552 Megan Dahle:
The numbers tell the story of any business, yet why do so many entrepreneurs struggle to know… their numbers? All too often entrepreneurs tie their success to topline revenue – and not how to make that revenue profitable.
I’m Melinda Wittstock and today on Wings of Inspired Business we meet an inspiring entrepreneur who has made it her business to help business owners know their numbers so they can know and grow their companies.
Megan Dahle is founder and CEO of Consulting CFO.
After 15 years in the corporate accounting world, Megan set out to make the numbers easy to understand and use so her clients can grow stronger, cash-generating, and profitable businesses and rest assured that they know what’s coming up the road.
I can’t wait to introduce you to Megan! First…
Some 15 years into Megan Dahle’s corporate accounting career, a business owner reached out privately because she was concerned one of her partners was taking more than their fair share. After a cursory look at the books Megan discovered that the partner had, in fact, taken over $400,000 out of the business without the other partners knowing.
This sensitive project was the launching pad for Megan. She is now a Consulting CFO who creates lightbulb moments inside her clients’ businesses. Megan says her clients go from nervously checking their bank balances to understanding their business finances to give themselves a serious competitive advantage, so they can confidently build the business of their dreams.
Today talk about the common mistakes founders make when it comes to accounting and finance, how to demystify the numbers, assure proper oversight and more…
Go ahead and take out your phone so you can join the conversation over on Podopolo – share your own challenges with the finances, and any tips you’ve learned along the way.
Today Megan Dahle, the founder of Consulting CFO, shares the inside skinny on what you can do right now to get your books in order, boost your confidence about using the numbers to guide your growth path, and build predictably growing and profitable revenue streams.
Let’s put on our wings with the inspiring Megan Dahle.
Melinda Wittstock: Megan, welcome to Wings.
Megan Dahle: Thank you so much, Melinda. I’m so happy to be here.
Melinda Wittstock: Megan, welcome to Wings.
Megan Dahle: Thank you so much, Melinda. I’m so happy to be here.
Melinda Wittstock: Me too. I love talking numbers and it’s astonishing to me how many women in business don’t. They run from numbers. They don’t want to know the numbers, but the numbers tell a story. You work with a lot of female business owners and entrepreneurs, and they obviously need you. What’s the biggest challenge that you find?
Megan Dahle: The fear. Just like you said, it’s the fear factor of, we fear what we don’t know and we avoid what we fear and then we avoid what we can never conquer. It’s like this, this story that we’ve been told of, if you just make more revenue, you don’t really have to pay attention to this big, scary gorilla in the corner.
Melinda Wittstock: Yeah. It’s true. Do think it goes back to school where somewhere as little girls, we told ourselves we were bad at math.
Megan Dahle: That’s a theory that I held for a while, that maybe it was that constant message that we’re receiving. When I work with men, it’s the same thing. They don’t want to look either. I think a lot of it has to do with their gut feeling of something is wrong. I’m missing something, I’m doing something bad or I’m going to get found out. I’m going to discover something. I really didn’t want to know.
Melinda Wittstock: It’s kind of out of sight out of mind. For instance, if you’re actually looking at your margins or you’re actually looking at your costs relative to your expenditure and you’re afraid of the story that it’s going to tell you.
Megan Dahle: Right. Right. You might face something in that mirror that you may have known in your gut was true, but it’s so much easier to just ignore it and go get the revenue. Go, go, go, go revenue, revenue, revenue.
Melinda Wittstock: The thing that people miss, is the difference between revenue and profitable revenue. I see all these people on Facebook, all the kind of coaches that say, “Hey, I had a million dollar year.” What they don’t tell you, is it costs them $999,000.
Megan Dahle: Actually, I’ve seen the books of some of those very prominent people. It’s not even that million dollars cost of 900. Sometimes that million dollars cost them 1.5 million and they’ve caught themselves in a cycle of using the revenue that they earn today for the program that they have to fulfill in the next three months. They’re actually using that money for the last time they launched three months ago to catch up there. They’ve really gotten themselves into an ugly cycle.
Melinda Wittstock: Absolutely. How do you work with people to get them to understand the idea of profitable revenue?
Megan Dahle: My first thing is just getting them to understand that it’s okay. There’s a lot of shame and embarrassment when people first are reaching out and they don’t know what it’s going to look like. They’re really kind of, please don’t see me in my underwear type of thing. Just getting them to understand that it’s a safe space. There’s nothing I haven’t seen. I’ve seen fraud. I’ve seen bankruptcy, I’ve seen everything and it’s okay. Wherever you are, it’s okay. Let’s just get to work. That’s always the first step [crosstalk 00:03:26].
Melinda Wittstock: People can be afraid of showing you the books and I think it’s an additional thing perhaps for women, because we’re such perfectionists. We think, “Oh, we’ve got to clean the house before the housekeeper comes.” “Oh, I can’t really show my numbers because I got to do all these work on the numbers before I’m going to show the numbers to anybody.” Meantime, that’s not what we’re good at.
Megan Dahle: You really nailed that right on the head. It really is like, “Oh, it’s not ready yet.” They’re apologetic and like, “Oh, that’s kind of messy.” It’s okay. It’s okay. The important thing is that you took this first step, you raised your hand and in the next two hours you are going to feel so good about what’s coming next.
Melinda Wittstock: Yeah. A lot of people, when they go into business, don’t necessarily set up all the right systems and it’s hard to know what you need at varying stages. Let’s talk about a solopreneur say to start. She’s gone into business for the first time and maybe she has QuickBooks. Maybe she doesn’t. What are some of the common issues you find at that early stage? When is the best time to start getting these accounting systems really in place and nailing them? You’re actually, you can watch your cash flows. You can watch all the things… Take me through that process for that early stage. What’s [crosstalk 00:05:02]?
Megan Dahle: The sooner, the better. Sometimes people are coming to me with just a download of all their transactions from the bank from the last year, which is fine. I can work with that, but then I know that we need to get them into QuickBooks. Now is the time. I use kind of in my brain, I’m always categorizing where people are at in terms of organizing their numbers. If they’re organized, do they understand them? If they understand them, are they using them? Those are like the three phases. When we’re doing that first dive into, “Okay, what is it that you have?, let me take a look? Is it even organized?” if that’s not even the starting point, we got to get them organized before we can even start to understand.
Melinda Wittstock: Right. Just even classifications of revenue or classifications of costs, things like that. Is it cost of sales? Is it R&D? Is it operational, G&A, that kind of stuff? That, I guess is more advanced for people.
Megan Dahle: Well, I try to stay away from the accounting jargon. I’m a creative person who happens to be really good at math. That’s kind of how I landed in doing what I’m doing. People get really intimidated by like some of the terms that you just used and then terms like amortization and depreciation and revenue and gross margin and all these [inaudible 00:06:21].
Melinda Wittstock: EBITDA, that’s a fun one.
Megan Dahle: What the heck is EBITDA? Yeah. Right. Getting rid of that jargon and using terms that are useful to them and not your accountant, because sometimes I even find that accountants don’t even want to ask the question, like just let me get to work, please. Some will use fancy jargons, just so people stop asking them questions sometimes. To take that power back to the business owner and how do we use that information in terms that they can very easily understand and very easily start using themselves to empower themselves, to use their numbers?
Melinda Wittstock: Well, it’s an interesting thing too, just even with say a sales funnel. Say you have a product and you want to sell a thousand of this particular product. People neglect to understand what it’s going to cost them to sell a thousand of these. How long is this going to take? What do they have to spend? What’s the actual cost of that sale? Do you need to reach a hundred thousand people to sell a thousand? Do you need to reach 10,000 people to sell? This is where the numbers are really, really helpful in terms of forecasting or just knowing what you’ve got to do to actually hit your goal.
Megan Dahle: Yes. You can’t do any of that without putting it out there. Step one, validating your product. Does anybody even want this? Because we certainly don’t want to be spending more on ads and marketing than what we’re bringing in. Unless it’s a strategy, of course. If you have a self-liquidating offer, but that’s a different story. You’re more along the path, once you’re reaching the self-liquidating offer area, but absolutely. Understanding how many people do I need to talk to in order to sell one item? What’s my ad spend in order to sell 10? Is it scalable? If not, if I reach a hundred instead, does that really throw off my numbers in coming back to really understanding hard, the value that people are paying you for?
Melinda Wittstock: Yeah. You can’t really know that, especially in the beginning stages of company. There’s more that you don’t know than you do know. Having a sense of forgiveness around your own numbers. You’ll put in targets and then if you don’t reach them, you have to be on the numbers to be able to kind of learn what’s working and what’s not working, as again, they tell the story. It’s a projection to begin with, but then you start to refine it over time, but it does require a little bit of self-forgiveness because you can be, and I know I have been, wildly wrong or over optimistic or in some cases under optimistic, where I’m like so… I’m always surprised.
Megan Dahle: Yeah. You really nailed that word right on the head, forgiveness. One of my favorite values is grace. Grace and curiosity, if I can get up every day and just revel in giving people the grace that they need to forgive themselves and the grace that they need in order to say, pick themselves up and, “Okay, let’s go on to the next experiment. It’s okay. I learned something. This is good. I still love myself. I still love my business.”, and keep on going. It’s really sad to see some people be so hard on themselves, especially women. They’re so hard and judgmental and hang on a second. That’s my client you’re talking about. You’re not allowed to talk to her like that, even though they’re talking about themselves.
Melinda Wittstock: Exactly. This is the case in all aspects of business, not just the numbers and all of it, because it’s very personal to us, especially for women. We all think we have to be perfect and doing it all and at all times. It’s just not the reality. It’s a journey. I think the interesting thing I find with women though, too, and I know I had to struggle through this myself as well, is when you’re hiring people, is it a cost or is it an investment? What I mean is I think a lot of women can fall into sort of that penny pinching, like, “Oh my God, I can’t afford to hire anybody. Or what if I hire that person and I have to fire them?”
All that fear around that. Hiring a person is actually going to help bring more revenue to your company, as long as you like pick the right person, tie them to a result, what is the result they have to drive to be able to justify their salary? When you pay that person and they deliver the revenue, hopefully profitably, it’s an investment. It’s not a cost. There’s a big mindset shift that has to go on there. How do you coach people around that particular issue, when to hire?
Megan Dahle: The first thing is, I would really prefer that people hire before they’re at maximum capacity, but that’s not how it happens. People get to a hundred percent capacity, like, ah, finally admit that they need help. I prefer that they do it beforehand so they have plenty of time to really integrate that new employee into their business. Where I start with them is with a cash projection. That’s my favorite tool that I use with my clients is to just sit down and say, “Okay, where is your cash going to be in 30, 60, 90 days? Where’s it going to be in six months? All right. Now let’s start putting in some variables and see what your expectations are going to be. If you hire a full-time employee, or if you hire a contractor, if you hire, this is the cash that it’s going to cost you, this is what you’re expecting those results to be.”
Then we can start to set some milestones for when that person comes on and make sure we’re very clear about the expectations, about how fast they can get up to speed and how fast we can start seeing those results. Ultimately it’s not the scary thing of, I don’t know how it’s going to impact my business. What if I have to fire them? Like, “Okay, well, let’s take a look. What does it look like in 90 days, if you have somebody on the payroll for your cash flow?”
Melinda Wittstock: Yeah. This brings me to a later stage of business, that really awkward phase. This is actually the phase where a lot of businesses fail. It’s not at the beginning. It’s when you’re hit with sudden growth and you didn’t anticipate the cost of that or being able to fulfill demand. I know, because I’ve also been in this place, where you’re kind of in your own way. Suddenly you have to hire a lot of people, but you’ve not anticipated how much time it’s going to take for you to do the hiring. How much time is going to take for you, as you’re saying, to integrate that person into your business, how long it’s going to take for them to start producing, all that stuff. Meanwhile, you’re at capacity. You’re doing everything yourself and burning out.
There’s a lot of women who get there at that stage where suddenly you’ve got good six figure, mid six figure revenue. You’re heading towards a million and you’ve got a scale, but you have to be a totally different person at that point. If you don’t have the systems in place, if you don’t know your numbers, Oh my God. A lot of these things can be avoided, but all too often, sometimes you have to go through the experience before you learn the lesson. Wouldn’t it be nice if you could avoid that phase?
Megan Dahle: Yes. Prevention is worth the, what is an ounce of prevention is worth a pound of cure? Yeah. Before you’re frantically throwing money at some solution that you found on a Facebook ad, to actually have a 90 day runway leading up to it beforehand, seeing that coming down the tracks before the train hits you, is really important.
Melinda Wittstock: Yeah. I’m on business number five, and because it is a business that’s taking in investment from Angel Investors, I have to do a five-year projection model. Now, it’s really difficult to know what the hell is going to be happening five years from now. You’ve got to make like credible projections where you want to be generally right, not precisely wrong, but in that near term. I’m, right now, just before I came on this podcast, I was looking at my numbers for next year and we have a pretty steep hiring ramp for next year. I’m thinking, “Oh my God, okay. What is actually going to, what is the operational reality of bringing on all those people? How is that actually going to work? What’s the actual cost of doing that?” It’s tricky to know.
Megan Dahle: It is. It is tricky to know, but at least you’re looking. Obviously, your projections in five years, you’re not going to hit them on the nose. You might be over, you might be under, they might be a little enthusiastic that you might have been pulling back the throttle, just to keep investors from judging or questioning what your projection capability is. The farther away, the harder it is. At least you can see a year from now. You know, and you can assess for yourself, is this something that I’m going to do? Or would I really rather bring on a team member that can really handle the onboarding much better than I can so I can keep going on this other part?
Melinda Wittstock: Well, this is the other thing too, For somebody who doesn’t like doing the numbers, I mean, they need you or someone like you. Double down on your strengths and hire your weaknesses is what I always say.
Megan Dahle: Absolutely. That’s why I love working with creative women. If you’re good at your craft, I could sit and watch you do it all day long, even if it was just your calligraphy. I love it. If I can see before and after’s of interior design, I love it. I just love watching creative people work. If I can help them just work on what they’re good at by having their back and being able to raise my hand and say, “Hey, Melinda, did you see this thing coming down the track?” Letting them take a look at their numbers when they need to, and not having to do this dragging your feet, procrastination, spending more time, avoiding it than actually doing it. My work here is done.
Melinda Wittstock: Exactly. How did you get started, Megan, as a consulting CFO? What was the spark that made you go in this direction?
Megan Dahle: The spark was, I was kind of tired of working at my job. I was working as a controller for an eight figure business here in town. I could do my job efficiently in 10 hours a week. I wasn’t excited about doing the same thing over and over again. I thought to myself, “You know what? I’m going to save these people a ton of money. They’re going to be my first client.” I went in there and I talked to my boss and I was like, “Listen. This is what is going to happen. I only need 10 hours a week to do my job. I’m going to be your contract CFO.” This was kind of an epiphany in the middle of the night, went in the next morning and told them. They’re like, “Nope. We’re good. Thanks.”
Oh, okay. Okay. They truly wanted somebody full-time. They’re, “No, thank you.”, was also here’s the door at the same time. I was like, “Oh, that’s interesting.” About the same time, I had a friend of mine reach out to me who was a silent partner in a restaurant franchise. She’s like, “I think that the majority owners are stealing and I can’t tell.” It was actually really good timing. It was literally days after I had left my controller position. I dug in, sure enough, they had taken about $450,000 over the past couple of years.
Melinda Wittstock: Oh my God.
Megan Dahle: Yeah. Yeah. And so that was my launching point of realizing that people really don’t dig into what they’re afraid of. They don’t know how to see it and there are a lot of, especially women out there, that just don’t want to know about their numbers because they don’t know what they don’t know. It’s fine. It’s fine. I’ll just raise revenue. It worked out really well. It was certainly a holy spirit moment where it was like, you’re out of this business so you can really hustle and figure out what’s going on in this business over here. The rest is kind of history.
Melinda Wittstock: That was my big accounting, learning experience in my first business, where my head of accounting, stole $40,000 from the company. All the while, she was really liked by everybody, a really big part of the team. When it was discovered, a tremendous amount of personal betrayal, but she’d done it in a really inventive way. I think, “Gosh. Had this woman put all her energy in positively, she would have grown the business, earn more money, all that. Instead she spent all this time covering up this thing.” She ended up going to jail actually because it was done across federal lines.
Here was the lesson that I learned. She was doing the monthly reconciliations and she would show me stuff and then she’d go back to the books and change stuff around and then the next monthly. I was on it, but I still wasn’t really on it without an independent eye. Somebody really validating that the numbers are actually the numbers.
Megan Dahle: Yeah. Having those checks and balances.
Melinda Wittstock: Yeah. It was a really painful lesson that basically enabled me to learn all about FASB, GAAP accounting.
Like I say, when the lesson is learned, the experience is no longer necessary. You have something like that happen and I definitely went through all kinds of shame and grief and I thought, “How could I be so stupid?” It was all that kind of stuff. It was a profound learning and while accountancy is not my favorite thing to do in the world, I’ll be honest. It’s not really my sweet spot or skill, I understand it really well. So that I can manage somebody else doing it, or I know what questions to ask.
Megan Dahle: That is so key. Questions to ask, that’s actually kind of the core of what I do is finding the right questions to ask, to give that perspective in seeing, in helping my clients understand what the numbers could actually do for them and what they can discover about themselves and their business and really, what’s the next step.
Melinda Wittstock: Yeah. You can have all this, so it’s really important to get all the systems in place, but even with the systems in place and you’ve hired somebody things can still go wrong. Making sure that you have some sort of oversight is important and that you’re educated enough to at least be able to manage it. Yeah. It’s a journey.
Megan Dahle: Yeah. I do come across clients who are just like, they want to double check over the shoulders of their bookkeeper. It’s surprising how many people have a distrust between themselves and their bookkeeper just because one, they didn’t understand what the relationship should be going into it and two, they don’t understand what is going on, on their balance sheet and income statement. Sometimes there are weird things that we need to go to the bookkeeper and say, “Hey. You want to explain why there’s a $20,000 asset in the sales tax payable? What’s going on here?” They’re like, “Oh, I said, I was going to fix that.” I’m like, “Well, you said you were going to fix that for the last year apparently and it hasn’t been.” Just kind of making sure that things are on the up and up with what’s going on with your bookkeepers.
Melinda Wittstock: Exactly. Then there’s all kinds of tax implications too, for how you run your business as well, in terms of your taxes. Do you go into all of that with people also?
Megan Dahle: Yeah. Here’s the deal on taxes. When I was getting my master’s degree, I took the advanced whatever master’s tax class. I got a 40%. 40% in tax. That was open book. That was also an A, because it was the highest score in the class. Yes, I will help them put the structures in place to make sure that they are putting enough aside for taxes. When it comes to the nitty-gritty of taxes, I actually have a little army of people that I can refer my clients to and say, “Hey. This is the tax person for your type of business.”
Melinda Wittstock: Yeah. That’s amazing. How many people do you work with at any given time as a consulting CFO? How many clients do you have and how does that all work?
Megan Dahle: Sure. I take on the big clients that have multiple employees, multimillion-dollar companies. I only take on one or two of those at a time because they demand more of my attention, which is fine. What I really love, I have about 10 spots per month, where I take on small solopreneur type businesses. We just do a deep dive into their numbers just to take a look, just to see what’s going on in the amount of control that people feel over their businesses by the end of those two hours, because now they can see what’s going on. They can see that cash flow, they can see what their target revenue numbers should really, really be in order to put that amount that they need in their pocket. That really lights me up. I love working with those clients.
Melinda Wittstock: That is fantastic. As we wrap up, if there was one takeaway or one piece of advice you would give to every single woman in business, whatever stage she’s at listening to this podcast, what would it be?
Megan Dahle: Know your future forecast. Your financial statements are great and everything, but your future forecast will take that into account and it’s fine. Once how much cash you’re going to have in the bank in 90 days from now, you can sleep at night. You can plan better. You know what to work on when you get up in the morning.
Melinda Wittstock: Oh, that’s so important because it actually prioritizes your effort. You where the gaps are. You can see in advance a problem before it becomes a difficult problem.
Megan Dahle: Exactly.
Melinda Wittstock: Oh gosh. So many, what do they call them? Value bombs here. Megan, how can people find you and work with you?
Megan Dahle: Sure. Come on over to Meghan Dahle. That’s M-E-G-A-N, D-A-H-L-E.com. You can either, you can browse my product offerings or you can make an appointment with me and I would love to talk to you.
Melinda Wittstock: Fantastic. Well, thank you so much for putting on your wings and flying with us today.
Megan Dahle: This was so fun, Melinda. Thank you.
Melinda Wittstock: It was.