode with your colleagues. If you haven’t done so already, please subscribe to unsuitable on Rea Radio on iTunes, or for those that you prefer, go see what’s happening on YouTube. Until next time, I’m Dave Cain, encouraging you to loosen up your tie and think outside the box.
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