ļ»æJustine Lemanowicz transcript
Opening
AJ: My guest on today's episode of the Thriving Through podcast is Justine Lemanowicz. Justine, welcome.
Justine: Thank you for having me on your podcast, AJ.
AJ: I'm excited to jump in and talk to you. I have a question I ask all of my podcast guests. It's the first question: What was your path to self-employment?
The Long Path to Independence
Justine: It was a long path. I'm the type of person who has goals, plans, and overanalyzes, which serves me well in my profession, not always in my personal life. I actually bought a domain ten years ago, fractional-accounted.net, and I knew at some point I was going to go off on my own. I've been in business two years this month now, so that's a big win for me.
AJ: Congratulations.
Justine: Thank you. When I started seriously considering this about three years ago, going off on my own, I started thinking about retirement at some point. That's typically when a CFO transitions to a fractional CFO, because they want to keep their skin in the game, they enjoy what they're doing. It gives them something else to do in retirement that they find interesting.
I decided I want to start pursuing this path now and see what I can build - how big I can build this, what it'll morph into. The only thing that has held me back was fear.
Conquering Fear Through Strategic Questioning
Justine: I started really questioning myself. That question was, what's the worst thing that could happen? What's the worst thing that could happen? I can fail. Failure's not an option for me, but if I did fail, let's just say that happened - I have to go get a job with somebody else.
Because I enjoy what I do so much and working with multiple clients, I'm going to make it work. That's what I've decided. And so far, it's worked out really well.
AJ: What I appreciate is how you had a conversation with that voice in your head that was saying you might fail, and that's bad. You had a wonderful conversation saying, what's the worst thing that could happen? Worst case, I go back and get a job. You talked yourself off that fear ledge by projecting out and recognizing that what that fear voice was telling you wasn't all that scary.
Justine: It wasn't, and let me add to that. Prior to making the decision, I probably met with 25 people. Some of them were mentors, some of them were former owners of some of the companies that I've worked for, some of them were solopreneurs, some of them started their own business. I've met with other fractional CFOs.
I really vetted out the fact that there is a need for more fractionals in the marketplace, and I can do this, and why not do this? So I did my research.
AJ: You did your research to calm the fear part of you down. You knew what you were doing, it wasn't impetuous - it wasn't just one day I'm gonna start to do this.
Market Research and Validation
AJ: I want to talk a little bit more about those conversations. What kinds of questions did you ask? And what convinced you that there was a market need?
Justine: The type of questions depended on the person. For someone who started out as a solopreneur and grew their business, I asked what did you experience when you were starting out? One of the pieces of advice that I received was make sure you have about six months of expenses, six months of funds to cover your expenses in your bank account, just in case you experience a lull, or you don't have as many clients lined up on day one as you would want.
Other fractional CFOs that I know in my network - I asked is there a demand? And there definitely was. We actually all play nice in the same space together, just because if you're making an assumption, most of us fractional CFOs who are on our own and not with a firm, all of our business is referrals. When you receive a referral from a trusted source, there's no or little competition - they're just gonna go with you or they're not.
Having the encouragement from people who know me, and they're saying you can do this, there's no reason not to go forward, we'll support you, we'll help you - I did have that support. I was blessed right out of the gate, I had my first engagement before I even transitioned off my own W-2 job, and then my second engagement day one when I launched. I'm gonna call it blessed that it's worked out so well so far.
Building Trust in a Vulnerable Industry
AJ: Absolutely. You said that it's all referral, and I can understand why, because companies need to trust you in order to let you come in. That's a really vulnerable world to let them give you entree to their financials and their books, and you have to have that trust.
Justine: What happens if the referral network starts to dry up?
AJ: I do a lot of networking, and it takes a while to build those relationships. If you really think about it, if you go to an event, you're talking surface-level conversations first of all, and then maybe as you meet for coffee, or you start meeting for lunch more often, then you start really getting to know the person and digging deeper in what they do in their business, for their clients, and their personal lives too. So that matters. They see that you're a person of integrity, how you approach your clients, that you're trustworthy, and that they feel comfortable referring you.
The Importance of Client Compassion
Justine: One of the most important things as a fractional CFO to do is when you're working with a prospect or a client, make sure you almost gloss over the fact that when they need my services, they almost feel embarrassed that their books got to this point. I always start off those conversations saying, hey, you didn't go into business to run finance or accounting, and that's where most of the issues sometimes start - they don't have somebody who knows exactly what's going on.
I make them feel comfortable. They started their core business which is what they're great at. It's understanding the financials and being able to build a strategy around the KPIs that you may or may not even be able to identify in their current state of financial statements.
When Companies Need Fractional CFOs
AJ: How do you typically work? Do you work with smaller companies that are moving from founder-led to more professional management? When does a company need a fractional CFO, and is it sort of an interim to hiring a full-time CFO?
Justine: In my experience, companies need a fractional CFO a lot sooner than they think they need a fractional CFO. I only say that because I'm talking with one prospect right now, and they are in a ton of debt. At some point, they stopped being able to cover their operating expenses and just kept going deeper and deeper into that.
Their financials aren't structured in a way that they can report on gross profit. They're not recognizing revenue correctly, so you don't even have that one-to-one match. If you're an owner running your business, or you've got a bookkeeper, you may not even be familiar with that concept.
Back to your question, I work with small to mid-market companies, so I'll help startups, but they typically might need somebody plugged in eight hours a month, which was what I was working with one client previously. Small mid-market - I find myself working in the professional services space a lot. I have a background in IT, not as a technician, but on the finance and accounting side, so I seem to get a lot of referrals from my network there. It could be any revenue from $2 million to $150 million, it depends on the industry.
Learning from Early Mistakes
AJ: When we talked earlier, you told a story about your first fixed price project that went sideways. Tell us about what happened and how much did you underestimate, and what did you learn from that experience?
Justine: I did learn a lot, and it's funny. I actually spoke with a couple other fractionals in my network about that same situation. This was my first engagement. It was fixed price. I'm not against that, because it does help companies budget.
There were three separate work streams I was tasked to work on, with another colleague. I put together what I thought was good estimates, padded it slightly, just because there's going to be those unexpected topics, issues that arise that you weren't expecting, and it happens in almost every engagement.
But I found myself spending a lot of time on the phone, having one-on-one conversations that weren't even related to the project. A lot of time - for example, hey, our health insurance renewal's coming up, can you help us with our plan design and look at our costs and see if they're reasonable, and look how we're splitting the cost between the employee and the employer. Sure, I love having those conversations, but I didn't plan on having those conversations.
Balancing Service and Boundaries
Justine: However, what I learned after that is just do the right thing, which is what I always try to do. You have to recognize there's a value add there. You don't want to play psychologist sometimes, but I think there's value in just taking the call, maybe cutting it short, giving them some resources to refer to. It wasn't a big lesson, so maybe I'm blessed in that. I've heard some other solopreneurs have a lot worse experiences.
AJ: So it's sort of potential for scope creep in the future, if you've got things that were outside the scope, would you tell them that you could help them, but you would have to charge more? Or how would you handle that if you had that again?
Justine: I think, and this actually was in our statement of work, you add a clause - anything outside scope will be charged at X amount per hour. Now, do you hold the client accountable for that? I guess it depends. Phone call here and there, your opinion on A, B, C, or D, sure. But when you let's say, for example, I go into an engagement and I have to take their financials from cash to accrual, or something that, and discover that there's three years of receivables that are open because you've been booking your deposits to income instead of applying against the invoices. Well, that's an unknown, and yes, I'm going to charge for that, because you had no knowledge of that.
But these conversations, I think they're adding value, not only to the client, and it also - besides accomplishing the work you set out to do, it gives them a sense that you really do care. I definitely want to leave my clients with that thought once I transition off, if it's a project engagement. Maybe I'll get another referral from them if they invest in another business, or have a colleague that needs my services, and that's just how you look at it. It's a give and take.
AJ: It does depend, but if you're gonna err on the side of anything, it's building the relationship.
Justine: Yes.
Rebranding and Expanding Services
AJ: On a separate topic, you're going through a rebranding right now. What made you realize your current branding wasn't working? Or why did you decide to rebrand?
Justine: I'll be transparent, I don't love the name of my company, and I'll probably keep it, but I feel that I'm going down a path that's also technical. I mentioned, before we had our call, we were talking about LinkedIn, and I said, oh yes, I do need to update my profile, because I just added a new line of business. So I'm consulting for clients, small to mid-market, to look at their current processes and evaluate where their biggest challenges are. Then determine two to three AI automation tools that'll solve for that problem. That usually creates some cost savings there as well.
That's a little bit more technical, and then I'm in infancy stages of working with a developer to write a web application. I was thinking it's finance and it's tech, so fintech. But I feel my website's a little - it doesn't really represent what I'm currently doing now. The look and the feel of it, and I am not a branding expert, so yes, I am working with somebody.
Exploring AI Automation Advisory Services
AJ: Tell me more about this new service, these AI assessments. What do you call your new service?
Justine: I call them finance tech advisory services. There's a lot of talk about AI out there right now, a lot of chatter, and there are some larger companies offering AI and automation tools right now for finance and accounting that solve some specific needs.
I feel there's a gap in the market to actually figure out how to - where do you start? I've talked to a lot of business owners. I made an assumption that even the large corporations have a roadmap. Most of them don't. So I saw a gap, and I've always been really interested in technology, so I thought, why not learn about all the tools that are out there? And there's a lot of tools currently being developed, and very quickly, so I feel there's going to be a little bit of a flooding of the market.
Since I started my career working in accounts receivable, working in accounts payable, overseeing inventory and warehousing, I've had hands-on experience in everything, so I understand the processes and the challenges. Then as a fractional, you start digging under the hood, and then you identify the bottlenecks - where is improvement needed? So there are automation tools out there already, but having AI sit on top of those tools, it's going to be fascinating once companies start deploying these tools.
AI Tools in Action
Justine: I'll give you a specific example of one of the tools that I demoed recently. Most CFOs, controllers, vice president of finance, who's ever going to be presenting the financials to the shareholders, they will put together and answer the questions before they're asked. They're going to put together notes - here's where we are year over year, quarter over quarter, here's net income, and then they'll do a variance analysis, because we understand what questions they're going to ask.
Now, this tool will actually drill down into the general ledger and grab the transaction that caused the variance over whatever threshold you set. So it could be a dollar or a percentage. They'll find the transaction, and they'll already create those notes based on your prompt. It's crazy. So that'll save especially larger corporations a lot of time, just having that summary.
There's tools out there for collections and managing collections, all the way down to - I've already sent you two emails, one the original invoice, two reminders, and now I'm gonna have my robot call you. Now they haven't perfected that yet, because I could tell you personally, I don't want to talk to a robot. If it doesn't sound a robot, I don't mind talking to one, but that's really interesting. It's fascinating what's going on. So you're either going to embrace it, or you're going to get left behind.
Addressing AI Concerns
AJ: And but it's overwhelming, so you're taking on the task of demoing all of this stuff, and figuring out what is really right, and then offering that as a service to your clients.
Justine: Yes, and I think, too, psychologically, there is some fear when you start talking about AI - it does need oversight. It's just a person you can't trust 100%. You have to verify. But, there is a lot of people who are worried and anxious about losing their positions, and that's to me valid.
I think I'm helping the client, the shareholders, the owners, do what's right for their business. I'm not for eliminating people, but when I hear these experts say it's not going to eliminate any jobs, it already has started eliminating jobs. That's what's happening.
AJ: But in a lot of cases, it does a better job. I mean, with the example you gave of drilling down on the variances, it's probably more accurate in finding the variances than a human.
Justine: It probably is, yes, you are right, because if you could have to look through several months, and then pull all the transactions, and then create a pivot table, and compare them, and figure it out. Being able to just tell that story, that's gonna save a lot of time as well.
AJ: And provide better value to the shareholders.
Justine: Correct.
Two Years in Business: Lessons Learned
AJ: You've been in business two years this month. Looking back at two years in business, what would you do differently if you started over today?
Justine: I've never thought about that, trying to think what mistakes have I made? Well, I'm perfect. No, that's unfair.
AJ: I love it!
Justine: I'm kidding, I'm absolutely kidding. I feel, and I already knew this, I'm working with clients who are in trouble, for the most part. So sometimes it's a matter of, I need to get paid to make sure I can help you, and maybe being a little bit generous with payment terms.
But again, I want to help my client, and yes, that's a risk I'm taking. As long as you're aware of that risk, there's a chance you might not get paid on time, or paid at all in some cases, it's a risk you can take. The other thing you can do, and this is just not my approach. I was told how to be a fractional CFO 101 on one of my networking groups. Always bill ahead, and if the client doesn't pay you, stop working. That's just not who I am. That's not my approach.
AJ: So you made it authentic to you, and you didn't take the advice just because others told you to.
Justine: Correct. And I think that brought a lot of goodwill, too, with the clients and other referrals futuristically.
The Biggest Surprise About Independence
AJ: What is the biggest surprise about running your own consulting practice? Something that you never expected when you were an employee.
Justine: One of the things I was very naive about, and this I find funny now to even speak it out loud, is that I wouldn't have to deal with any office politics. I absolutely will, 100%, on every single engagement, because we're dealing with people. But I thought, as an outsider, I'm going to be immune to that, and you won't, because you become part of their team, in essence.
AJ: So if you wanted to do this to get out of politics, too bad.
Justine: That's correct.
Looking Ahead: Future Vision
AJ: Where do you see your practice in 2-3 years?
Justine: I would still continue to serve clients who are distressed, and help them turn their businesses around. I am making somewhat of a pivot, to be a little bit more technical. And I can tell you, I don't know, and here's why.
I think things are rapidly changing, and people who adapt and can change and see where the need is in the market are going to survive and thrive. Two years ago, I wouldn't imagine that I was gonna go down a path of advising firms on AI and automation tools, but there's a need out there. So I don't know, but it's going to be somewhere fun.
Marketing Challenges with New Services
AJ: Do you think that the AI services, the AI advisory services, are going to require a different approach to marketing and sales than your fractional CFO work? And how is that gonna be different?
Justine: I'm not doing any marketing right now besides building relationships. So that business wouldn't be reaching the same audience. It's gonna be a completely different audience. So I will, I have already kind of thought this through - I might need somebody to help with lead gen. I may need somebody to lead the marketing efforts.
That is not my area of expertise. I don't enjoy it. It's who, not how. So I am going to have to approach that in a completely different fashion. Now, I do feel that clients I have worked with in the past, clients I will be working with, clients I'm working with now, that will lead to an AI automation conversation, and then vice versa. So when I'm working with a client, and I'm consulting on what kind of tools I would recommend them deploying, that might lead to some fractional CFO services engagement.
AJ: So they're synergistic, but the marketing, you recognize the marketing approach is going to have to be different.
Justine: Definitely.
Advice for Aspiring Fractional CFOs
AJ: If someone in accounting or finance is thinking about going independent as a fractional CFO, what's the one thing they should do before they make that leap?
Justine: I think the advice that I received from a good friend was make sure you have funds set aside to cover your expenses. Another one of my friends actually said, make sure you have your first gig before you put in your notice. That's not always possible. I said, I'm lucky and blessed, and that did happen, but I would say that you can either approach it two ways. Jump off a cliff, and it's fight or flight at that point, or start it as a side hustle, potentially.
Personally, I couldn't go the side hustle route. Only because I'm either all-in or I'm out. I can't just be - this is a thing that I'm doing on the side, because my head is just - when I'm working for a company, my head's still there when I'm not even online. I'm still thinking of how can I approach this problem? What else do I need to do? Have I thought of designing this model that'll help them grow and run their business this particular way?
Yeah, I would just say do your research, talk to as many people as you can. Make sure there's a need in the market, which you can discover by doing market research or networking, talking to other people, hearing their experiences, but just do your research and make sure that it's a right fit for you. If you don't networking, this probably won't work out for you. And I wouldn't say people don't to sell. I don't to sell either. I don't sell. I consult. If you want to work with me, or you think there's a benefit to it, that's great. I understand you need to do what's right for your business, and that's how I approach it. So just do your homework, do your due diligence, you would on any big decision.
Rapid Fire Questions
AJ: Now I have a couple rapid-fire questions. What's the best advice you received about consulting that you initially ignored?
Justine: I don't think I ignored anybody's advice. I think I was a sponge when I had these conversations - I'm not going to just dismiss anything that anybody's telling me, because they've already lived it. So I don't think I really dismissed anything.
AJ: Came in as a sponge, that's good. Last question. What do you wish clients understood about working with a fractional CFO?
Justine: I think the term fractional CFO is kind of confusing to people, so I'm wishing we could rebrand it into something a little bit easier to understand. I can help you save your business.
They may not understand what we do, and I guess, listening to podcasts and doing some reading, that's the first thing you want to do is grab your attention in a very short amount of time, shorter than your elevator speech. I will help you turn your business into a cash flow positive business. That makes more sense than, hey, I work with multiple clients, looking at profitability and building KPIs so that they can run their business. That's really the meat of what I do is I help businesses thrive and survive.
AJ: It comes down to messaging and how you say it. Well, that's a wrap on today's episode of the Thriving Through Podcast. Justine, thank you so much for being my guest today.
Justine: AJ, thank you so much for having me. I really appreciate your time.
