Zero To A Hundred – Episode 35: Unlocking Profitability And Financial Efficiency With Roger Chen!

Zero to a Hundred - Jarrod Guy Randolph | Roger Chen | Profitability

 

Accelerators!🚀

This week, we’re joined by Roger Chen, fractional CFO and founder of MYeCFO, to reveal the secrets to financial efficiency and profitability. With over 25 years of experience working with top firms like AIG, Ernst & Young, and New York Life, Roger shares the seven-step pathway to profit and a three-portfolio framework for building wealth and managing risk. Whether you’re looking to scale, save, or streamline, this episode is packed with actionable strategies to level up your business!🎯

What’s on the Menu:

💼When to bring on a fractional CFO—and what to expect.

🔑The seven-step pathway to profit every business owner should know.

📊How to align financial goals with personal and professional growth.

Why Tune In?

Roger’s practical insights simplify financial management for entrepreneurs, helping you make smarter decisions to drive growth and profitability. Whether you’re just starting out or managing a thriving business, this episode delivers valuable takeaways to help you succeed.

Gem from Roger:

Your financials are the resume of your business—make sure they’re spotless.”

Get in Touch with Roger:

📧Email him at Roger@MYeCFO.com or visit MYeCFO.com to learn more.

Don’t miss out—hit that subscribe button and let’s take your business from zero to a hundred!💥

 

Watch the episode here

 

Listen to the podcast here

 

 

Unlocking Profitability And Financial Efficiency With Roger Chen!

I’m very excited to introduce our guest, Roger Chen, who is a financial advisor, as well as a fractional CFO service leader at MYeCFO who works with businesses like yours, founders, entrepreneurs, and executives, helping you create more profitability. He’s been in the business for many years and works with big shops like AIG and Ernst Young, as well as New York Life. He has a chartered financial analyst designation. The guy is wicked smart.

Some of the topics that we will cover will be things such as when you should bring in that CFO, what you should expect from the CFO, the three portfolio frameworks you should have structured around your business and frankly, around your life, and the seven-step pathway to profit formula. It’s not going to be what you expected. It wasn’t what I expected. I want you to tune in because these are things that you can apply to your business and they will make a difference overnight.

For those of you who do not know me, I am the Founder of BoxFi. We are the nation’s leading payment consultant, providing payment processing solutions that help grow your business. I’m excited to share the network that I’ve built over my entrepreneurial journey to help you grow your business and become more profitable. Ladies and gentlemen, let’s accelerate together.

Zero to a Hundred - Jarrod Guy Randolph | Roger Chen | Profitability

 

 

Roger, we are very excited to have you on the show.

I’m excited to be here.

You do some interesting business and work with some very interesting clients as a fractional CFO and a business growth strategist. I’m going to start our session a little bit differently than I typically do. I want you to walk our audience of business owners and entrepreneurs through when they should be considering bringing on a fractional CFO to help grow their business.

When To Consider Hiring A Fractional CFO

A fractional CFO is also referred to as an outsourced CFO. It’s a non-fulltime CFO. By definition, we’re talking about small and medium-sized businesses that don’t have the scale to have a full-time in-house CFO. I’ll get that out of the way. The question is, “When does it make sense?” I’m not trying to throw shade on any accounts or CPAs but typically any for-profit business has a minimum need to do the annual taxes. They need to do it themselves or they have a tax preparer, often a CPA or a tax specialist.

A typical thing is at the point where they might outgrow that particular relationship. That’s not to say that there’s anything wrong with the tax prep that they’re getting. If you think about the business model of a typical professional tax preparer, it’s a volume business. They could be at scale. An individual tax preparer could be handling 300, 400, to 500 tax returns a month for other businesses.

They certainly are positioned to be that advisor but their business model is not designed to support it. A fractional CFO, the way I see it, is designed to support multiple clients but not anywhere near 300 a year. There are so many hours in a year and a week. It’s a relationship support. It’s the point where you ask yourself questions about if you could have a few more hours with whoever your financial partner is. Oftentimes, it is your CPA, tax accountant, or so forth. Not only the owner can decide this but they feel like they’re getting the support they need.

As an owner of a business, what should you be asking yourself or how should you be looking at your business to determine that it is the time that you bring on that fractional CFO? Are there certain milestones that you reach as a business owner where it’s the pivotal point we need to bring them on?

It’s case by case. One is a firm understanding of where they’re at in their business. Is their profit stream relatively predictable? It doesn’t have to be. It depends on the industry and business. Can it get to the point where they understand what’s going on? Are they in no-surprises mode? If they can’t comfortably answer that for themselves, then they should think about working with a partner.

You look at your fractional CFO almost like an outside partner to the business. Is there a too early to bring one on scenario or is it the earlier the better? What would you advise?

I would say the earlier the better. The way I view it is there is a role. A fractional CFO is a specific role like many fractional CXO types of roles. It’s a part-time thing versus having the full-time. There’s a literal sense but I would step back and say if you think about any business owner, there’s the profit. There’s the financial management of their profit stream, the money that they’re making. You think, “That’s my finance person or CFO.” That’s the literal type of thing.

This is true for any chief financial officer or financial manager. They’re a partner to the business owner in understanding the drivers behind how the business is making money. It’s not the results. It’s forward-looking things. What shows up in the financials, they’re not leading indicators. By the time revenues get booked in any business, there are 3 or 4 key metrics that exist for every business that generates revenue and that need to be understood.

Forward-Looking: On Growing Revenue And Profitability

Traditionally, maybe a lot of owners don’t think of those as what the CFO thinks about but a good CFO does go backward before the dollars, revenues, and expenses get booked. In the P&L, there are questions. Start first with communicating and partnering with the business owner and understanding the business model, their positioning, and some of those key metrics. There are seven key steps that exist for every single business to make money and consistent profits. The last three are P&L metrics. The first four are pre-P&L. CFO is just a label but it goes backwards from that.

We’re going to get to the good stuff, which is the seven steps. I’m excited for you to go over that because they’re fascinating. A lot of business owners aren’t looking at their business in this way. What I would love for you to talk a little bit about that you mentioned that I didn’t even think of is forward-looking. If you work typically with a CPA and accountant, everything is looking at the past. If you’re bringing in that CFO to look forward, what should I as a business owner be asking for your help on or advice on that is forward-looking and that’s going to grow the revenue and the profitability of my business?

We can talk about the profit thing. Can I take a step back though? We can get into the specific metrics and so forth. One thing I wanted to frame is a few key frameworks. One is the seven-step pathway to profit. Another one is the framework around thinking about expense management, which is maybe even drilling down on one of the steps in the seven steps. It is an expense management cost. That’s step seven. That’s in there.

As related to personal wealth building as well as any business, it really is fundamentally your human capital. Share on X

I like to go maybe higher around the way I think about it around the framework around wealth creation in general, which applies to personal life as well as in business, coupled with a framework for managing risk. I call this framework the Three Portfolios Framework. It is a fundamental thing in terms of the underlying a lot of my firm’s philosophy around how you think about wealth creation and managing risk. The Three Portfolios Framework is a framework for building wealth and managing risk. That puts all these other things in context. It’s helpful to go over that. Can we do that?

Let’s do it. Why we’re so fortunate to be able to do this is we get to look behind the curtain into your brain. I’m going to speak for the audience of business owners and entrepreneurs. A lot of times, we don’t know what options are out there, how to ask the right questions, and how we should be with things. We’ll hear it one way but guess what? It might not work for us. Figuring out how to hone that path and product or service for us is a huge value. You got the floor.

It is an underlying philosophy I’ll call it. There’s an article that we wrote several years ago and it’s one of the flagship articles on our website. You can go to MYeCFO.com. The three portfolios are one of the banner articles. Essentially, it is a framework for building wealth and managing risk. Simply put A portfolio, B portfolio, and C portfolio. What I like about the article is that it uses a baseball analogy.

With the A portfolio, the goal is to be as successful as possible. That is a focus in baseball on hitting home runs, getting the biggest bang for the buck, and so forth. You want to swing for the fences and try to hit home runs. As related to personal wealth building, as well as any business, it is fundamentally your human capital. What is it that you can get paid to outsize the marketplace values with what you provide more than just a commodity? What makes you special? That applies to your personal life in terms of your capital.

Think about growing a business. Why are you a different business? Why should people come to you versus somebody else? That’s your A portfolio. That’s the idea of hitting home runs and swinging over fences. If you’re not doing that, they should ask yourself, “Why are you in that business or career?” That’s your A portfolio. Human capital is developing to its full potential, whether it’s for individuals or yourself.

With the B portfolio, essentially the baseball analogy is saying, “Let’s get on base whatever you take, singles and doubles consistency,” or small balls as they used to call it. There’s a time and a place for that. If you think about it in terms of a traditional individual or business, starting, you have to position yourself, generate consistent earnings either as an individual or as a business, and start accumulating capital.

Over time, that human capital gets converted into financial capital that needs to be managed. It’s either a revenue earnings profit stream that needs to be managed from a CFO perspective or it’s the actual wealth accumulation capital, either your personal capital or accumulated profits of a business that also needs to be invested, managed, and redeployed. Financial capital management is the B portfolio.

The point is you should swing for the fences as much as possible to make the most money in your A portfolio and partner with a professional whose game is to manage the B portfolio or the finances unless you believe that your A portfolio is financial management. You are a capital allocator and a money manager. You’re going to be an alpha producer.

In essence, you should only be managing money if your business is managing money or you have a background in managing money.

Exactly. The question is, are you going to compete with the big dogs in the world? That’s a very competitive space. Arguably speaking, if you step back and think about it, they do it professionally. It’s very competitive but oftentimes, it depends. A lot of them are not doing it with their money. They’re doing it with other people. They could have some skin in the game as well and that’s a good thing. Generally speaking, that is their A portfolio. How do you know that shouldn’t be your A portfolio and B portfolio? There are three main criteria. 1) Do you have the knowledge and the know-how? 2) Do you have the time and discipline to do it? 3) Do you enjoy it?

I’m going to jump in because it’s a book that I read and wish I would have read it many years ago by Michael Gerber, The E-Myth Revisited: Why Most Small Businesses Don’t Work. We’re always wearing all of these hats as business owners. When we start our businesses, we are EEOs, Everything Entrepreneurs.

Chief Everything Officer is what I call it.

Everything Chief Executive Officer with the Everything Executive Officer. It becomes a challenge when the business grows beyond our technical expertise. The whole idea behind the book is you’ve got the entrepreneur, manager, and technician. A lot of times, technicians become business owners or entrepreneurs. They don’t know how to manage people or the business. Entrepreneurially, they have a vision but they’re so focused on providing the technical product or service that they’re not able to focus on growing the business. Putting your systems in place is very important to grow your business. One of the most important and key aspects of that is proper financial management.

 

Zero to a Hundred - Jarrod Guy Randolph | Roger Chen | Profitability

 

I wanted to talk about this first because it provides the overall context. It’s not just what the fractional CFO or the fractional marketing does. You’re right. For any business starting, it is a chief everything officer. When does it make sense to have a higher fractional other thing, the F, M, or whatever it might be? It is the same thing. It’s specific to that industry, business, and owner of where they’re going to allocate and make a decision where it makes sense like, “I need this person. This is clearly outside of what my A portfolio is and has been, which has gotten me here.”

I’m accumulating capital. There are decisions that you have to make on an ongoing basis that you didn’t have to that got you there. What’s interesting about business growth is like any growth, what you got to this level is a certain set of things. The biggest value proposition of fractional is they work with multiple businesses in those key phases and then there should be experts who are best fit for certain phases.

I didn’t get to the C portfolio. A portfolio is your human capital, how you make your outsize gains or profits relative to the competition. A portfolio is about efficiency, consistency, and not swinging for the fences, singles, and doubles. That brings up the risk element. If it’s not A portfolio, then partner with somebody who can do it efficiently and sees a lot. They see the whole playing field and that helps you.

It’s about risk management. A portfolio is the wealth creation engine. B portfolio is about managing that and minimizing your downside. You’re like, “Is that all you need, the A and B?” The C portfolio is to have fun with it. It’s a human thing. It’s not just business. It’s also in life. If you have a certain itch and you need to scratch it, scratch that itch.

Any Chief Financial Officer or Financial Manager is really a partner to the business owner on understanding the drivers behind how the business is making money. It's not the result. It's actually for looking at things. Share on X

The Three Portfolios Framework

It doesn’t fall into, “I enjoy it. I’m not going to get paid outsize profits for it.” These are hobbies or things like that. I’m not necessarily doing stuff to make it a B portfolio. That’s boring and mundane but I still enjoy it. That’s a C portfolio. It’s a fun thing. It could be Angel investments and so forth. It could be volunteering or doing some other things like a side hustle or side business. You’re a miner. It’s important because that’s what makes us different as humans. You have these three portfolios. Scratch that itch but keep it to less than 5%.

Don’t go crazy. You have these three portfolios. We take on new clients and look at other things. Sometimes they’re all out of whack, meaning they’re good at what they do and clearly, that’s how they got there but they way over-invested themselves in their B portfolio. Their C portfolio is way more than 5%. It’s about focus because you need all these things to optimize your wealth creation engine in A portfolio but also keep it real and balanced. It’s a portfolio thing. That’s another way to understand it. It’s a portfolio allocation of how capital manifests over a business lifetime.

That’s very good to go over the seven-step pathway to profit. These are the types of fundamentals that for our audience are very valuable because they set a framework, pun intended, for us on how we should be looking at our businesses, managing our people, and managing our money. When it comes down to the fun part, it is managing your time. A lot of people aren’t allocating that when they’re thinking of this very strict portfolio allocation. “I’ve got to do this to keep the business running, grow it, make money, and grow that,” but you also have to carve out that balance. I’d love to understand what the seven steps look like.

Let’s get right into that. The seven steps if properly applied should be the domain of the business owner. It should be in A portfolio. Business owners are often overlooking the seven steps together. Let’s go through them. I would call these the key steps that every business owner needs to be doing to work on their business as opposed to only in their business.

The station is in business getting paid for a product or service that it delivers. That’s working in the business. That’s what gets the revenues in. I’ll fully acknowledge that I have the utmost respect for any business owner who’s made it that far to successfully be sustainable and deliver a valuable product or service. That is the true essence of being an entrepreneur.

As we know, as entrepreneurs, that is difficult. There’s a lot of learning you have to do.

I don’t want to discount the sweat, labor, creativity, and everything it takes to get to that point. That’s working in the business. That’s table stakes. Otherwise, if you can’t do that in a way, then somebody else is going to do it. That’s the free market economy. Working on the business has seven steps. Step one is every business needs to generate leads. Their lead generation should be measured in terms of what’s their average newly generated per month, quarter, or year. They need to know how many new leads they’re getting from all sources. That has to be true.

The second step is they have to convert those leads into prospects. A viable prospect depends on the industry but typically, it’s some form where at least get changed the lead into a meeting. I have a presentational proposal at a minimum. You have a point of engagement where they’re more than just a lead in the database. It’s conversion to a prospect. Number three is managing your closing rates from prospects to paying customers or clients. That has to be true. We already have the three key metrics that exist, whether they measure them accurately or not. You can do that big picture by channel. It’s endless the way you measure this.

Roger, I have a question. When you’re going through these steps, are these steps that you should know beforehand, or is this something that you can create with a fractional CFO?

One thing is knowing the substance of it and how you would measure and dissect it meaningfully. Both are important. You need to know the substance of it first in your industry and business. It doesn’t mean that you know the numbers. I’ve talked to many and I’m often more surprised if they know them well. I don’t judge or discount them if they don’t know the actual numbers but I do expect them to know what it would take to gather the data and background to benchmark these things and measure it for themselves. There’s no judgment in any of this.

We’re at three steps. 1) Lead gen. 2) Conversion. 3) Closing rates. Number four is critically important. Once they’re your clients and customers, you want to understand how well you’re retaining so client retention rates. That also varies by industry. In some businesses, you don’t have much repeat business. Some are all about repeat business. Think about insurance and financial services. They’re keeping the money or services with the firm.

It’s funny though and I want to point this out. It’s enlightening to me because I’ve done a lot of marketing research study, whether it’s Russell Brunson, Alex Hormozi, Dan Kennedy, or some of the big ones that are out there who are known names. They talk about understanding your cost of acquisition, creating that sales funnel, your conversion rates, and all those things. They drive revenue for the business but I’ve never heard them tied to your economic plan for the business. This is an interesting look at the first four steps tying it with the key marketing matrix into creating more profitability and proper financial management of your business. I wanted to throw that in there but keep going. This is interesting.

It is true. I’ll come back to your observation there once we get through some of the steps. These first four steps by definition are before you even measure P&L metrics. These things happen out in the business world before any bookkeeper accountant books revenues to a transaction P&L. Think of all the work that it takes to manage each of those things. It’s not just one-time work. It’s ongoing. You’re building engines for each of these things.

Let’s go to the last three which are embedded within the P&L. The next one is understanding all that work of the funnel. You then have a paying client base or a customer base. Understanding what is your average dollar per sale? Think about your core products and revenues on average for each transaction that your ideal customer makes. What is that? How much are you pulling in revenues for that product?

If you’re selling clothing, is your average pair of jeans $200? It’s as simple as that. Average is important because there’s a whole distribution but the core is what explains the outcome of a business. What’s the frequency of sales in a typical year? Do they buy those pair of jeans one and done or are they typically four pieces of clothing a year? Also with your ideal customer, how often are they buying? It’s your frequency of sales per average customer.

Every business needs to generate leads. Share on X

The seventh is what we talked about managing your costs so cost management. That’s both your variable costs as well your fixed costs together. Arguably, people think of a CFO as dealing backward from the other side with costs, revenues, volumes, and so forth, the last three. The big picture is that if you step back, these seven steps work together like gears in a machine.

Each one drives the next one and the whole machine needs to be working. Together, they generate a predictable pathway to profit. If any one of these steps gets clogged up or is not functioning properly, everything downstream eventually slows down. It doesn’t come to a screeching halt but eventually, you’re not going to have predictable, consistent profits or growth.

I love this framework. This is great. It puts a different lens on when looking at it this way in terms of the overall financial management of your business. Customer acquisition is the financial management of your business. It’s not strictly sales. There’s something you said you wanted to mention about that before I go to my next question. What was it that you wanted to mention?

I was feeding off of your observation. You mentioned a few different writers who I triggered for you. I don’t necessarily talk about that. What I like to think about is understanding how these seven steps work together in your industry as well as for your particular business. You need to understand the dynamics of the industry. The benchmarks are going to be different for each industry and the weightings of these things.

A simple example is often a business that doesn’t have that much client retention are going to have to even work harder on the lead gen and the conversion stuff to be all these people by definition. You can see how that’s the case but the more important thing is it is the seven-step pathway to profit formula. It is reduced down to a literal equation with seven inputs that are some additivity and multiplicative. You start with a number of leads per year with your conversion rate to prospect and closing rate to the customer.

You multiply that by dollars and the frequency. You can calculate revenues and the bottom line. It’s a mathematical formula. I’m a math guy. You can take any step and understand its contribution to the bottom line. Think of it this way. Traditionally, you want to optimize every single step, benchmark where you are, and understand how you’re doing and how you could do better. That’s the basic essence of the whole understanding of the framework. What strategies can you apply where you need to do better or you want to do better? It’s that strategy and then specifics.

A simple example is if you see obvious low-hanging fruit in terms of cost savings, you’re going to take that. If you, by definition, save $1 in expenses, you’ve generated a dollar of revenue. You’re always going to do that one-for-one. What is often misunderstood is the power of compounding these steps in terms of improvements. Upfront, if you think about it, there are a few multiplicative steps. You start with a certain number of leads and your current baseline of how many leads you generate.

Let’s say, you have a conversion rate. Typically, I might convert 1 in 5 of those to a prospect. I might close 1/3 of those after that. Right there, the math is percentage times percentage. Anytime you have two or more multiplicative steps, you have the mathematical opportunity to compound there, and that compounding trickles in the way the time value of money compounds over time. These steps in the profit formula compound.

The higher you go up at the chain earlier, all those steps that you improve in terms of improving your conversion rate, closing rate, and lead gen compounds have an outsized contribution to the bottom line. Here’s a simple example I’ll give you. I see this all the time in every industry. The premise is that every industry has a distribution around these seven metrics based on size and all this stuff. It explains the different performance of businesses in that industry.

Let’s say you knew what the average metrics were for average business in that industry and they are what they are. This happens all the time. You take company A that’s an average one and take another business that looks probably the same. Let’s say bricks and mortar. They look like almost the same size and staff. Let’s say that the second business looks the same but you looked at their metrics. The second business is a fraction, 10% or 20% better on each of the seven metrics. It has more leads. Those compound across the seven steps. It’s not 10% better on the bottom line but multiples better.

Real-World Examples: How The 7-Step Formula Transforms Businesses

I’m going to make a real-time example of this. We do payment consulting. One of the merchants that we worked with was a multi-location nail salon. We helped them engage in a program that eliminated their credit card fees. Looking at the system that you built here, these seven steps, are fascinating to me because they took the majority of their savings. Per location, it was maybe $4,000 a month and they had 4 locations. They were saving $16,000 a month.

They had told me they took about 80% of that money and converted that into Facebook, Google leads, and web leads, which increased the amount of prospects that they had. I don’t know if their conversion rate went up but the saving of the money gave them more capital to reinvest in leads and they had more prospects to convert. Not only did the saving of the money increase their profitability right away but it increased their revenue even more. They were able to bring in more clients because they were in front of more clients.

I never looked at it as a continuous cycle. If we’re talking about managing your closing rate and you’re closing 3 customers out of 10 customers, a 30% close rate, if you can increase that to a 50% close rate to 2 more customers and you keep the same client retention, the average rev per share frequency of sales that all stays the same, it still compounds because there’s more of that client. It’s smart and broken down well.

It’s not an invention. It’s discovering a way to look at it and once you understand it, what do you need to measure to manage it? Manage what you measure. This exists. It’s a matter of do you know it or not. I love the example because what you’re saying is it’s not something that you can argue with either. My example of an industry is Company A and Company B. You could say, “The other surface looks the same but this one is 50% more profitable and is 10% better on each of these metrics.” You’re wondering, “How’s that possible?” That explains it. This is performance in general. We’re talking about business. Do you golf at all, Jarrod?

I do golf.

Everybody knows this. You’re competitive with your buddies and so forth for either money or pride.

Not at all.

If you invest in the things that make your customers happy and give them the best value and experience, they're going to stay with you. That's lifetime value. Share on X

You go out there and it’s like the guy is the same. He has all the same shots at the same distances. He has the same physical ability. There’s that guy that at the end of the 18 holes, he’s always 5 strokes better than you. You’re like, “What explains that?” All the little things add up.

Let’s stay on the seven steps. Let’s say you’re able to create cost savings. One of the partners that we work with, we’ve started to integrate it into our business because we have a partnership. We look at everything from the payments ecosystem. They provide technology as a service, meaning they will go in and work with a company to help reduce their internet rates, wifi rates, telephone, malware, and cybersecurity. They add to their bottom line compounding that on saving by even reducing half a percentage point for your payment processing.

That addition to the bottom line becomes found money because these are expenses that were fixed. All of a sudden, you can reinvest those. Let’s say we reinvest them in two things. Roger, this is brilliant what you’re dropping. We do more advertising for lead generation and then invest in more education for our salespeople for conversion. All of a sudden, you find money in step seven. In step 1, as well as in step 2, you’re able to increase the amount of customers that come through and have a higher conversion rate.

You’re right. It’s not stepping up your business 1.5X. That’s quadrupling your business overnight. All of these things are linked to each other in terms of the financial success of your business. It’s not something we focus on the show in terms of marketing but the reality is understanding your marketing, client acquisition costs, processes, and SOPs that are driving your business. Your marketing could be word of mouth and referrals. It could be you strictly do paid ads. You do it through partnerships. It doesn’t matter what it is. This process truly works for any business with these seven steps.

Unlocking Exponential Growth: The Power Of Compounding In The 7-Step Formula

That is true. The seven-step pathway to profit is a formula and a framework but it doesn’t tell you strategy at that point. It tells you what’s possible and how you measure it. You’re getting to the point of saying, “If you have some dollar savings, where do you invest it for the most return?” You’re getting to strategic decisions around the allocation of additional found monies or additional money to invest.

That does become an ROI question. You do projections and say, “Where am I going to get the highest return for my investments?” That’s true for any investment. It’s true for financial investments, marketing investments, ad spending, and other things in terms of investing in your processes, client retention, customer experience, and all those things.

What the seven steps help you is an objective framework to decide where are your choices that you’re going to debate saying, “Is it A, B, or C? Which is it?” If you knew you were maxed out and optimized, then you’re going to be skeptical about spending more on advertising. I got two takeaways from this discussion for the audience out there. One is you probably know steps 5, 6, and 7 but do you know where you’re at and where you are relative to your competition in terms of steps 1, 2, 3, and 4?

The question is if you knew that, then you would know where you could be doing better and where the opportunities are. To answer your initial question about when it makes sense to work with that fractional executive partner to help do these things, that’s where it’s so clear that you need somebody to help you understand your business from this framework and then understand the opportunities for the forward-looking management of your business.

Your questions were about, “When does it make sense? How does it tie to your forward-looking decision-making around growing your business?” Hopefully, I’ve set the frameworks. That’s when it becomes actual strategic decision-making and where I find it’s the most fun and interesting. Oftentimes, the pitfall is that if you’re doing what everybody else is doing and you try to do more of them or copy them, that’s typically not the answer. It’s typically like, “Everybody’s doing Google ads so I need to do that.” It could be the case but not necessarily.

Strategic Expense Management: Aligning Costs With Business Goals

This was a masterclass that I needed for my business as we’re working through a relaunch for 2025 and a rebrand, which we’re focused on starting on the 16th of January to the rest of the month. I like the way that this is broken down because it could change the conversation that I have with the business owners who we’re talking to in regards to the service that we provide, where we’re trying to find money that they didn’t realize was already there through restructuring their payment or technology systems and then how you can reallocate that.

A lot of business owners are not looking at their business this way that I could say, “Could this help you increase your closing rate by hiring more people? Could it help you increase your conversion rate of prospects by investing in somebody who’s a funnel expert and creating the top-of-funnel and mid-funnel metrics that you need to stay on top of the inquiries that you’re getting?” This is some advanced-level stuff and this was stellar.

To close that thought, it makes you understand that it’s not just about the traditional view of cost-cutting, budgeting, and so forth. It gives you a framework to understand expense management, meaning that if you can’t tie your existing expenses to any of the previous steps, then why are you spending on it? It’s like thinking, “Is that expense helping you generate leads during conversion and closing customers that are obtaining clients?”

“Is it helping you optimize your client retention and retaining clients? Is it helping you increase the lifetime value of the customer?” Those are your average dollars per sale and frequency of sales. The classical thing is its investments around happy customers. Why are they happy? It’s because they get the best value and experience. If you invest in those and they’re going to stay with you, that’s lifetime value.

I had my bookkeeper print out our monthlies and I’ve been going through them for the entire year line by line of what has contributed to what is mandatory, something that we can scratch as an expense, what contributes to our revenue, and what contributes to our bottom line. It’s fascinating to see the amount of subscriptions that we have that we don’t need. They’re all $49 to $199 a month. There are a couple thousand right there.

It’s those little things like that, even things that I would have engaged in or signed up for. I got a bill for Mids Journey, which is an AI image creator. It was $300 some odd. I said, “Call them and cancel this. Get this money back because I don’t use it.” I got sucked into that vortex, “This is cool.” I don’t use that. I have a creative team who makes all of our creative so I shouldn’t be paying for this on top of it.

It’s little things like that that are not contributing to my bottom line so I’m looking at my business in a very different way. I’m like, “You got to go. That’s not going to work.” Before we get to the rapid-fire section, I have one more question for you. What are some immediate steps that our audience of business owners and entrepreneurs can take to increase the profitability of their businesses?

What we covered is thinking about expense management. There are three rules. Simply and immediately look at say your last three months of all your business outflows. They need to meet one or more free criteria. One is, “Does the expense help you obtain a new customer?” Number two, “Does it help you retain an existing customer?” Criteria number three is, “Does it help you increase the lifetime value of a customer?” Those tie it all together and that creates that virtual cycle. It is a linear chain but that makes it more of a conveyor belt. That thing alone ties looking expenses. When clients hire me, I usually go through that exercise right away. That’s the first thing we work on. It pays for me right away.

What's something you cannot do today but think you can do tomorrow? Focus on that and the next thing you know what was impossible before becomes easy and second nature. Share on X

Rapid Fire Round: Insights and Inspiration for Entrepreneurs

We’re going to go into the rapid-fire section, the fun stuff. Who wins the race, the rabbit or the turtle?

I’m a turtle guy.

If it was years ago, I would have said the rabbit. I will tell you, I truly believe it is the turtle. That’s a whole segment in itself. It is a zombie apocalypse and you have to get out of your house and protect your family. What is the one weapon that you would pick to take with you?

Invisibility. Does that count?

Maybe in the world of Marvel but not in the real world. I didn’t put any parameters around this. I like how your brain works. You made up what you wanted to say so I will give you invisibility. That might trump all the other ones we’ve ever received. That’s awesome. Do you have a favorite book that you would recommend our audience of entrepreneurs and business owners read that could help them in the growth of their business?

 

Zero to a Hundred - Jarrod Guy Randolph | Roger Chen | Profitability

 

I have an eBook myself. That’s number one. It’s called Accelerate Proven Strategies for Greater Profits. I cover these frameworks that we talked about with some case studies and examples as well. That’s one thing. It’s a little self-serving. You can decide which one you put in. Another one I felt was quite on the strategy side. It was written by my MBA professor when I got my MBA a long time ago.

My strategy professor taught core strategy. He’s passed but years ago, he wrote a book called Good Strategy Bad Strategy. The author is Richard Rumelt. I love case studies. It breaks down what good business strategy is in contrast to bad business strategy through a lot of case studies and specific definitions. It was fantastic. One of the cases he goes into is about the early days of NVIDIA and how they positioned themselves around it. He did the strategic analysis. It was published many years ago.

Here’s the next one and make this one quick. If you had the chance to go to dinner with someone dead or alive, who would it be and why?

David Bowie. I love him.

Let’s say you are a small business owner and you’re doing $10 million in annual sales. I walk through your front door and hand you a $300,000 check just for fun. How would you suggest that they invest that $300,000 in their business to help them create more profitability?

Am I the owner?

Sure, you’re the owner.

I would have already known where I was in terms of the key performance on my seven steps to profit and my engine. It will be what I already decided where I’m focusing on in terms of the lever that I’m trying to optimize.

The last question is, what is the single hurdle that you had to overcome in your life to build the level of success that you have?

It gets back to the turtle thing. I’ve had my share of challenges like everybody and setbacks you can call them. It’s understanding what it takes to get back up when you’re knocked down and then what sustainable growth means. That applies both personally. I can share this personal thing but when I was 23, I had a pretty serious accident. I had to take six months off work to rehab myself.

It was pretty severe. I don’t want to get into it but it put me in a place that I wouldn’t wish on anybody. It made me learn a lot about myself in terms of if you hit rock bottom in any sense, you have the ability to day by day do something. You’ll find you need to reduce things down. The definition of progress is you can’t do something that you tried one day and the next day, you can do it.

That’s a very powerful growth paradigm. Meaning to say shoot for the stars but be realistic about something that you can’t do today but you think you could do tomorrow, and focus on that. That’s a definite progress. If you’re focusing on the right things, the next day you can do it. What was impossible before becomes easy and second nature. It’s ingrained.

It’s something that you need to do. If you ever go through a serious rehab, that’s essentially the mindset you have to be. It’s rare. It’s a good thing that happened to me because it was relatively early but you don’t wish that type of injury and recovery on anybody, especially all you know is growth as a kid comes easy. You come to a point where you realize you have to regrow as an adult. This applies to a lot of things.

You can only do that next step. You can’t go too much and you flop. It’s like a sapling. The sapling needs to go to another inch before I can survive the next rainstorm or wind thing. It’s step-by-step. That’s why these measurements are important. It relates to things I found in terms of how I make progress and grow personally.

Where To Reach Roger

Thank you for sharing that story with us. That was excellent. We’re glad you’re in one piece, shedding the light that you shed. Roger, please tell everyone where they can connect with you if they would like to do so.

They can find me at Roger@MYeCFO.com. For MYeCFO, E stands for Efficient. You would say, “Roger is my efficient CFO.”

Roger Chen, thank you for joining us.

Thank you, Jarrod. It’s a pleasure.

 

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About Roger Chen

Zero to a Hundred - Jarrod Guy Randolph | Roger Chen | ProfitabilityRoger Chen is Financial Advisor and Fractional CFO Services Leader at MYeCFO, a full-service financial advisory firm that serves professionals, entrepreneurs, and executives. As a fractional CFO and business growth specialist, Roger serves small-to-medium sized businesses via profit acceleration strategies and efficient CFO services. Drawing from extensive experience advising major financial institutions in risk and capital management, he now empowers business owners by applying proven strategies for greater profits. Roger holds the Chartered Financial Analyst (CFA) designation and an MBA from UCLA Anderson School of Management.