Small Business Doctor is an Intuit Quickbooks ProAdvisor certified firm with reasonable rates. Every bookkeeper is a certified bookkeeper. We can handle payroll if requested and can clean up your books if needed.
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Every small business has a limiting factor. It could be leads, cash flow, capacity, almost anything. The Small Business Doctor diagnoses and develops a treatment plan for your bottleneck.
From business plan analysis to routine small business checkups to strategy sessions, the Small Business Doctor provides the full-suite of strategic fractional CFO services.
Learn all about accounting, finance, business strategy, economics, and financial math from the basics to the advanced. I've taught and tutored these subjects for years, helping everyone from teens to postdocs, CPAs and MDs.
I want us all to grow. It's never too late to learn something new.
No hidden fees or lock in contracts ever.
Fantastic personal service from smart seasoned experts.
Exclusively dedicated to small businesses.
Always a text, call or an email away.
100% of all work is done in America by us. No outsourcing.
There are two types of CFO. Both types will provide forecasting, strategic guidance and cash flow visibility.
The first type of CFO is one who primarily reports. A bookkeeper tells the owner what has already happened. A controller or CPA will ensure that this financial information from the bookkeeper is accurate. The first type of CFO will report on and explain what those numbers mean.
The second type of CFO will not only report and make sense out of your financials, this type of CFO will attempt to move your business to hit 3 key small business financial metrics: gross margin, operating margin and the multiple that your business would sell for even if you aren’t currently looking to sell. This second type of CFO is your strategic partner.
One of the most common ways I see this difference in small businesses is in cash flow. Cash flow problems are the biggest cause of small business failure. Even when your small business is profitable on paper, cash flow problems are your small company’s biggest threat. A strategic CFO helps you restructure your business so that the dreaded cash crunch never arrives.
The Small Business Doctor’s fractional CFO service focuses on providing your company with 3 measurable outcomes: a gross margin target and a plan to achieve it, a tax strategy that pays for the CFO’s services, and an increased enterprise value multiple.
Hawkins Roofing had great bookkeeping and tax service from their local CPA firm. The firm employed, in the owner’s words, number crunchers. The books were kept accurate and done on time. Every report accurately reported what happened, but he was never well advised on what to do next.
The Small Business Doctor’s strategic fractional CFO service enters to provide him with financial planning, decision support and detailed strategic sessions instead of a simple monthly report. Soon an internal operations problem was surfaced and solved during a strategic session. Reporting type CFO services never find such things, because they aren’t looking for them.
The initial shift from passive reporting to strategic sessions was not without friction however. The owner now had to engage with his numbers differently. It was no longer sufficient to simply review financial statements. The owner had to pressure-test possibilities and leave with decisions. That’s a real change. It often takes time and intentional effort for strategic sessions to produce their full value.
The full value is real and tangible though. The owner sold the small roofing business at a 3.5x exit multiple and benefited from a tax strategy that paid for the engagement itself for the 2 years prior to the sale. But it does take effort and intent to strategically restructure a small business.
Gross margin is simply the difference between your sales revenue and your cost of sales, which is also known as your cost of goods sold, divided by your sales revenue. If I have $100 of sales revenue, and it cost me $60 directly to complete that sale, then my gross margin is ($100 – $60) / $100 = 0.4 or 40%. Maybe I sold a necklace for $100 that cost me $60 to purchase. Or maybe I rewired an electrical outlet for $100 and it cost me a combined $60 in labor and materials to do so. If my direct costs (outflow) are $60 for a $100 sale (inflow), then my gross margin is 40%.
For a service-based small business I as a fractional CFO would want to move gross margin towards a target of 60% and definitely above 55%. If a fractional CFO does not commit to a gross margin target, but only commits to improving profitability, then whatever you’re paying them is probably too much.
Gross margin improvement follows a 12-18 month arc. Prices, labor and systems optimization are fixed in that order.
The Small Business Doctor would diagnose your company’s cost of goods sold first. This is often the place where small businesses struggle the most. Also, a better pricing strategy is almost always a more effective lever to improve gross margin than cost-cutting.
The next diagnostic step would be to examine your sales and marketing expenses and then your business’s general and administrative expenses. It should always be in this order, because general and administrative expenses have nowhere near the impact on your company’s profitability as your pricing strategy or the efficiency of your operations.
If a fractional CFO begins by trimming general and administrative expenses like subscriptions, then they are likely the reporting type of CFO rather than the strategic type of fractional CFO. In addition to a defined gross margin target, a strategic fractional CFO should also set a target for sales and marketing and for general and administrative expenses.
Your sales and marketing expenses are your advertising spending, sales commissions and salaries, and your lead generation costs. After adjusting your pricing strategy and your cost of goods sold, then you should target sales and marketing expenses at 15% of your total revenue. A good way to evaluate the effectiveness of your sales and marketing expenses is by analyzing your customer acquisition cost payback period and your various marketing programs’ returns on investment.
Your general and administrative expenses are your overhead costs. These are items like bookkeeping, rent and software subscriptions. After adjusting your pricing strategy and your cost of goods sold as well as your sales and marketing expenses, then you should target your general and administrative expenses to be no more than 15% of your total revenue. A good way to evaluate the effectiveness of your general and administrative expenses is to analyze these costs per full-time employee, per facility, and per vendor.
Oftentimes, a smart tax strategy saves small business owners enough that it pays for the fractional CFO itself. A good tax strategy looks ahead. A good tax strategy examines the past and recommends optimizations in the present based on looking forward.
Most often, a good tax strategy for a small business with under $20M in annual revenue involves reviewing your business entity structure, your estimated tax payments, analyzing your compensation, retirement and benefit vehicles, quarterly tax strategy, and leveraged tax structures. For a small business with less than $500k in annual revenue, then it is unlikely that the tax strategy alone can pay for the cost of a fractional CFO.
Your tax exposure is determined by your business structure. We examine whether your current entity type (LLC, S-Corp, C-Corp, etc) is optimized for where your business is in terms of your personal tax situation, your revenue level and your revenue growth trajectory. We want to ensure that every dollar you earn is taxed as efficiently as possible. For example, if you are a single member LLC, the S-Corp election might be able to save you tens of thousands of dollars in self-employment taxes.
Your tax strategy should be a quarterly affair that evolves with your business. This should include updating quarterly estimated payments and updating your strategies as your numbers evolve.
Your small business tax strategy should definitely include a reasonable owner compensation analysis that minimizes self-employment tax while still being completely defensible if there were ever an audit. This can be one of the most impactful levers in a tax strategy. A good way of doing that is by benchmarking the small business owner’s salary and keeping audit-defensible documentation of these steps.
Similarly, most small business owners substantially underutilize retirement vehicles. Solo 401(k), defined benefit plans, and HSA contributions should all be optimized to maximize tax-deferred savings while still aligning with your personal cash flow needs.
Leveraging advanced strategies like the Augusta rule, cost segregation and strategic charitable structures can be useful where qualified. These should correspond to your small business growth plan and not be used as loopholes.
This outcome is the biggest bang for your buck. Whether or not you are getting ready to sell your small business, building a business that is actually worth selling is always worthwhile.
Based on data from nearly 5,000 different sales of small businesses, there can be massive differences in sale prices for small businesses even with the same revenue and earnings before incomes taxes, depreciation and amortization (EBITDA). Why?
There are primarily 2 related reasons. The first is whether or not the small business is owner-dependent. Is the owner the single point of failure for the small business? The second reason is whether or not the profitability of the small business is consistent and predictable or volatile and unpredictable.
From these 5,000 different sales of small businesses, we see that an owner-dependent small business with volatile margins sells on average for 2.76 times EBITDA. A small business that runs independently and has predictable margins sells for an average of 6.27 times EBITDA.
That means that a small business with $1M of EBITDA that is owner-dependent and has volatile margins will sell on average for $2.76M. Another small business with exactly the same $1M of EBITDA that is independent and has predictable margins will sell on average for $6.27M. That’s a difference of $6.27 – $2.76 = $3.51M driven entirely by business structure and risk.
A strategic fractional CFO service like ours will increase your EBITDA multiple by systematically diagnosing and restructuring your small business to decrease its riskiness and increasing its operational independence using the strategies outlined above. Enterprise value increases accrue across 18-24 months as the small business becomes more independent and predictable.
None of the aforementioned can be usefully done until you have clean books. Your chart of accounts should be structured for benchmarking your small business not simply for tax filing. You cannot optimize what you cannot measure.
| Small business size | Monthly Costs |
|---|---|
| Solo entrepreneur | $200 |
| Small business $100k-$500k annual revenue | $260-$1285 |
| Mid-small business $500k-$2M annual revenue | $1285-$3000 |
| Established small business $2M-$10M annual revenue | $3000-$7000 |
| Established small business $10M-$20M | $7000-$15,000 |
Fractional Business Economist
Economic analysis
Macroeconomic forecasting
Strategic analysis
Demand forecasting
Pricing strategy
Data science
Simulation & modeling
Financial statement analysis
Corporate valuation
Financial health & variance analysis
Budgeting & forecasting
Financial modeling & valuation
Cash flow analysis & cash forecasting
Software solutions
Capital investment analysis
Financial planning & analysis
Merger & acquisition analysis
Data analytics & advanced reporting
Fractional CFO services
We can provide any or all of these finance functions for your small business on either an ad-hoc basis or on a recurring basis. Please reach out to see if we can help you.
Old Fashioned Service
I Tailor My Services To Align With Your Needs
Over the years, I have happily and confidentially advised a wide range of clients from a plumber near Pittsburgh to a robotics startup to a multi-state pediatrics practice. I am always your primary point of contact and hold myself accountable for your success.
The initial consultation is always free. My billing goal is to always provide clients with a high return on investment when working with me irrespective of their budget.
I am not a salesman. I will only take on a client when I can provide genuine value for them. Reach out if you need expert advice, assistance or have a question.
Hi there! I'm Matt. I'm a Christian, husband and father of four. I'm a graduate of Calvin, Harvard, Cardiff and Johns Hopkins Universities. I have a PhD in Economics, an MBA in Finance and an MS in Data Analytics. I'm a numbers guy who can communicate well!
I began this service to work directly with the small and mid-sized business owners who grow our great country's economy. Since 1999, I've worked with owners across industries from high tech IT and robotics to small farmers and artists. I've also helped and advised nonprofits from churches to civic organizations.
I also served as a Finance Staff Officer and eventually as the National Division Chief for Measurement Research within the US Coast Guard. The research and methods I created there continue to guide strategic decisions to this day.
I enjoy being active outdoors, especially in wild lands. Hiking, biking and fly fishing are some of my favorite pastimes.
I also love dogs! I'm an AKC obedience evaluator, and I train service and therapy dogs.
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