Financial Clarity That Builds Real Business Value with Dorothy Zubel

Most entrepreneurs think finance is about numbers—it’s really about decisions. In this episode, Pete Mohr talks with Dorothy Zubel, Co-Founder of The Finance Group, about the power of fractional finance and why clarity in your books directly impacts confidence, growth, and exit value.

Dorothy shares how her team supports businesses with CFO-level insight, KPIs, and financial strategy without the full-time cost. Learn how clean financial records, proper reporting, and strategic forecasting can turn stress into momentum.

You’ll Learn:
→ What fractional finance is and why it matters
→ How to use KPIs to guide smarter decisions
→ The difference between a bookkeeper, controller, and CFO
→ Why clean financials boost your exit valuation
→ How to find and work with the right finance partner

 Connect with Dorothy Zubel:
Email: dorothy.zubel@thefinancegroup-global.com
Website: www.thefinancegroup-global.com

Connect with Pete Mohr:
Website: simplifyingentrepreneurship.com
LinkedIn: linkedin.com/in/petemohr

Are you looking to make some changes in your business and your life in 2024?  Head over to speaktopete.com and book a chat with me to see if we're the right fit!

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Don’t leave your business’s future to chance. Click here to take the Value Builder Assessment and start building a more valuable, resilient business today!

Book a no charge Freedom Call with Pete, to see if you’re a good fit for his business coaching or talk to Pete about speaking at your next event head over to http://speaktopete.com to find a time that works for you!

Pete's Websites:

Pete-Mohr.com
The Exit Ready Business
Kolbe Coach
Simplifying Entrepreneurship

LinkedIn at https://www.linkedin.com/in/petemohr/
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Transcript

0:02

Dorothy, it is a pleasure to have you here on the Business Owner Breakthrough. And today we're simulcasting this episode two on the footwear retailer. So, so excited to have you with me here today. I'm excited to be here. um It's a pleasure that you invited me to join you for this. Awesome. you know, we've known each other for a few years now, done a lot of Colby work. I know several listeners of the, of this podcast will be familiar with Colby and we've done some offsite stuff with you guys. Uh, and, and also you use Colby as a big part of your hiring process and putting everybody through. And you guys are have grown so much over the last few years. It's an exciting business. It's exciting time, lots of things happening. And I'm excited to get into what it is you do, but Tell us a little bit, Dorothy, about the finance group and your other holdings and all the things, how it came together and why you do what you do. So the finance group is what we call a fractional finance firm, uh something that I've been doing for 12 years. ah I started ah this business with my business partner, Donna Gleeha, about three years ago, uh mainly because uh what I noticed when I entered this space was fractional finance before it was sold very much like a tactical type of business. So very much putting together financial statements. And I noticed a lot of owners were still not getting that insights based finance that they really needed. And so I started doing, services to my clients the way I did incorporate. finance through KPIs, efficiencies, cost savings, teaching management, how to read financial statements. And it was a gap that, you my business partner, Donna, was seeing in the market herself. We had very complimentary skills. Our colbys are very much yin and yang. Where I have gaps, Donna those gaps. And so it's been a good partnership. We keep each other sane and the ball moving. And so within those three years, we've been able to. grow from an organization of three to an organization of over 40 finance professionals. And we continue to grow there. Yeah. I mean your growth is outstanding and you work across multiple countries too, right? We work across the US and Canada. um We have uh some staff members located out of Argentina as well as the Philippines. And so, yeah, so we're internationally based, yes. that's interesting running all the different pieces of the puzzle there even. Yeah, for sure. It's definitely a lot of learnings. um I would say, you know, if you don't have an executive coach, executive coaching is really helpful to, uh you know, aligning you, setting your priorities, keeping you sane and accountable, especially for us quick starts out there in the world. Somebody's almost got to hold us accountable and, uh you know, keep us honest with ourselves. And so, you know, our executive coach definitely has helped us do that and suss out and pivot where needed. So that's what has allowed us to grow uh as quickly as we have. I know we're going to spend a lot of the time talking about the finance side and the finance group, but one of your. growth you've, you've expanded outside of finance over the last couple of years too. And I know you do, um, partial COO and CEO, and you do payroll and you do, uh, human resources as part of the, so give us a little bit of lowdown of the overall group. And then we'll dig into sort of the finance side of things for the episode. Yeah, I mean, we're really here to be extensions of um your team, right? So wherever those pain points kind of occur, know, finance, what I've noticed is anytime I've been in organizations working in finance, they work very closely with HR, with the payroll departments, with those executive team members. And so it was a natural extension to kind of bridge those gaps because finance, you'll see finance people that enter that COO type of role. You'll see finance people who enter that CEO role. You that financial lens is really important, but it's not the end all and be all. It could be a balance of different individuals looking at things from different angles. you know, why we leverage. you know, to see who are those visionaries, who are those integrators, identifying those to make sure we're providing the best fit to the puzzle. So not only through a skills assessment within the organization, but also through, you know, that personality and that balance. you know I I think it's so interesting how the different stuff that you do and you're seeing so many different businesses because 40 people strong, you're working with multiple business, each person, you get to see this overall vision of where businesses at across a couple of countries through very many different industries and things like that. And what are you seeing these days as we're recording this sort of early in October, early, uh early in Q4, what are you seeing as overall? issues and overall interesting points for the different businesses that you work would say overall the businesses that really we work with when we're looking at our ICPs, we're looking for people that understand that uh they want to focus on growth and they want to understand and get a clearer picture of their numbers so that they can make decisions that are not based on their feeling anymore but based on the numbers. And as we enter, uh you know, times in the economy where there's uncertainty and there's risk, there's an even higher focus or hyper focus on that because you have limited resources to invest and you want to make sure you're doing that. effectively. And that's where a finance uh team like our own can come in and really help you hone in on those KPIs, um the return on investments, those financial basis to making those decisions to make sure you're making the right decision. So for our businesses as a whole, I would say we haven't seen uh a major impact for the businesses that we deal uh on the tariff side on the US. um But definitely we're seeing an uptick in the fractional finance because of those businesses trying to get a better understanding of where they can pull levers to make themselves uh more profitable or to maintain profitability in uncertain times. You know one of the things that I've seen a lot in small and mid-sized businesses is that The financial side is often ignored until it starts causing pain and either the cash gets tight, you know, margins are unclear or it's just hard to make decisions. Sometimes their business has grown so fast. They, they, know, the business owner may maybe isn't steeped in, in understanding and didn't go to business school and doesn't really understand P and L and the balance sheet and cashflow analysis and all of these things can be major effects on. how the business carries forth and grows and whether or not the growth actually causes stumbling blocks that could actually cause the business to fail. All of these different pieces of the puzzle come into play where you need to have professionals. And why do you think so many entrepreneurs avoid this final financial side until it becomes urgent like this? Well, I mean, with all your work with Colby, you'll know that a lot of entrepreneurs tend to be those high quick starts, uh low fact finder, low follow through. And that's great when you're starting a business because you really need to adapt and change and innovate very quickly. But, you know, as your business grows and as you want to scale it, you really need to have those systems processes in place in order to maintain that business. you know, sometimes opportunity can be the death of the business because when you have too much opportunity and you don't know or you don't understand which opportunities you should be focusing on. that's where finance can really uh paint a picture for you where your focus should be. you know finance professionals are very good at creating systems, processes, averting risks that you may not be thinking about ah and so a lot of entrepreneurs avoid that because Finance in general is a mystery to them. Nobody's ever taught them. Oftentimes I hear math is not my strong suit. Finance is not math. And there is no mystery here. It's just, uh you know, somebody's made you feel uncomfortable about this, but it's very easy for you to understand. And what we try to do is make sure we can bridge the gaps of business owners. understand their financial statements because they should understand them in order to know what situation or uh where their business needs to go into the future. That's the thing, you know, back to business days, business school days where we had financial accounting and managerial accounting. And, know, my side of interest is always on the managerial accounting side of things, not the financial, but you know, for business or for business owners that haven't taken some of the functional backgrounds there, the idea is, you know, the financial accounting. is really your tax preparations and all that. It's looking back six months and getting your taxes done up and all that needs to be done. Of course, we need to pay our taxes and we need to report and all that sort of thing. But the interesting thing I think is using the numbers to make better decisions. And I think Dorothy, a lot of the um business owners that are listening, maybe either doing their books themselves using QuickBooks or whatever the case, or maybe have somebody on their team that's doing um book work. I know you outsource book work as well. But if they are at that level where they have somebody internally on their team, let's say doing the data entry. The next step is you actually need to do something with the data and your team can come in on that level too. You can, you can come in at so many different levels with the finance group and, um, tell us about sort of the coming in on how you would, you would operate as at that level as a CFO type thing and helping the business owner understand their numbers, helping the business owner make better strategic. decisions and that sort of stuff. Yeah, absolutely. I mean, oftentimes we come in to definitely professionalize the financial reporting in these organizations. um So when we come into those organizations, oftentimes we see business owners who don't understand why their gross profit, which is your revenues minus your costs of goods sold or your direct expenses, those that generate revenue for you are so lumpy. And oftentimes, it's taking a step back and having business owners understand the difference between a cash versus a cruel basis accounting, right? cash basis is your cash comes in and your cash goes out and you look at, you know, what that gross profit number is, that's your gross profit versus a cruel basis where as the revenues come in, you're matching your costs against those revenues for that period, which is really giving you a clearer insight of of when I sell a dollar, am I making 50 cents because my costs are 50 cents, right? Versus on cash, you might put out a dollar, buy $2 of inventory and show a loss on your gross profit, which is telling you absolutely nothing about how you need to be running your business. So oftentimes that's a big shift we see um when coming in, shifting businesses into that accrual basis accounting so they can actually start to see their real profitability on a month to month basis. And then we take it a step further where we try to dissect the financials in an easy way recording in the financial systems because a lot of our work is about simplifying not through a make work project but a sustainable way of doing your finance by uh streamlining your systems to capture the metrics that need to be captured. So that may be coming in and doing a departmental uh profitability or by uh sales channel. And so structuring that right in the accounting system and training, maybe you have a staff who's inputting invoices already, but training them on inputting them correctly so that your metrics actually mean something and can help you see when, shoot, know, our costs are really spiking, nobody told us, but we can see it in our gross profit margin because that's decreasing. You know, there's so many things that can be done even in, in QuickBooks to channel that and to give you better numbers from a managerial lens. think when you start doing this stuff with business owners that haven't had this in place, and some of these business owners, I'm sure have been at it 10, 15 years and, and they're not just newbies, right? A lot of them have been at it for a while and looking at this and when they start seeing this through this different lens, what are some of the changes that you notice? Well, oftentimes, I mean, everything trickles down. Once you have those kind of metrics, you're able to make decisions about your operations and where to focus your sales, your operational efforts, your investments. ah We talk about complimentary goods and we'll hear a visionary say, I'm pretty sure when we get this type of business sold, we also get this type of business from that client. Well, the numbers will actually reflect that, right? Because then we can see where did we upsell that client? How did we upsell? And is it worth then, if somebody was just looking at it through a financial lens, they might say, well, this is giving you a lower gross profit. You should cut this product off versus really having that uh strategic view. So looking holistically at your business, this is where our CFOs come in to help you understand, well, what are those complimentary services? What's getting clients through the door? Where does real investment need to happen in your business for you to see that growth trajectory increase? And that type of thinking, that strategically minded thinking where people are so focused sometimes in their business, it's helping them refocus to focus on their business. Why did you get into this? Where do you want to go? And what's the roadmap to there? I love it. You know, it's, it's such a big piece of overall, cause the startup phase is different and the startup phase, we put our heads down in that first one to three years. It's like all in, we're doing everything where we're, we're the Jack of all trades for the lack of a better words and just kind of getting, getting through that startup. And, but there's this level, once you get through that initial phase where you're starting to build out your accountability chart, you're starting to. have other people make some decisions for you and different things like that. And you're able to, like you said, um look at your business again. Now you come back and start looking at your business and you're saying, huh, where do I need to be? Who else needs to be in here? And, you know, maybe it's time now that we hire a controller or maybe it's time that we hire a CFO and maybe, maybe I have enough for a full time, but maybe I don't, you know, many owners think they need to hire full time for this sort of thing, but that's often overkill. and expensive. So what's the difference between hiring somebody internally in a business and outsourcing like you do for firms? So oftentimes I will hear small business owners say to me, I had a bookkeeper and that bookkeeper, I didn't like them because they couldn't do budgeting. First, it's firstly and foremost understanding what roles do different people play in an accounting uh department, right? So we break it down into three because generally they kind of straddle all the areas, which is, you know, that strategic finance CFO, they're really that forward thinking, They're taking your vision and they're putting the numbers behind your vision and telling you where your shortfalls gonna be. What are the risks you're gonna, and quantifying those things. Then you've got your controller and that controller is gonna come in and create the systems and processes that basically uh protect you from uh financial risk, right? Whether it's not filing your taxes on time. whether it's not paying your employees, all of those things. So they're managing that day-to-day financial piece and mitigating any of those risks and giving you your historical financials, meaning month-to-month, they're the ones who are going through the financials, doing a budget-to-actual comparison, talking you through what's going on, where those shifts are happening, and what's being realized. And a bookkeeper is really just that data entry individual, right? So that person who's going to Book all of your invoices, book all of your payables, make sure that there's receipts attached if they're doing a good job, making sure they're following where your budget allocations are occurring. And oftentimes, you know, the rule of thumb for finance, when you're a very, very large organization, and I'm talking millions of dollars, billions of dollars, you know, is about that 1%, 1.2 % of revenue. When you're a smaller business, you have to keep in mind you're probably going to be spending a little bit more just because of the size of your business. So it can get up to that five, six percent of your total revenue in terms of your overall spend on the finance side. But ultimately, I always tell clients, how much more sales could you get through the door if you gave up this piece? Right? None of these people got into business to do finance. They hate it. it. And it frees up so much of their time to go once you have that proof of concept, you know how you're selling, you know what works, how much more sales because you get to the door that gets you down to that lower percentage as a total spend. Yeah, I mean I I always like to extrapolate those numbers over a year and say okay Well, how much you know you were saying how much time well if we're spending whatever 10 hours a week doing our bookkeeping and We're not doing these other things but 10 hours a week is actually 520 hours a year and 520 hours a year is an awful lot of time. And so when we look at some of these things, what's it worth to you and to level up your game as the business owner or the business manager listening to the show, you know, in order for you to level up to the highest level that is most capable in your business so that you can have somebody do. what's at the highest level of their capabilities. And I really think this is an interesting piece is we're always trying to level up and always trying to do better things. And if you're doing things that can be done by somebody um probably better than you can, cause they're true professionals at it and at a lower cost, why wouldn't you do this? It's just bad business not to. I agree, but I'm biased. Yeah, yeah. But I agree 100%. I mean, and even what you're talking about there, way of thinking, of thinking about what's the return on investment? That's how you should be approaching most of your problems. You should for sure, or I shouldn't say problems, but most of your solutioning or your options should have an ROI, right? So what is it gonna give me in the end? end? Yeah. mean, I've got two business degrees and an MBA and I've done a lot of time in behind the financial side of things. I can do book work fairly well, but I haven't done it probably. I've just celebrated my 30th year in business last last year this time. And it's probably been since year two or three since I moved myself out of book work, even though at like I said that those first few years we do we have to do I had to do it. But I've never looked back and it's just been one of those things. I'm so happy to have somebody else balance my visa for me who who's when she balances and and I'm like, my god, you who when you balance the visa and I like I pulled whatever left out of the hair out of my head when I have to look at that stuff. So absolutely. We all know what it means to work in your flow state. uh you know, I said, I definitely don't have the typical finance Colby. Most of us are high fact, high follow through people. But I think, you know, throughout my career, operating outside of my flow state has uh taught me to be very understanding and empathetic and see how other people think and approach problems. you know, it allows me to be a better leader. uh So all you entrepreneurs out there who are doing the finance piece and are working outside of your closed space, it is a great learning opportunity, it's great that you're hearing it. Ultimately, you're gonna give it to somebody and I promise it's not something disgusting. There's people out there who love it all day long. long. For sure, for sure. And I know you've got a lot of them on your team. I've had the pleasure of meeting several through our Zoom meetings and stuff like that. Some great team members for sure. I think, you One of the things I like to tie back to a lot of the work that I do as a business coach is around exit planning and helping people get to the right exit and building value in their business. And, you know, it's really hard to even start the conversations if the financials aren't clear. And I think, you know, a lot of owners don't think about exit until it's too late. And one of the things that, you know, that sort of happy zone is sort of two to five years away before you're thinking of exiting so that we have time to work on process and people and a variety of different things and cleaning up the books. But how does strong financial systems and reporting increase the actual value of the business from your eyes? Well, I know from being on enough of these deals where businesses are being sold or being on part of the due diligence, they're huge. ah know, without having clean financial statements, you're already setting yourself up for negotiating a uh price that's way lower than you could get if you had clean financial records. That is the first place through the due diligence process that that the acquirer is going to be looking. Are you organized? Do you have your ducks in a row? Do you understand your financial metrics inside and out? Do you have a good cash runway? Do you understand your breakeven rate, your profit margins, right? um What's your revenue growth look like? What's that pipeline look like? What's your close rate? You all of these are financial KPIs and metrics, and those are just, you know, touching across a few different areas. And if you are thinking that one day you want to sell and so one day you need to get your ducks in a row, I can tell you, I mean, most businesses are looking three to five years of financial uh records easily to see whether your financials are clean and the records are clean and so on and so forth. So if you think tomorrow you're going to clean up your financials, it will not. solve the problem and it will ultimately decrease the price that you will garner if you have any financial to start with. One of the most interesting things that works against this whole process is that small business owners and as a general rule don't like to pay tax. So what do we do not to pay tax? We lower the income of our business. But what are we looking for when we go to sell the business? A high income for the business. You know, these different things and I'll use, I'll use some examples that I've seen in the past as I used to be a former business broker. So these are, these are things that we've had to clarify and financial records over the years. And, and I'm saying that a couple of examples here, I'm sure you have lots to Dorothy, but you know, um, because if you're trying to lower your income, but you're trying to get multiples on that income, you know, it doesn't matter what your multiple is. If your income zero, because you don't want to pay any tax. Then your multiple is zero. Your amount is zero. So we've got to be able to recast the income. And I'll use this one example where I had a company where the gentleman had a $200,000 motor home on the balance sheet of his uh business and ran probably $15,000 worth of expenses related to that through a year to go to one trade show basically that they went to, which obviously was a personal. motor home that they were expensing through the business. but that $15,000, if we just even take the $15,000 basically and depreciation on the balance sheet side and all this different stuff. But if we were casting this, just think that if you got three times earnings, you're leaving $45,000 on the table. If you can't explain this out of your business. So, and if that was three, if that happened two or three years ago and you don't have the proper documentation. around that the buyers in that due diligence when they go back to that third year are going to say, well, I don't believe that. So I'm not paying you for that. So the biggest thing here is that, you know, if you are and everybody runs a certain amount of stuff through or most people do the certain in small business, but just make sure that if you take the trip to Italy for a buying show and it's really you're not buying anything from Italy and you're it's a $15,000 trip that you're expensing to your business. that you're able to capitalize that back into your numbers when it comes time to buy. And you need to have the documentation around that to prove it because people only believe what they can see. The confidence comes only when the proof is there. And I think that's the one thing. People will expense this stuff, but two years ago they can't even explain it because they don't remember what they did. And if you can't explain it, you're not going to get anything for it in the time of a transition or a sale. And you're especially not going to get multiples on Yeah, that's absolutely true. mean, clean financial records with the way technology works nowadays with the ability to attach backup to every single transaction in your financials, that's really what a finance person is looking for, right? You wanna make things easy for audit, review or a sale perspective, right? You wanna have uh receipts and bills to back up with notes, clarifying what everything is. because they will be able to see when you uploaded that file, they will be able to see what's going on with that file. And there's no question around ah what that was for because it's clearly listed on that transaction. So you raise a really good point in terms of normalizing financials and what those look like and who's going to buy into what when you're normalizing those financials. The other thing I will stress also is ah when you are thinking about your tax planning, really go talk to a professional around tax planning and what that really means from a tax planning perspective because you know the landscape is complex out there and it will require a little bit of an investment but if you're thinking about selling at some point you want to reduce as much of those taxes as possible and there are strategies out there that can help you to manage that in a legal effective way which will not devalue your business on the front end. Yeah. It's, it's so important to have, um, your team, what I call your team, you know, and the team is. proper financial advice, personal financial advice as the business owner, proper business financial advice, a great accountant and team and all of this sort of stuff, a great lawyer who's not just the lawyer that helps you transition your house, but also has business background and understanding on how deals are done, that sort of stuff, proper tax accountant, proper insurance, all these different things are. are what you need to be looking at and doing as part of your team. And I'm so happy that um you've spent some time here with us, Dorothea, on how having the right CFO, having the right controller, having, you know, looking at these outsource partners for people that are scared, that haven't really done this. Maybe you're coming up to this sort of glass ceiling where they're saying, oh, I've been regretting doing this, or I just avoiding doing this, but now it's time that I need to really start looking into this. You know, What would next steps be for them to come to work with you or with someone else who's doing outsource sort of things that you're, know, where would they go? What would they do? And then we'll talk about your actual business too. Well, what would they do? I mean, what they would just need to do is reach out and have the conversation. I mean, start with the conversation. uh The one thing I will say is you should never come out of that conversation feeling stupid. So you know you're not working with the right partner if on the other end they're trying to mystify finance. You know you're working with the right partner or finding the right partner when they're ready to partner with you and walk you through and really explain how things are done. And so, you know, that's what we do in our business. I can't say that that's true across all business lines, but just to keep that in mind when you're meeting, it shouldn't seem like uh they're creating an air of mystery around that finance piece. So for the finance group and for, you know, all of your other things, the fractional COO, COO, payroll, human resources, all these different pieces of the puzzle, what's the onboarding process like in your company? Yeah, so typically we would have a discovery call to understand what the pain points are for the business and what the needs are and a proposal would go out addressing those. And then we kick off. There's usually an onboarding and transition period there where the team that is deployed on your file gets a thorough understanding of both your strategic and your operational finance uh needs and what's going on in the organization. They're going to straighten out and clean up whatever needs to be cleaned up and then you're off to steady state where you're getting insight-based finance uh services from TFG. Well, know Dorothy thanks so much for sharing all this today. It's been really good It's great to see you again as always and thanks for Thanks for everyone else for listening here today because financial clarity, you know, I Years ago when I started this podcast, used to end, and I haven't for a long time, but it kind of got me thinking about it around this statement called, Clarity creates confidence and confidence ignites momentum. And I think this is an interesting piece. When we have clarity in our finances, we can make the decisions that we need to make to grow, to do what we want to do. We all got into business because we wanted to have a better life as a business owner. And you know, The kind of things that we're trying to do here is to have, give us the ways to have a better life and end a better business. So thanks again for sharing some time with us. And for everyone else, I will include Dorothy's information in the show notes and you can, Dorothy, tell them how they can reach out to you if they want to reach out to you directly. Well, you can email me at dorothy.subell at thefinancegroup-global.com and be happy to take any emails and respond. Awesome. Thanks again, Dorothy. It's a pleasure to see you. Make it a great day. Thank you. You too.