Marketing Experts Reveal Top Strategies To

Arlen
[00:00:27]
Welcome back to the e-commerce marketing podcast. Everyone. I am your host Arlen Robinson. And today we have a very special guest Adam lean, who is the founder of The CFO Project that’s made up of “Chief Financial Officers” who works directly with small business owners and shows them how to make their business profitable. Welcome to the podcast, Adam.

Adam
[00:00:51]
Hey, I’m glad to be here. Thanks for having me. Yeah,

Arlen
[00:00:53]
Not a problem. I’m super excited to talk to you because you’re a numbers guy and I don’t think I’ve had too many numbers guys on the podcast. And so it’s a little switching gears a little bit here, but the bottom line is numbers is where it’s at and that’s what businesses really need to be focused on on the day to day basis is improving that bottom line. And you’ve come up with a, a kind of a clear path for businesses to achieve profitability four key steps that we’re gonna be talking about today in the podcast. But before we get into all of that, why don’t you tell our audience a little bit about your background and specifically how you got into what you’re doing today?

Adam
[00:01:30]
Yeah, so I mean, the reason why I’m doing what I’m doing today, which is helping small business owners improve the profit of their business is because I started my very first e-commerce store. When I graduated from college, this was back in 2005. I was an accounting major. So I thought, Hey, I’ll become an accountant. I became an accountant and quickly realized that that was not the profession for me. I understood numbers. And I got it. I just didn’t like sitting behind a desk recording what happened for a business. I wanted to actually work in the business and sort of get my hands dirty. And so I was bored to tears. So I started an e-commerce business. This was back in 2005 and things actually started off pretty great. I mean, within, I mean, it was a struggle of course, but within two years I was doing about a half a million dollars in sales and it was great. So I left my day job and then things started to go downhill.

Arlen
[00:02:26]
Okay,

Adam
[00:02:27]
Very fast. You know, sales were growing, that’s the thing sales were growing, but profitability was not. And, and in fact it was shrinking. The more sales grew, the more my profit shrink, which is not a good thing. And I remember, you know, about a month before Christmas, and of course I sold a, you know, in retail, all of us that have retail businesses, Christmas, the fourth quarter is such a very important time. And I remember sitting at my desk about a month before, just scared to death because things were going so wrong, but I didn’t know why I was so overwhelmed. I, it seemed like I had all these balls up in the air and I felt like they were all gonna drop. And of course my luck, they were all gonna drop two weeks before Christmas. And, and I would go outta business. All my customers would hate me.

Adam
[00:03:16]
And, but the thing that frustrated me was that I was an accountant. I should have known what was wrong with the business, but I didn’t because I was so unfocused, I simply was just not focused on the most important things that mattered. So I got to work, figuring out what were the most important things that mattered in the business because I didn’t wanna fail. So it took me several years to get there, but I figured out the most important things that need to happen. And I, you know, I got it. I sought it out from a lot of others, very smart people in the eCommerce world, people that were not in the e-commerce world that were business people and I figured out what needed to happen. And so that’s what I do today. As I’ve founded this business called the CFO project, we give business owners, e-commerce business owners, a CFO to lead them through this four step process for having a more profitable business. That’s what we

Arlen
[00:04:15]
Do. Okay. That’s awesome. And it’s really good to hear that you come from, you know, I guess you could say you’re kind of a veteran in the game as far as e-commerce is concerned. Cause like you said, you ran an e-commerce business and you know, you were making a couple million dollars in that and that’s not an effort that is easy to achieve really. You know, that’s not something that you can just wake up one day, say, okay, I’m gonna sell, I’m gonna start selling shoes online. And you know, you know, six months later, or a year later, you don’t just immediately start making millions of dollars. It’s just not that easy. So obviously you were doing the right thing and that you, you knew what you had to do. Now. One thing I wanted to ask you and, and I think I may already know the answer to this question, but we always hear that so many businesses fail, you know, out of all of these businesses that start up every day, small businesses, there’s such a small percentage of these businesses that actually see their fifth birthday is the main reason because they didn’t follow these particular steps.

Arlen
[00:05:17]
These four key things, is that really what it is? Is that kind of what you uncovered?

Adam
[00:05:21]
It all boils down to focusing on the most important things, the most important things that matter. And you know, according to the small business administration, half of all small businesses fail within the first five years, they never see that’s the statistic. You were just reciting, never see their fifth birthday, half of ’em. That’s crazy. And it’s because of a few things, but it all boils down to the fact that those business owners did not focus on the most important things in order to have a profitable business, because at the end of the day, any business and listening business owner, listening to this knows that you have to have cash flow. Well, this sounds obvious, but when you put it in practically speaking, what does that even mean? Like cash flow be a profitable business. I mean, what does that even mean? Well, at the end of the day, you have to have, you simply just have to have enough cash to continue keeping the business alive, but also growing the business.

Adam
[00:06:17]
That’s pretty much it. So if that’s the end goal to have generate enough cash to keep the lights on and to grow the business, then how do you get there? Well, that’s the question, the million dollar question that business owners struggle with. They’re not focusing on the answer to that question. They’re not focusing on the things that matter every single month. And the reason is, is because most, and this is in my, you know, my opinion from working with a ton of business owners and just my own personal experience is that business owners get into business because they have a love of what they sell, not necessarily because they’re experts in business. So for example, somebody that loves leathercraft who came up with these, who loves working with their hands and came up with these cool methods for creating wallets as an example, and key chains outta leather and notebooks, that person has a love for leathercraft and they wanna sell their product on an e-commerce store, which is great, but they’re going to naturally spend most of their time focusing on the operations, focusing on the product of their business. And of course you have to have a good product. You have to provide something of quality and you have to provide something that people want. But at the end of the day, the business is still a business and the business has to have cash flow and has to make a profit and business owners are a lot of times are just not equipped and, or they’re just too busy to figure out what those are. What are the most important things needed to make a profit?

Arlen
[00:07:54]
That is so true. And I think you really nailed it. The main thing is a lot of these business owners are just are too busy. You know, they’re in the weeds. So to speak over their business, they’re managing the day to day operations, making sure the products are getting out to the people or the services are getting out to their customers. And just going through all that, you know, I don’t have to list everything, but all of the business owners out there that are listening know that, you know, there’s a million things that you have to do. So it’s really easy to get kind of distracted and really not and lose focus or lose sight into the true main thing that you need to be focused on, which is increasing the profit. I think one of the things also that you mentioned earlier, when you talked about the business that you were in, where you were continually making more and more sales selling, more and more products, but you still weren’t profitable.

Arlen
[00:08:45]
And I can definitely see how that could be the case for, you know, not only your business, but the other businesses that I’ve seen this happen to. And a lot of businesses don’t realize this, you can do as much marketing that you possibly can, you know, on this podcast, we’ve interviewed hundreds of, of people and have provided some very insightful marketing strategies. And so you can do all of these tactics to drive business into your business or drive customers into your business, but that’s not necessarily gonna translate to profitability because of course you have to think about with all of these customers coming in that is going to increase overhead costs, things that you have to do. And if you don’t manage your numbers correctly, and some of the key things that you know, you’re gonna talk about, you can easily not be profitable. So it’s that I can definitely see. Yeah. That being the case with a, with a lot of businesses. So in your experience with the businesses that you’ve dealt with, really, what’s the first thing that you look for when you kind of get in there and your, your CFOs sit down with them. What do they look for?

Adam
[00:09:46]
The very first thing we do when we work with any business is we’ve got to understand where the business is currently. And everybody knows, you gotta know your numbers, but you, you have to not just know your numbers. You have to know what your numbers are telling you. You have to be able to spot trends. You have to just look at your, you have to take your rose colored glasses off and look at where your business really is heading. What are the red flags? What are the, the weaknesses in the business? And then the other hand, what are the opportunities that you have? What are the strings of the businesses that you could capitalize on? All of that is you have to know your numbers, but you also have to know what your numbers are telling you. So that’s the very first thing that’s actually the first step in our four step process is we do a deep dive and really understand we do an, what we call it a financial audit on the business.

Adam
[01:10:33]
But you have to understand where your business is at now for the, and where it’s been for the past, at least 24 months, and be able to spot trends. You have to take a very objective, look at your business. And that’s hard for business owners, especially that because they’re so close to the business business owners. And I’m guilty of this tend to ignore certain red flags because they don’t really want to deal with it. Right. Right. You know what I mean? Like that one year that, I mean, my worst year in business was the, when I knew I had a problem, it was a month before Christmas and I was working on things that I enjoyed more and I failed to work on the things that needed to really improve the business.

Arlen
[01:11:19]
And you’re not the only one that I know is something that a lot of business owners do. It’s easy. It’s kind of comfortable to kind of go through doing things that, you know, like you said, you like to do, or that are easy or, or things that you can kind of just do almost on autopilot because you’re so used to doing it. But a lot of times that is not the right thing to be doing specifically at a certain times in the business.

Adam

[01:11:43]

And by the way, you have to know your numbers. That’s what I mentioned in step one. And a lot of business owners think that they have a bookkeeper and accountant. So they’re all good. Here’s the problem though. A bookkeeper, an accountant’s job is to record what happened in the past correctly. That’s what they do. They’re not designed and they’re not getting paid to, honestly, they’re not getting paid to help you strategize and interpret your numbers and, and help you figure out what they mean, what your numbers are telling you to help you grow your business. That’s the job of a CFO. That’s why big businesses have CFOs to do that. The CFO has a team of people that produce the reports. That’ll be the bookkeeper to account. It. They’ll produce these financials for you, but the CFO interprets those numbers and helps the leadership understand what they need to focus on to grow the business. Because those 50 those business owners, the half of all businesses that failed, I guarantee you, most of them had that failed, had a bookkeeper and accounted. So you have to be able to have you don’t just need to know your numbers. You need to know what they’re telling you.

Arlen
[01:12:49]
Right? Right. Definitely. That makes a lot of sense. Now, you know, once you guys do this initial deep dive, what’s like a high level view of the next steps. What are the next things that you guys

Adam
[01:12:58]
Do? Yeah. So the very next step in step two in our four step process is we set goals for profit. So we say, right, as of 12 months from today’s date, where do we want to be profit wise? And that will be our target. We call it the, the profit target. So that will be our target for profit to come up with that target. We’ll figure out where do we wanna be sales wise? And we’ll do this for every product. Or if your storage is large enough, every category will sales goals for every category or every product we’ll set, gross average order amounts. And then total order amounts. We’ll set goals for those things that will give us sales goals. Then we’ll set gross margin goals for each of those same categories or products. And then we’ll set expense goals for the whole store, like overhead expenses. And then that will give us our net profit goal. And once we set that goal, that is our focus. That’s why we call it a target. That is our focus. A lot of businesses they’ll call it like a budget. They’ll set a budget and then forget it because budget is such a constricting term.

Arlen
[01:14:08]
Yeah, it

Adam
[01:14:09]
Is. We’d like to think of it as a goal because it is a goal. We, you know, if you set an aggressive enough goal, that is reason that it’s realistic and attainable. That’s motivating. If you know that in a year from now, you can have a 20% or 10% higher profit than you did last year. That’s motivating that translates into real cash that goes into your pocket, that you can do what you want with. You can reinvest back in your business. You can keep it, you can give everybody a bonus. It doesn’t matter. It’s just, you’re creating more cash, which is helping you not go out of business.

Arlen
[01:14:44]
Right. That’s really good because it’s really so important to have these goals. I know it’s something in the fact that you kind of see what you’re striving for rather than shooting in the dark. Cuz I know businesses tend to, they know they need to make more money. They know they need to Mo make more sales. They’re constantly running. They’re constantly trying to achieve a goal, but it’s like an, almost an unstated goal, but there’s something in the power of actually noting that and dictating all of that to the appropriate people within the organization, that these are our goals. This is what we’re trying to meet for this particular quarter or this particular month. This is what we need to be. And these are the things that we’re gonna do to make that happen. And so, yeah, I think that’s, yeah, that’s really so important. And I know with businesses, of course there’s a lot to it, but I think the main thing, and I know what you probably do. I know a lot of what you guys are probably doing is really just kind of coaching businesses to really kind of stay on track and adhere to these things, which I know is kind of a whole thing as to what you’re doing is to make sure that they follow through with this.

Adam
[01:15:51]
Yeah, well that’s actually steps three and four. I mean, step three is keeping track of how well the business is doing compared to its goal. And we call it the scoreboard. So we literally create a scoreboard of how the business is doing and it’s, and that’s the other thing we don’t like to speak like an accountant or finance person, because most business owners don’t wanna listen to that. Right.

Arlen
[01:16:15]
Right.

Adam
[01:16:16]
And we speak like a normal person, even though we’re financial people, we know what it’s like. I mean, to be the business owner we wanna make and we wanna make sure you hit those targets. So we’re going to do whatever we can to help you. So we created this thing called a scoreboard, and we’ll give you this one page report that will clearly show you, what’s going right. And what’s going wrong. And then step four is every single month, we’ll give you a list of no more than five. So usually about three, three, so three to five of the most important, next steps that need to happen within the next 30 days. And we’ll do that every single month. And that way you’re focusing on only the things that matter. So as long as you do these three to five things, then you could spend the rest of your time doing what you enjoy doing, frankly, things that you, you should be doing to help you from being burned out. But at least, you know, that you’re, that when you’re working on these three to five, most important things, you’re working on your business instead of in your business, you’re ensuring that your business is going to is growing and is on track to hit those goals.

Arlen
[01:17:24]
That’s very critical and so true. That it’s really interesting what you said. It’s not that these business owners have to put aside really what they’re passionate about, which is providing a product or service or doing a specific aspect of a business. That’s essential to it, the heart of the business. They don’t have to put that aside, but what they have to do is more kind of adjust their priorities and focus on those key things that you mentioned and have some more accountability. I know that’s really the key thing there. Now, as far as these steps are concerned, is there like a general in your experience, is there a general timeframe as to when a business will reach profitability? Let’s say at the beginning of you meeting with them and working with them, how long does it typically take a business to reach profitability when they go through these steps?

Adam
[01:18:13]
That’s a great question. And it really just depends on the business and depends on how bad the business is. And we’ve seen that it takes about a good six months to really, to see a lot of progress. But most businesses that start working with us we’ll see progress within 30 to 60 days because we’re naturally going to start with the most important thing. So sort of the lower hanging fruit of the things that we can immediately give you some cash, influx, some, some things that will improve the profit almost immediately. And then every single month we’ll keep working on those things. So that you’re growing in your profit, growing profit and cash flow. You know, one of my favorite quotes is, is it doesn’t matter how much you make it matters, how much you keep and making is the sales part. Keeping is the profit part

Arlen
[01:19:03]
That is so true. It really comes down to it. Yeah. How much are you keeping? Yes. Necessarily how much you’re pulling in now I’m a huge fan of these business shows that kind of go into the details and the minutia of businesses that have been around for, you know, varying the amount of time, specifically the show, the profit, which is on CNBC. I love the profit, right? I think you had mentioned that when we spoke earlier that you’re a big fan of it. And for those listeners, I’m familiar with it. There’s a gentleman, a very successful entrepreneur named Marcus loons who goes, and he invests in businesses. What he’ll do is provide an initial infusion of cash in exchange for equity. And he also goes in and does various other roles plays other roles in the business, or his team actually plays other roles where they’ll assist them with various things.

Arlen
[01:19:52]
And one of the things that I I’ve seen in a lot of the episodes at the beginning is, you know, there’s a lot of businesses where a lot of these businesses, maybe some mom and pop spots, small businesses where seems like they have a really solid product or they’re providing some great services, but yet they just have a track record of years and years of not being profitable. A lot of these businesses have a lot of debt that they’re dealing with, and it’s not that they don’t have a good product or service, but it’s just, they have this long history of just really not making a profit. What I really wanted to know in your opinion is when you’re dealing with businesses like that, where, you know, they haven’t been profitable for just years and years, they maybe have a lot of debt. Is it, is it too late to fix a company like this? Or is it ever too late for a company to reach profitability?

Adam
[02:20:41]
Honestly, if they’re still in business, it’s not too late. If the business owner has passion and if the business owner cares that much and they believe that much, then we’re gonna do everything we can to help them. And if the business is not outta business yet, then, then there’s a reason why, I mean, so we’re gonna do as much as we can, but we can’t be passionate more than the business owner about the business. We can’t push the business owner. The business owner has to, if, if they care that much, then we will care. We truly care about the success of our clients. Now, in some cases it may be too late, but we’ve never experienced that.

Arlen
[02:21:22]
Yeah, I guess like you said, as long as they’re still in business, if the lights are still on, they’re still providing a product or service to some set of customers. There’s hope. Yeah. I guess there’s still a little bit of light at the end of that tunnel, even though it may be getting dimmer and dimmer, as long as they’re, like I said, the doors are still open there’s, there’s definitely things that can be done.

Adam
[02:21:41]
And the clients that I’ve dealt with that had a very similar situation it’s usually because they didn’t have a, the reason why they hadn’t gone outta business yet is because there is a demand for what they sell. And there they have sales. They’re just not making enough money on those sales. So like I had a client that we started working with a couple years ago that they didn’t have a sales problem. They were doing about 1.4 million in sales. We quickly realized that one of their problems was one of their product categories had very, very poor margins. We got to work on fixing those margins. We either increased the price or worked with the supplier on getting the costs down, but we were able to improve their profit, their net profit by a quarter of a million dollars without increasing sales. And so that’s the thing. It is doesn’t matter how much you make. It literally matters how much you keep. They were better off with the, of course, with making a $250,000 profit. And they weren’t making a, a loss with the same sales.

Arlen
[02:22:45]
That’s really interesting. Cuz like you said, you never, it didn’t increase their sales, but yeah, you just did some tweaks and allowed them to make more off of those sales that they were already getting. Yeah. So that’s very powerful. Well, Adam, you definitely have opened my eyes on quite a, a lot of things. And I know a lot of our listeners as well, and it was a great refresher here to, to talk about some accounting fundamentals and, and profitability, which is something that every business owner needs to be focusing on. For sure. So I know year four steps there to success are definitely gonna be great for the businesses that take advantage of that. But yeah, what I’d like to leave our listeners with is my final question that I always ask and just kind of switching gears, here’s a, my final fun fact question and that’s, what’s one thing, one fun fact that our audience would be surprised to know about

Adam
[02:23:35]
You. That I was a DJ for my college radio station. Okay. I was the eighties lunchtime rewind DJ. It was a lot of fun. Okay.

Arlen
[02:23:45]
Okay. That’s awesome.

Adam
[02:23:47]
For w E G L I had tens and tens of listeners.

Arlen
[02:23:52]
I’m sure you had had more than that. That’s awesome. Yeah, no, it was a pretty cool job. I could imagine. Regardless of how many listeners you had, I know you had a ball doing it.

Adam
[02:24:01]
Yeah. So yeah, I thought it was fine.

Arlen
[02:24:04]
Yeah, definitely. All right. Well that sounds awesome, Adam. Well, we definitely appreciate you being on the e-commerce marketing podcast and joining us today. And finally, of course, if any of our listeners would like to get ahold of you and pick your brain more, then we’ve already done. So what’s the best way for them to get in contact with you.

Adam
[02:24:22]
So the best way is to go to my website, the CFO project.com. And then you can literally book a call with me at the top right of the website. So just schedule a call, but also I have a sort of a workshop that I’ll give you for free called the CFO project.com/video. The workshop is why your eCommerce business might not be as profitable as it should be. And the five changes required to boost profits this quarter. So check that out. The CFO project.com/video.

Arlen
[02:24:51]
Okay, great. Well, we appreciate that, Adam. I’m glad you share that with our listeners. And I know I definitely encourage everyone to take advantage of that for sure. And definitely thank you again for joining us today on the e-commerce marketing podcast.

Adam
[02:25:03]
Oh man. Thanks for having me. I appreciate it.

speaker 0
[02:25:06]
Thank you for listening to the e-commerce marketing podcast. 

Podcast Guest Info

Adam Lean
Founder of CFO Project