In this prudent episode, Tom Dillon, Founder of Frak Finance, shares strategies for data-driven financial decisions. If you struggle with cashflow mismatches, you won't want to miss it.

You will discover:

- How to use rolling forecasts to predict cashflow issues

- Why transparency with executives boosts team problem-solving

- How to shift from gut-based to data-driven decisions

This episode is ideal for for Founders, Owners, and CEOs in stage 4 of The Founder's Evolution. Not sure which stage you're in? Find out for free in less than 10 minutes at https://www.scalearchitects.com/founders/quiz

Tom Dillon, CFA, is a seasoned financial strategist and the driving force behind Frank Finance. With years of experience as a fractional CFO, Tom specializes in helping SMBs unlock growth through data-driven financial management, cash flow optimization, and strategic investments. His mission is to demystify complex financial concepts, empowering entrepreneurs and executives to make confident, informed decisions that fuel long-term success. His insights help entrepreneurs and executives cut through financial noise, focus on what drives profitability, and make strategic decisions with clarity and confidence.

Want to learn more about Tom Dillon's work at Frak Finance? Check out his website at https://www.frakfinance.com/

Mentioned in this episode:

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Founder's Quiz

Hello, hello and welcome. Welcome, once

again to the start, scale and succeed. Podcast the only

podcast that grows with you through all seven stages of

your journey as a founder and if you have had enough success

to lead your organization long enough and again successfully

enough to hit milestones like your first million or your

first 5 million or even 10 million or 50 million, you

have probably discovered what I did through those different

phases, and that is that organizations get bigger, not

necessarily better. And with all that growth, especially

when it comes quickly, comes problems, a lot of problems,

and oftentimes financial problems. And I have found, in

my experience, maybe other than people, problems,

financial ones are the most frustrating, because they're

just there and they you know, you can try to get around

them, but if you don't solve them, they keep coming back

and they keep coming back and they keep coming back. And so

if your revenue, you're listening today, and your

revenue and your profit, or your revenue and your cash

flow don't seem to match, right? You're bringing way too

much money coming in to keep so little of it, then you're

you're in the right place, because with us today is Tom

Dillon. And Tom is a seasoned financial strategist and the

driving force behind FRAC finance with years of

experience as a fractional CFO. Tom specializes in

helping small and medium sized businesses to unlock growth

through data driven financial management, cash flow

optimization and strategic investments. His mission is to

demystify complex financial concepts, empowering

entrepreneurs and executives to make confident, informed

decisions that fuel long term success. His insights help

entrepreneurs and executives get the cut through financial

noise, focus on what drives profitability and make

strategic decisions with clarity and confidence. And

he's here with us today. Tom I've had this question rolling

around my mind the last couple of weeks, and I think you're

the perfect person to answer it, so I'm gonna say it this

way. I don't think that organizations have financial

problems, at least at the core. I think that they have

decision making problems that have financial consequences.

And I would love to hear, do you agree with that, or how do

you see it differently?

I do agree with that. And Hey, Scott, it's a

pleasure to be here. I really love what you do for the

community and really helping founders move from that kind

of visionary gut feel decision making into more of the kind

of data driven decision making. And so to answer your

question, yeah, I absolutely agree with you. It's it's

really not having a good understanding around the

impact of those decisions, they feel like a lot of

founders move from that kind of gut feeling of this feels

like we're making the right decisions. And a lot of times

early on in the phases and the journey of building a company,

you have to operate in that vacuum of the void of no data,

but then you start to get the data, and then you really want

to utilize it. But we felt so good, and we've gotten thus

far. Why would we change? So this visionary kind of

transition into more of a, you know, a leader of executives,

needs to transpire, and sometimes, and we see that at

the detriment of these companies. And so, yeah, I

100% agree with you, and a lot of times those decisions

revolve around, you know, maybe a bloated team that

needs some trimming. That's not happening. Maybe it's that

there's not really a stop gap with regards to a budget. If

we hit this level of profitability or cash flow,

maybe we need to take a pause, revisit and really look and

lean on our team leaders to reorganize. So those are just

a couple of examples of things that popped into my head as

soon as you asked the question of, you know, some of these

decisions around, you know, the hiring, the margins, not

product, those are all in swirling around my head as

well. Yeah, yeah. It definitely leads to the

detriment.

Yeah. So the way that I like to kind of

articulate this to folks is it's kind of like flying, and

when you first you get your pilot's license, which I don't

have, I took one course and realized that's a very bad

idea for me. The checklist just crushed my soul, but it's

better crushing your soul on the ground than crushing all

of you in the air. So I decided not to do that. But

basically, when you first start, you're authorized to

fly by sight, right, visually. And so you look out the window

and you see the roads and the lakes and everything, and you

know where to go and and in many ways, that's how we start

businesses right? The intuition that we have doesn't

come out of nowhere. It doesn't just like emanate from

you. It's how you're processing all the information

that you see and experience on a daily basis. But you get big

enough to where you're flying in the clouds, you're flying

high enough you can't see that anymore, and it robs us of the

data that our gut used to make those good decisions. Yes. So

it's a really big deal. Now, when we go to try and cross

that bridge to okay, how do we make database decisions?

There's, there's some, I found some pretty big problems from

a financial perspective. And one of the things that I've

seen really great CFOs do, and this includes fractional CFOs,

is to come in and basically make that financial data

accessible so that we can make better decisions and and so

one of the you listed off a couple of these already, but I

want to dig into it a little bit deeper. How do you see

founders and their teams relate to data differently

after you've worked with them and helped them give get

access to that data, versus before?

That's really good question. So let me tell a

story first and then provide an insight. If that's okay.

Love it. Okay. Um, so we, we came in a few years back, but

it's just such a perfect story for for this question. We came

in, and we were brought in to help this company that was a

little distressed. They were starting to have some cash

flow issues. They were looking at getting some lines of

credit, term loans, etc. And we ain't paused and asked the

question, Why? Why do you need to take on this debt? We've

seen it ruin so many companies. Are you leveraging

it for growth? Are you leveraging it for survival?

Very good distinction. If any of you, founders or business

owners that are out there need to ask yourself, that's the

question to ask before you do so. And so when we asked that

question, we started to realize that when we met with

the other executives on the team, they all had different

answers and different problems, and they clearly

weren't talking to each other, and they all had solutions to

their current problem. And so I think to your point in

pulling in that analogy of flying by site, flying by

data, the instruments that you have at hand that you have to

rely on. What is the feedback that you're getting from all

these technical tools as you fly in these clouds? Well, the

founders and or business owners, they need to leverage

their team, the department heads, the executives on their

team. Those are the instruments on the plane that

are telling you how to navigate through these clouds

that you can't see and use your normal gut feel and that

sight of the senses that has led that led you this far, and

so when we went in there it was, it was this kind of the

void that, you know, the vacuum of a lack of data that

people were trying to make decisions in, and then it was

connecting them. And so all we did was say, Hey guys, you you

guys are a phenomenal team. We've met with all of you. We

think you're you guys are all exceptional. But there's a

communication breakdown here. And it's not that it wasn't

being communicated because it was they had their leadership

meetings, but they all wanted to say their piece, and they

all wanted to make right. They didn't want to listen to the

overall underlining issues and solve the, you know, the

actual, you know, fundamental problems, where sales and

marketing were saying, hey, we need more qualified leads and

marketing saying, or sales saying we need more leads and

marketing saying we need more qualified leads and etc, etc.

You know, you know the story of how that goes on, and then

Ops is saying we need to hire more people for this growth.

And so the problem was, was connecting all those kind of

stories, but it really just revolved around two things.

One was having a rolling forecast where we can update

and see it in real time around. Here is my issue. How

does it affect the future? Most importantly, cash number

number two was, it was the it was the audio learners, or

versus virtual visual visual learners. Perfect example,

most of the team, they needed to see the dashboard. They

needed to see the KPIs in which one they were being

benchmarked against, but also their team was being

benchmarked against so that they could understand not

just, Hey, here's performance and how we get might be paid,

because without all of its tied to comp, a lot of it

should just be tied to management. The team wins, you

know, and if this person wins, we all win. And so once we

were able to make the implement those two things,

which was the leadership conversations, led to actual

implementation of fork rolling forecasts that allowed us to

understand what problems lied ahead, and then collaborating

as a team of how to solve them, utilizing those actual

KPIs, the key performance indicators, the things that

move the needle in every department head in which

they're kind of benchmark hands that was transformative

and. That's what we did, and what we were able to leverage

into to your exact question. You know, you have these

problems. There's bad decision making. But how do you

implement, how do you get people to listen effectively?

And so there's a lot of different, you know, it's the

ego management personality, the different learning types

in terms of, you know, maybe someone has linguistic

intelligence, another person has a processing so different

brains, right? And then basically being able to pull

all together and say, All right, here are the tools

we're going to use to help you. So that was really

powerful for that.

It's so good, and it highlights what I

think is a really important change, and that is that we

have to move to this being a team sport, right?

Understanding and implementing financial data in an

organization of this size and complexity is a team sport,

and that creates a couple of different challenges. And one

is, is actually pretty practical, but a lot of

founders, early on play their financial data pretty close to

their chest, right? It it it has a lot to do with their

personal income and profits. You know, can be very taboo in

some organizational cultures. How do you know what

information to share with the team and what if anything, to

withhold?

Wow, great question. Surprisingly, I

haven't been asked this before on, you know, publicly, in a

podcast, internally, we have these conversations. So it

really boils down to what and then when. And I think in

every team could be different in terms of the when, but I

think the what should be, you know, pretty, pretty

commonplace, synonymous across the board, around for us, it's

performance. Here's the thing, high level, I'm just going to

say everything transparency wins, but with exceptions, and

we'll go into that right now. So when it comes down to

performance, it's sharing it all. It's being transparent,

just like the forecast and the in the KPIs, the dashboards,

all of that. Here's the one that's kind of taboo to some

people, cash burn or your runway, yeah, share it with

your executive team, right? You're not going to be sharing

this with you know, middle, lower level employees who that

might scare and they think, oh my gosh, this is frightening.

I don't have the ability to, you know, bet on these people

in a secure way. I just signed a lease that's expensive, and

I thought I was signing up for a huge opportunity here and

now, it sounds unstable, but for the executive teams, if

you don't have someone that can help you navigate and

problem solve during your your your cash burn, time periods

where things are getting tight, maybe there's

seasonality where you do need a line of credit, and you need

to figure that out of how to get past that until you grow

to a size, or maybe you'll never be at the at the size,

but you have to manage it. You want to share all that, those

different perspectives and how you can navigate it, are

instrumental. I've seen such creative solutions come out of

the most unlikely areas within your operators. And so for

that, you share, you know, your cash position, your

performance, and then for us, the when. So it's the what,

and then it's the when and when for us again, it's that

rolling forecast. This is monthly your leadership

meetings. It's shared, best shared ahead of time, but

shared and then executed upon in terms of what are the

solutions if there's problems or congratulating and you

know, given the the proud kind of cheers for the people who

have really been crushing it. And so that opportunity of the

when now the what not to share these would be, I mean,

executives, a lot of them have access to HR, not all of them.

But, you know, salaries, any kind of sensitive HR stuff,

big hypothetical scenarios of like, oh my god, if we lose

our biggest client, we're done for not necessary. It's

obvious. But like, we don't need to sit here and play

scenario analysis and scare people. And then there's the

one thing about like, if you're going to be having

those conversations with your board or an investor, yeah,

keep those private. If you're raising capital, you know the

investors need to know what their downside risk is. Your

team, your employees. Don't. You know the success and

failure rates of startups. It's you know, if someone's

signing up and they don't understand the inherent risks

associated with startups. I mean, shame on them, but like

in terms of managing people, egos and productivity of

people, yeah, you know, you don't want to play out those

scenarios that's going to end up having your top talent head

for the hills.

Yeah. I agree on all this front. And

so I think one of the things that that could be missed with

a casual listen is how important it is to shift from

what we do with financial reporting typically, which is

what happened, to what you keep saying, and rightfully

so, is actually using it to forecast what will happen,

because you can't make any decisions to change what has

happened. You can only make decisions as a management team

about what will happen. And so getting in that habit and

building the skill like it doesn't come automatically.

And this is where someone like a CFO or fractional CFO is

really helpful. Like, just because you want to have a

rolling cash forecast doesn't mean that you know how to do

that. And so making sure that that is done well and it's

reliable to the extent that that's possible, is a really,

really important skill to develop as a team. I couldn't

agree more on all fronts there Tom this conversation could go

for a very long time, but I want to get to one question

I'm dying to hear your answer to before we let folks know

how they can get in touch with you and find out more

directly. But that question is this, what would you say is

the biggest secret that you wish wasn't a secret at all.

What's that one thing you wish everybody watching or

listening today knew?

That you don't need to be a financial expert

to run a great company, but you do need to stop pretending

like it doesn't matter. Think that's the biggest secret that

I could possibly share with people to have it resonate and

and hopefully take action because of it.

Yeah, so true. So true. So tell us just

quickly. What do you folks do there at frack finance? And

where can we find out more?

Yeah, so we're a corporate finance advisory

firm boutique, and so we really help companies that are

in their journey of either buying, growing or selling a

business, and ultimately in that growth phase it is. You

kind of think of it as outsourced finance and

accounting type work, and we really help companies grow and

and that's really our focus, both on organic and inorganic

growth. And so growth through acquisition, buying, buying

companies as well. And so you can find us best, to find me

on LinkedIn, and then also you can also reach us on our

website@frakfinance.com, which is F, R, A, K, finance.com

Fantastic, Tom, thanks so much for being

on the show. It was a real privilege and honor having you

here today, and for those of you watching and listening,

you know your time and attention mean the world to

us. I hope you got as much out of this episode as I know I

did, and I cannot wait to see you next time. Take care.