As Brandish was winning more contracts, growing its employee base and earning more revenue, Lee Waltham was concerned.
They were good problems for the founder and managing partner of the Winnipeg-based advertising agency, but he realized the lack of financial management had the potential to cause missed opportunities as well as lead to uncertain decision making and an unfocused strategy. The combination could make the company increasingly difficult to lead.
More receivables were coming in, more payables were heading out and the financial situation was becoming unwieldy. Originally, he managed the company’s finances on his own but even after hiring a full-time accountant, it still wasn’t enough.
“As our business grew, the financial management became more complex. Our needs financially also became more complex and sophisticated. It was daunting and it created a lot of anxiety. There was too much work for one individual. We needed a solution that would scale with our business,” he says.
Enter McLenehan and Associates. The Winnipeg- based accounting firm offers a “Fractional CFO” service that provides valuable strategic financial coaching and advice, as well as the crucial day- to-day accounting support of an entire accounting department – all at a fraction of the cost of a full-time employee. The target market for this unique service is small and medium-sized businesses with annual revenues between $1 million and $20 million.
Company founder Mike McLenehan says the challenge for many entrepreneurs is while they may be the brains and driving forces behind their businesses, they don’t necessarily have the expertise to handle financial management, accounting and taxes while simultaneously trying to grow their companies to the next level. Many of them are constantly being pulled in all directions by departments such as operations, human resources, finances, sales or marketing, or even all five at the same time.
McLenehan and Associates takes over the daily operational accounting for all of its Fractional CFO clients, which can include managing accounts payables and receivables, bank and credit card reconciliations, payroll coordination, monthly financial reporting, cash flow forecasting, budgeting, and overseeing compliance with tax obligations and internal controls.
“Our service is about meeting the need. Sure, it’s having a skilled and capable accounting team of professionals working on your business but it’s more than that. It’s also mentorship, coaching, advice, setting strategy and making a plan for the future. That’s what most people aren’t getting from their accountants. They’re getting retroactive tax planning and financial statements six months after year-end,” he says.
McLenehan’s service includes a team of Chartered Professional Accountants who act as Controllers for Fractional CFO clients and are responsible for clear and accurate financial reporting and forecasting. Overseeing the entire financial situation is a Fractional CFO, who meets with the client as little as once a month up to six times per month. Such meetings are structured coaching and strategy sessions, complete with agendas, reports and financial dashboards built specifically for each meeting.
“We’ll help you to drive profitable business growth. Your financial statements will go from being an obligation and a matter of compliance to a tool and a resource that you’re using to run a better and more successful company,” he says.
McLenehan says most business owners recognize the need for financial forecasting but all too often it slips to the bottom of their to-do lists. He and his Chartered Professional Accountants will project a cash flow forecast for the short-, medium- and long- term, allowing them to run scenarios based on the entrepreneur’s plan.
“A forecast is something you come back to over and over again, change, run multiple scenarios and use to make decisions for your business. We’ll say, ‘based on what’s happened in the past and your plans, here’s what your next 12 months looks like.’ We help provide financial clarity and the confidence to make decisions based on accurate information,” he says.
The process for implementing Fractional CFO services is straightforward. McLenehan schedules a meeting with prospective clients to get an understanding of their financial challenges and where the services would help the business succeed. He then compiles a tailored financial plan that fits with the company’s unique needs and goals. Within a month, his team will be integrated seamlessly with the client’s operations, providing expert financial management and strategic advice.
The scalability of the Fractional CFO makes it particularly valuable for business owners. For example, if you had a full-time accountant but more work than they could handle, you’d likely hire another full-time employee. But if the excess work only took up 30 per cent of the new hire’s time, you’ve taken on both excess capacity and waste.
The Fractional CFO service is structured and recurring. The team implements systems and a structure designed to provide maximum value and streamline processes.
“We can scale up and scale down to make sure we’re addressing their exact needs. We’ll standardize their technology, including their accounting software and their systems. Bill payments, management of employee spending and accounts receivable are example of features that can be added to the service,” he says.
“We connect to our clients’ accounting software and implement financial planning and analysis tools that make their financial data more understandable. Financial statements, such as balance sheets and income statements, shouldn’t be concepts that people don’t understand. We meet with our clients regularly to help them interpret this information and make better business decisions.”
Is there a downside to not having a firm grip on your finances? Most definitely. Some businesses can survive by bouncing from one crisis to the next but they won’t reach anywhere near their potential and the stress can take a significant toll on their owners.
“If you’re putting out fire after fire, you’ll have no clarity or certainty about the future. You don’t have a plan of what you’re going to accomplish or achieve over one, two and five years,” he says.
Good financial management is even more important for the survival and future prospects of a business when facing unpredictable events such as a global pandemic or international trade war.
“You don’t get to complain and not make decisions, solve problems or plan. You’ve got to pivot. But without financial coaching and guidance, you’re making adjustments without running scenarios and understanding them. You won’t know that you’re going to run out of cash in six months until it’s too late to make a decision or a change,” he says.
Perpetual financial confusion can lead to a string of poor financial decisions while an absence of clear financial data can result in moves leading to lost opportunities, inefficiencies and financial instability.
Profitability and cash flow struggles can also make it difficult to cover expenses, pay employees and reinvest in the business. The stress from worrying about paying overdue invoices can lead to burnout, health issues and the worst-case scenario – going out of business.
The ongoing trade war with the U.S. makes a Fractional CFO all the more valuable because good financial management will help companies survive volatile times, McLenehan says.
“Some companies will fail because of the trade war but strong companies with good systems and financial management will survive and thrive through difficult times. If you were just managing when things were good, a trade war will wipe you out. But if your business is built on strong fundamentals, you’ll pull through and succeed. It separates the winners from the losers and the strong from the weak,” he says.
McLenehan first started offering the Fractional CFO services in 2023 and the demand has grown ever since.
“We have a deep level of engagement and integration with our clients to fill the role of a full-time employee,” he says.
McLenehan can also speak from personal experience. He started his own firm 11 years ago with a desk, a laptop and zero clients. Today, he has a seven-figure firm with about 20 employees at two locations in Winnipeg.
“A lot of the advice I give is what I follow in my own business. I know that it works,” he says.
Back at Brandish, Waltham says the Fractional CFO services have “undoubtedly” transformed his company.
“Getting those daily reports, having weekly and monthly meetings and being able to text Mike and his team, all of that allows me and our team to focus on operating the business. We’ve evolved from being very reactive to being very proactive,” he says.
“What we’ve gained from working with a partner is
a true force multiplier. It allows us to access better capabilities and competencies for a lot less. It has allowed us, ultimately, to do a better job and be a better company.”
McLenehan says Brandish and other clients that experience strong growth do so intentionally because they formulate a plan and stick to it.
“Sometimes you can get to $500,000 in revenues just on hustle and work ethic but getting bigger than that takes planning and intentionality. We’ve built that into the daily and monthly services that we’re providing,” he says.
“Every business owner wants to succeed and the single biggest factor in business success is financial success.”
To request a meeting to find out if Fractional CFO services can help your business email mike@mclenehan.com
or call 204-505-3113 and request a meeting.
THE ABC’S OF vA FRACTIONAL CFO
Q: What is a Fractional CFO?
This unique service includes a team of Chartered Professional Accountants who act as Controllers for corporate clients and are responsible for clear and accurate financial reporting and forecasting. Overseeing the entire financial situation is a Fractional CFO, who meets with the client as little as once a month up to six times per month, depending on their needs.
Q: What is the cost of Fractional CFO services?
The cost is customized to the service offering and level of engagement for each client. McLenehan completes a needs assessment with prospective clients and provides a proposal, which is customized to their specific needs with a value calculated and consistent with their unique operations.
McLenehan and Associates can often fulfill these roles at a fraction of the cost of a full- time employee.
Q: Why do I need a Fractional CFO?
A: Many entrepreneurs are idea people
and don’t necessarily have the financial background – or the time – to understand complex financial management, accounting and taxes or use data to do financial forecasting. Without proper financial oversight, companies can struggle with profitability, cash flow, growth and compliance issues.
Q: What are the benefits of having a Fractional CFO?
A: Confidence in financial decision-making; predictable, stable cashflow; increased profitability and business growth; peace of mind knowing that experts are managing your finances; and more time to focus on strategy, innovation and growing your business.
