I took my first CFO client in November 2021. They had terrible books, no financial insight, and couldn't raise a dollar. Within a few weeks they had clean books, a clear financial plan, and an oversubscribed fundraising round. Here's a step-by-step walkthrough of what I did:
The Company The company was a brick and mortar wellness startup looking to expand past 1 location. They were looking to raise $5m and their current finance guy was MIA. So here's what I did in Week 1:
Checking Their Financials What they were doing before: • CPA was logging transactions in random places every 3 months • Not reconciling • Booking everything on an aggregate basis (aka they couldn’t delineate what was corporate overhead and physical location expense)
Reconciling Their Financials I spent 1 weekend going through and re-booking and re-categorizing all the financial information and reconciling it to bank statements. There was no way to build a financial model for investors without first understanding the books.
P&L by Class The next week, we created a system / SOP of what accounts would get booked into what vendors. And we started building out a "P&L by class" in Quickbooks The P&L by class allows you to look at the P&L by location or business unit (see image).
Chart of Accounts The P&L by class told us what revenue came from events VS brick & mortar locations. Prior to our cleanup, we wouldn’t have been able to even tell an investor the true profitability of one of their locations.
Our Software Our software integration pulls in their Quickbooks data every hour so they can plan cash flows and see how each new potential location will change their cash runway. Real-time KPI updates pulled every hour.
Runway We modeled out the timing of the cash flows on the financial model tab in our software and know that this new location drops our runway below 12 months So now we are in discussions with multiple investors signing SAFE notes
Fixing the Mess In 1 year they went from: • 801 transactions from the past 4 months not booked in their Quickbooks • no reconciliations • no insights To: • having clean books and a planning tool that helps them plan the next 12 months and the next 5 years.
5 Year Model After the 1 week clean up, we built a 5 yr model that we shared with investors. 1 potential investor was an investment firm that runs Jay-Z’s money (pretty cool, huh?) They told the COO “whoever does your financial work did an insane job” The ultimate compliment
The Investment Round That investment round was oversubscribed and they raised their multiple millions with ease at a very high valuation.
Our Relationship with the Client Our price with this client has 4x’d since we started and we are in discussions to double it again. They have referred us to multiple new people and are thrilled to work with us.
This is why we do what we do. To get: 1. Serious outcomes for founders 2. Clean books and key insights at all times to make better decisions
If you need help to understand what's going on under the hood with your financials, please reach out here: https://t.co/u320zdLpeA We can help you raise, exit, or scale. And if we can't help, we'll point you in the right direction.
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