Understanding the Value of Your Business Beyond the Financials with Ellen Wood, Co-Founder & CEO at VCFO
In this episode of Exploring Growth, host Lee Murray sits down with Ellen Wood, Co-founder and CEO of VCFO, to discuss how non-financial factors impact business value, especially when preparing for exits or acquisitions. They highlight the importance of company culture, leadership, infrastructure, and risk management in enhancing a business’s worth.
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Ellen Wood
00:00:00
Well, often it's culture. Culture sort of sets the tone for the company. And our practice is very experienced at helping people think through that and sort of, focus on what's important to pull that together, including messaging and sometimes rebuilding trust and so forth within the company. So I would say, culture is just incredibly important. So if that's broken, that's really a place that you should look first.
Lee Murray
00:00:33
So everyone will transition out of their business at some point. And at that point you're going to want to your business to be valuable. So why not start working on value right now? Today I have the opportunity to sit down with Ellen Wood, co-founder and CEO of V CFO. And we're going to look at areas of your business outside of your PNL, where you can actually build value for an exit or future exit. but we're going to do it through a financial lens. So welcome to the show, Ellen.
Ellen Wood
00:01:04
Thank you. Lee. It's great to be here this afternoon and talking about some of my very favorite topics.
Ellen Wood
00:01:09
I can't have a conversation that isn't through a financial lens. It's just I'm hard wired that way. So, so I'd really love the idea of looking at elements beyond the financials, though, because there is so much that businesses need to pay attention to and include in their strategic planning to have an optimal experience when it comes time to either exit their company. But also, people don't always think about the fact that it's important to have significant value all throughout the life of the company. It's not something that you want to wait till the very end, when you can see an exit on the horizon and then start thinking about things you could have been doing. Reasons for that. You may have wanted to do an acquisition along the way, and your value is important. At an acquisition, you may have wanted to raise capital that's based on how much you're worth, how much dilution you take is based on how much you're worth. So I just think it's important for so many reasons. In fact, it is so important here at CFO.
Ellen Wood
00:02:04
That about a year and a half ago, we developed a strategic roadmap, and we actually take all our clients through it when they come on board, and they're not coming on board with us because they're ready to exit most of the time. Most of the time they're coming on board because they want to grow, and they are at a point where they need expertise that they haven't had before. But one of the things that we want to help them do is look first through the financial lens that everybody's going to look through and say, well, right now your EBITDA, you know, earnings before interest, taxes, depreciation and amortization, we all know that term right now. That's this number, whatever that number may be. And industry multiples generally is an easy way to look at your value. You say maybe you're worth two times EBITDA or ten times EBITDA. There's a number there. But that is just the starting point. The thing that you need to think about is six other critical areas. And these are areas that if you've been through an exit, you're well aware of it, because they looked at him and they either marched you up or they marched you down because of how you were doing on them.
Ellen Wood
00:03:02
And so what we like to do is introduce those earlier in the life of a client so that when they get there, they're already optimized. So just to kind of lay those out for you, the first one is because we're financial people and it is important. It's profits and cash flow. You know, are you optimized for your profits and cash flow? That involves some benchmarking and traditional things that many people have probably experienced. But also looking at your leadership team, is it deep enough? Do you have the right people on board? Is your company completely dependent on you? What happens if you know somebody comes in and buys your company? You don't want to stay with it, and you were incredibly important to the the success of it or the ongoing success of it. Another one is infrastructure. Have you been cheap on the infrastructure? You know, have you have you basically deferred maintenance by not putting the right systems in place over time? And there's a big bill that's waiting to come due for somebody that steps in an incredibly important one.
Ellen Wood
00:03:55
It's going to be your people. You know, the way you treat your people, how they feel about your company. Are they partners or are they detractors? we here use a survey system. We use a program called Work of Phi, which is which is a really, really good one I'd recommend, but we want to we want to hear from people throughout and make sure that the things that they're worried about or that we could do better, we're addressing as we go. That all rolls into our culture and in our culture. People first, it used to be customers first, and customers were very important. They're second, but it's it's people first here at CFO. And then the final one is risk management because there's risks for everybody. And anybody that's taking a look at your business is going to want to know that you've thought about them. You're either insured against them or you've diversified, perhaps your client base. You don't have client concentration and things like that. you're aware of all the regulatory risk that's out there that's affecting your business and changes from the political climates, which we've certainly seen of late, how all those things might be impacting you.
Ellen Wood
00:04:57
So we take a look at those six things. We help our clients understand your worth. Traditionally, this right now sort of as a starting point. But if you optimized all of these things, our experience of more than 6000 clients in 28 years tells us that you could be worth this much more just by optimizing these six other non-financial statement items. And so that was a rather long answer, I think, to your question. But we're really passionate about it here, and we think it's so important that we roll it into the first 30 days with each new client.
Lee Murray
00:05:30
Yeah. That's great. Thanks for that. It's a great intro to everything that you guys are doing. and as we look at these sort of six areas, the first question that comes to mind is when you go in and look at a company, what is the the the most glaring problem that you see? I mean, outside of the financials, what is the biggest one that you you think you want to attack first with your clients?
Ellen Wood
00:05:54
Well, often it's culture.
Ellen Wood
00:05:56
Culture sort of sets the tone for the company, and our HR practice is very experienced at helping people think through that and sort of, focus on what's important to pull that together, including messaging and sometimes rebuilding trust and so forth within the company. So I would say, culture is just incredibly important. So if that's broken, that's really a place that you should look first.
Lee Murray
00:06:23
Yeah, that seems like it would be the hardest one to start with since, you know, the culture is the DNA of the company. How do you address culture, especially if you're doing it right out of the gate? How do you go in and say, hey, your culture is broken?
Ellen Wood
00:06:42
Well, that's a that's a tricky conversation. But, and I would say that it would be presumptuous for us to go in on day one and say something like that. That's true. That's probably not the day one thing that we would be identified, But in terms of the most important thing to focus on, if it's out of whack, I would say that's where it is.
Ellen Wood
00:06:59
So we would help them with probably some baseline assessment testing using a tool similar to what I suggested earlier. We would do a lot of interviews of the staff and the leadership to see what was going on and what was important to people. And and particularly depending on the structure of the company, whether it be owned by a small founding group or a larger entity that has expanded over time. What is the what's the core belief set of the folks that drive that company? Because we always have to remember we're there to support the shareholders that own that particular company.
Lee Murray
00:07:33
Right? Yeah. For sure of so so the biggest problem you see is culture. Do you think that fixing culture provides the most value?
Ellen Wood
00:07:45
Well, let me let me be more clear. I didn't mean to say it's always the most important problem, but if it's broken, it's the one that I would. I would focus on first.
Lee Murray
00:07:54
I agree. I see it, I see it too, I agree.
Ellen Wood
00:07:57
Other things. Other things. Follow behind that.
Ellen Wood
00:08:00
But it's hard to underestimate. The value enhancement of having your culture, in the right place. It affects everybody. Everything. The way you interact with your customers, the way you enact your course internally. The way you interact with the community. it's just a it's a huge driver.
Lee Murray
00:08:21
Yeah, I see it. Every client I've worked with. I get to sort of be a guest at their house and see how the family operates. you know. Yeah. Yeah. I'm invited for dinner, and I get to see their nuances and, you know, who likes this and doesn't like that, and who likes who and who doesn't like whom? and it's it's interesting to say that, to say the least. And the ones that are doing well. It it just seems very seamless and, natural. whether it's this, you know, the the culture is kind of, leans this way or that way. It just it doesn't matter. It's really more about, it's a natural, kind of seamless thing that everyone is.
Lee Murray
00:09:05
Feels like they're in the same boat, rowing in the same direction. But when that's broken, it's very clear that it's broken. And, it's not clear. It's clear to me because I'm coming from the outside. But it's not not clear usually to leadership.
Ellen Wood
00:09:20
Well, it's different degrees of broken to you can be broken broken and really need some some fixing. You may have some, you know, what people would refer to as internal terrorists, right. That you have to deal with. and then there's messaging. So sometimes what really is necessary is help getting the culture that that is a good culture messaged effectively throughout the community. But then it's critical. It's absolutely critical to live that culture. And here at TFO we use a program called the Entrepreneurial Operating System, or iOS. And for those of you that are familiar with that, it's from the book traction. And we've been using it. I guess we adopted it in 2018. But in order to really bring that in, we use that in our hiring, in our recruiting, we actually evaluate our candidates against whether they fit our culture.
Ellen Wood
00:10:12
We use it in our periodic internal reviews. Do our people fit our culture? because you do have to you have to honestly assess that and then help folks that aren't really fit with your culture find their way to the culture that works for them.
Lee Murray
00:10:28
For sure. And I think if you're looking at it from the perspective of a buyer or an investor, this is going to be a very important one to know that it's it's it's handled. you know, I've seen a lot of smaller companies where founder is the CEO and they become the bottleneck and they remain the bottleneck for various reasons, and you end up with sort of a toxic culture, where everything really has to be passed through this one individual for it to, to do any, to do any good. I know you've probably seen this too. and I think as an investor looking at the company, of course, you're looking at the financials. But once you get past that, and usually in part of that process of looking at the financials, you know, looking at the business, you're going to see, you're going to start to see that the company is divided.
Lee Murray
00:11:23
You know, some people think one way and some people think another. And usually it comes back to the CEO or whoever is running the ship. and so that would lead me to believe that the next most important one is who is your CEO and who is running the company. That's probably going to be I don't know if that was one of your six, categories. But, you know, leadership in general has got to be a huge one for a huge value driver outside the financials.
Ellen Wood
00:11:49
Absolutely. And the CEO is important, but also incredibly important as the rest of the team. And another very, very important element of iOS is what they call the accountability chart. And I've got to tell you when we put that in in 2018, you know, how old were we? We were, you know, 20 years old already. And I thought, oh my goodness. Of course we all know what our jobs are, right. Yeah. And I was really wrong. And so, but actually it's a little bit different than an org chart, but actually defining what everybody is responsible for from their areas of responsibility, the specifics of what they do, but also their level of decision making.
Ellen Wood
00:12:27
Right. Because to your point about bottleneck, I mean, I know I've been the bottleneck on more than one occasion, and I had to actually, you know, fess up to it and do something about it. But but delegation is important. But being clear what you've delegated is equally as important. Yes. And making sure that that's visible to everybody and that you you live that right.
Lee Murray
00:12:47
Okay. well, then, since we're talking about leaders, the leadership team. What else can you say about the value that can be extracted or created by looking further into building a leadership team? you know, as it relates to the value of the company.
Ellen Wood
00:13:04
Well, I think it's critical. if if, you know, if you think about the types of buyers that are out there and the reasons that they would buy your company. you don't if you're a founder, you most likely are not looking for someone that's going to tie you up to the company for another five years. First place, you're probably not great at reporting to someone else.
Ellen Wood
00:13:24
Right. And so, you know, most people are not thinking that way. So if you if it takes you to make every decision or the majority of the decisions, then you've devalued your company. You need to empower your leadership team to take those responsibilities and really sell their expertise, experience and abilities to, you know, as part of your pitch in whatever sale transaction you're going through. So, not every company can afford, you know, a significant, you know, you have to add leadership as you can afford it, but you should really invest in that and then, empower them.
Lee Murray
00:14:00
So you know how someone gets bought or who they get bought by. There's nuances to all the deals. Right? But is there some kind of, central theme or thread for how leadership teams can be built so that they are ready and poised to, to work with or fit in to the buyer? You know, talking about a strategic buyer, in maybe in the industry, there's various there's all kinds of different ways that a company can get bought and brought into another company.
Lee Murray
00:14:33
Is there sort of a, you know, a best practice for developing a leadership team that's going to look really, you know, look and work really well with the buying company?
Ellen Wood
00:14:46
That's a good question. And you're so right. There are so many different kinds of buyers from the folks that might be a P buying you as a platform. Play right where they really want you and your leadership team to be capable of being quickly the platform for acquisitions. That role on, you know, that's that's one set of, you know, preparation that might be going on. not a lot of people go into business knowing that they're going to be a platform play for somebody, though.
Lee Murray
00:15:12
So, exactly.
Ellen Wood
00:15:13
So I'm a big fan of hire high, you know, hire someone that's, is smart. Smarter than me for sure. Yeah. And, and empower them and, and those are the types of people that virtually any acquirer who's interested in a leadership team is going to be happy to, happy to pick up as part of the deal and then, ensuring that they work together as a team.
Ellen Wood
00:15:36
You know, you need to be an accountable team and not a group of superstars or individual high performers or occasional terrorist, as I said, right?
Lee Murray
00:15:47
Yeah, I like that. I guess, you know, where it takes me is as I'm thinking about what you're saying is it kind of goes back to systems, I guess, culture and systems. So like you're talking about iOS. That's a great, you know, kind of rule book to live by. And it's works for a lot of companies. but whether it's iOS or something else. I think having your foundation of systems that you operate by and your leadership, is trained by and and leads by, is going to be foundational for any company that's going to, look at it, be able to assess the value of what that is. It's going to be easier to, you know, I think that's a piece of what you're doing too, is not only what is the actual value, but how is that perceived, because they can actually assess it, and then the value is being rolled up into that other that other company again various ways that some someone can be bought.
Lee Murray
00:16:41
But I think that culture and systems is a great way to to sort of draw a framework around leadership so that the value can be understood and translated.
Ellen Wood
00:16:52
I think you're right. I think that's very important. And you're exactly right about iOS. It's not the only system out there by any means. What I love about it is it's simple. It speaks to everybody in the company. There's there's a communication protocol from top to bottom and bottom to top, which is I think as a buyer, it's comforting to know that that kind of communication has been going on, because often that's going to be one of those major, employee complaints. We don't hear enough about what's going on. Nobody tells us what's going on, that kind of thing. You know, when I think about the kinds of things that you hear. So I think that's been a huge help. And then again, the fact that they just made it, they made it simple. They pull together some important that's true. And they'll tell you themselves in the book they'll say, hey, this isn't you know, all of this is not unique.
Ellen Wood
00:17:40
But what we've done is we've organized it in a way that it's it's not complicated to follow and it works for everyone.
Lee Murray
00:17:48
Yeah. And it's great for accountability. I know that's sort of like an undertone of what you're saying, but just to call it just to call it out. I mean, I, I think accountability is great for each individual. If each individual person knows their role, it's clear to everyone and can communicate, you know, between each one, and then you're held accountable. to the I think they call them rocks and, you know, all the milestones. I think, that's a really good system, because if you're there to see the company prosper, then you're going to take much more ownership over your role. if you're if you know, you're held accountable to it and you're going to you're essentially going to want to be held accountable to it.
Ellen Wood
00:18:28
Well, it's also helpful when you have a problem, come in the door. You know where to go and who needs to work on it.
Ellen Wood
00:18:34
And I frequently not as frequently today probably as two years ago. But but I have often commented that I give it a lot of the credit for how well we pivoted when Covid hit. We put it in place in 2018. Second half of the year 2019 was our first year on iOS. It was our best year ever. And then here comes Covid in 2020, right? I happen to be out of the country in the week. They decided to shut Austin down. And I'm based here in Austin, Texas. Yeah. And so within a week we had pivoted in our own offices, were working remotely. Everything was remote. Everybody knew what they were responsible for, and took the initiative to address the pieces that needed to work successfully. So to me, that was a real test. Under fire. Who saw that coming?
Lee Murray
00:19:20
That's amazing. And what a great response and testimony to the system and to your people. to, you know, adhere to the system. Oh, I have.
Ellen Wood
00:19:30
Great, great people.
Lee Murray
00:19:31
Yeah. That's awesome. So I think one of the other things you mentioned was, client mix or a diversification of of clients. to me, I would think this would be a huge value driver in a business.
Ellen Wood
00:19:44
Well it is. And you know, I don't hold myself out to be a marketing expert. But as a financial professional, when I'm looking at a company or a client or a prospect that's got, you know, a heavy, heavy, heavy concentration with just a handful of clients, that is a red flag because there's a big vulnerability there. And so one of the things that we encourage our clients to do through this strategic roadmap is to really look carefully at their client mix, not just from a profitability perspective, but from a diversity. and, you know, not being vulnerable in any particular location. So a vulnerability in that area would be a risk under risk management that that definitely is an area. And that's something that would be concerning to a buyer.
Lee Murray
00:20:30
And what does that look like practically.
Lee Murray
00:20:32
Is it making sure you don't you're not top heavy with certain clients or you know someone's paying 60% of your revenue, or is it more nuanced than that?
Ellen Wood
00:20:43
Actually, it's all of those things. And to give you real life examples, we've had folks that have found themselves in surprisingly long receivables flows. Great contract. It looks like it's going to be wonderful, but they don't have enough, financial resources to to wait for that client to pay under that client's terms. So that's where you should be strategically looking ahead and making sure you have lines of credit and whatever else, or adequate capital to take those. I've had other situations where, clients have had super exciting agreements with big box operations and not realizing that they also have very long cycles. They have big, you know, rights to return. They have all of the, things that you can have when you're the big player in a negotiation. And so thinking ahead to those kinds of things is very important too.
Lee Murray
00:21:35
Yeah. We had a consumer brand expert on talking about all of that on, I don't know, 4 or 5, episodes ago.
Lee Murray
00:21:45
And it's just very eye opening to see how little control you really have over a lot of the distribution and what, you know, what goes from one hand to the next. And, you know, a lot of it is your cash just sitting out there, waiting to be either spent or burnt or, you know, returned. So I thought that was very eye opening, talking to her.
Ellen Wood
00:22:08
Well, it really is. And so, it's it's it's it's it's a plus for you on top of your evaluation, if you have a diverse client base where no one single change, either in the industry or with a purchasers decision is going to, you know, put you on the edge of profitability or worse, take you down. that's definitely a plus. And it's, you know, it's a negative as well if you do.
Lee Murray
00:22:32
Yeah. You know, looking at the DNA companies that I see is you have a very a variety of people. Some people are very risk averse. Some people are very risky.
Lee Murray
00:22:42
Some people are in survival mode all the time, and some people think the money's never going to run out. I mean, there's all kinds of different perspectives and personalities that come that lead companies. And, some people are really, you know, focused on making sure that they are solidly diversified. And, and they will spend they will overindex their time on this one aspect, but they will forget about culture, you know, or they'll forget, forget about these other value drivers. and I honestly think that people kind of go towards their bet, you know, if you're kind of wired a certain way, you're going to naturally lead in that way and the company is going to follow suit. And so that's why so great to talk about all these different, drivers because, not I don't think any one person's really got a bent in every area. They're usually going one, you know, 1 or 2 areas maybe be maximum, but there's other areas you have to learn from. I don't know why that that came in my mind when we were talking about this, but I just know I've seen people overindex on diversification and I applaud that.
Lee Murray
00:23:47
And I'm like, this is great. You know, you got a really solid business here. Revenue is good and you don't really have to worry about going out of business. But there's some other things that we should probably address that, you know, are not going to make you thrive as a business or are not going to make you a perfect, you know, perfectly suited for a buyer. so that's why it's so great that all these are so different, right? I mean, from client mix to leadership, team to culture. there's always somewhere to to work on your business.
Ellen Wood
00:24:18
that's the truth. Always.
Lee Murray
00:24:20
There is, you mentioned, maybe earlier or on our pre call talking about governance, governance risk, and that there was a, you had some type of an assessment to, to look at those risks. can you speak to that.
Ellen Wood
00:24:37
I may have been talking about the V3 60 program, which is our roadmap, which has an element for risk management, because one of the areas really within risk management is your governance, because you can't just set yourself up as a C corp or a partnership or whatever.
Ellen Wood
00:24:52
You actually have to follow the rules that that those entities require. Or you can be, you know, discarded. It can be looked through as if you don't have the protective corporate envelope that you set out to have. So you need to have those board meetings. You need to document those major decisions. You need to, you know, you need to treat the company like a company and not your checkbook. Of course, that would be for a smaller company, but you'd be surprised. Maybe you'd be surprised how many companies I've seen of substantial size that still have some problems with that. And so so it's very important to pay attention to what good corporate governance is. Again, I'm not a lawyer. Sometimes we'll bring the corporate lawyer in to work with the company board if we see a problem in that area. But that's something that your buyer down the road. And frankly, anybody who's doing due diligence for any kind of transaction that might be happening along the way, they're going to be looking at those documents.
Ellen Wood
00:25:44
That's part of the normal requests that come. So you should be prepared.
Lee Murray
00:25:48
Yeah. For sure. you know, talking about using it as your personal bank account. It's funny because I wouldn't be surprised because I've seen a lot, but I think a lot of people would that haven't had the chance to look behind the curtain on a lot of companies. How big of companies still operate without legitimate books and governance, in place and these type of things. And those are kind of the ones that I'm referring to that end up with toxic cultures and bottlenecks, CEOs and those kind of things. It's it's really funny that in a, in a free market, you can bring a product to market. And if it is a really good fit and the need is strong and sometimes it can be government contract, you know, it can be something that is, you know, just a plug and play solution. And it doesn't really take all, all of the branding and the, you know, thinking about, you know, strategy.
Lee Murray
00:26:43
It doesn't take any of that. It's just really there's a buyer and you're the seller. And there happens to be a really high margin in what you're selling. Those people can make a lot of money. Right. And these companies make a lot of money. But and you can kind of you can kind of be blind, blinded by how much money they're making. But after you kind of put that aside, and that's why I'm glad we're having this conversation, because the financials, they tell you a lot, but they don't tell you the whole picture, because if you put all the money aside and you look at how the company is being run and the type of people that are working there and how they're working together and structure and systems and governance and all of these things, you really start to see what is really going on. And sometimes that could be a really good thing, but sometimes it's not.
Ellen Wood
00:27:30
Well, and you don't want to be the company where it's not. And you didn't know it before it was discovered.
Ellen Wood
00:27:36
And any significant transaction is going to involve some significant due diligence. And they look at everything. and so that's it's important. That's very important.
Ellen Wood
00:27:49
Yes.
Lee Murray
00:27:50
So what have we what have we missed on the on the list? We talked.
Ellen Wood
00:27:55
Well, I think we hit most of, most well, we didn't really talk a lot about infrastructure. We kind of went right over it. I just would say that is important. And, you know, if I were to use a super simple example, many, many companies start with QuickBooks as an infrastructure tool. that only takes you so far when you get to the point where you have spreadsheets over here and this, that and the other, you know, you're beyond the point where you should have looked at what do I need to do as a next step in my ERP decision to scale my business and to be prepared for that next level? And you can either kind of try to stay a little bit in front of it, or you find yourself behind it and you're catching up.
Ellen Wood
00:28:35
And so that that is another thing that, you know, companies would be looking at from a valuation up or down. And it's it's not just that. It's what kind of systems are you using for your people, for your benefits? have you really looked at the efficiencies that you can drive in your business with the right infrastructure tools? Yeah. And my goodness, that's an area that's just exploding, you know, with AI opportunities. And it's amazing to think about what the landscape is going to look like over the next 3 or 4 years with opportunities there. but frequently we go into companies that have not made those investments. And they, you know, well, it still works. Well, it it works today, but, you know, it sort of works today and it isn't going to work tomorrow. And before we can actually execute perhaps an acquisition plan or whatever it is that they have in mind. You know, you have to get the house in order. So you either take care of maintenance as you go would be the way I would describe it.
Ellen Wood
00:29:31
Or you've got a big debt you have to take care of somewhere, and it's going to cost you time and money, and usually more than it would have if you did it as you went.
Lee Murray
00:29:39
That's a that's really well said because I think that resonates. I, we, I had a guest on a few episodes ago. We were talking about, software bloat. And that's what comes to mind when we talk about this, where, you know, you're bolting, you're bolting things together to make things work. And yes, it's still technically works, but no one's happy. It takes five times longer than it should. You know, you never really have just come back to solving these problems with more efficient tools or systems. So, again, I, you know, I want to kind of bring this back to like a DNA type of thing because I see it where, you know, these small to mid-sized companies, they, they go where their leader is taking them. And if the leader doesn't have a bent towards making things very efficient and solving those problems, they're not going to get the, the table time to talk about them.
Lee Murray
00:30:29
And you know, those kind of problems are going to get pushed to the back because they're talking about the things they like to talk about. So I want to just lace this conversation with that as well. Because if you're listening to this, and that is something that your people have been bringing up to you, you know, it might be time to to address it.
Ellen Wood
00:30:46
Right in, to plan in the investment. And again, back to the whole idea of doing a strategic roadmap as early in the company life as you can, you can plan those things out. You don't have to do them all in the next six months or the next two years. That's right. Plan those investments out of both time and money over time. so.
Lee Murray
00:31:06
Yeah, no, that's a that's a great point to make because if someone is thinking about selling their company, I think a lot of times it happens for, for your small to mid-sized companies, it happens too late for them to really because they're, they're, they're they kind of just said, okay, I'm in a place where I need to sell or I'm in a place where I want to sell.
Lee Murray
00:31:27
I'm kind of over it. Whatever that personal situation is generally dictates the, you know, starting process of the cell. But if you can if you're not in that situation and you have the idea that you want to sell at some point, a one year, two year, even three year timeline on putting a roadmap together. You know, quarter by quarter, taking some of these things off, you know, building a better foundation for your for your culture, for your systems, for your, your client mix. All the things that we've talked about is going to pay dividends in the future. So, you know, this is this is great.
Ellen Wood
00:32:07
Well, I certainly think it's important and a good way to approach it.
Lee Murray
00:32:13
Well, thanks for being on. This is really helpful. And I think very valuable for people to just kind of pull their head out of the financials and, and look at the rest of their company. but again, through a financial lens, because that's it's not a culture for culture sake.
Lee Murray
00:32:27
It's not, you know, a system for a system's sake. It's it's these things to improve your financials.
Ellen Wood
00:32:36
Well, I would wrap up if I could just by saying I completely agree with that. And the way we approach it is we start with, here's what we think you're worth. Here's these six major areas. And right now we evaluate you maybe 60% toward what would be considered a really effective operation. You might be 35% whatever. Then we estimate the invested cost to make those improvements. And we can then look at what the improved valuation would be from doing it and give you an ROI on it. So whether that's six months, three years, however long you want to take to do it, that financial lens can be applied to any of these things that you decide to do. You can look at, you can plan in advance what kind of ROI you're going to get over doing. So not only is it the right thing to do, you can measure how much more value you're going to going to have.
Ellen Wood
00:33:27
For doing it.
Lee Murray
00:33:28
I love that. Yeah, that's that's super valuable. Thanks for adding that in there. well, this has been a great conversation. If I want to send people well, I do want to send people, but if people want to find you, where where can we send them?
Ellen Wood
00:33:41
Well, you can send them to our website again. My name is Ellen Wood. I'm the CEO of V CFO. And our website is super simple. It's vsco.com. Oh great.
Lee Murray
00:33:51
You guys snag that one up. That's good.
Ellen Wood
00:33:53
Well, we were, we were the pioneer. Our original name. I'll tell you, it was virtual CFO trademarked name, but it's been borrowed heavily.
Lee Murray
00:34:01
So I bet.
Ellen Wood
00:34:02
Yes. Anyway, so thank you.
Lee Murray
00:34:03
So you guys were the original, virtual CFO?
Ellen Wood
00:34:06
We are the original virtual CFO. We pioneered the whole concept of fractional financial and HR executives. So that's so great. Well thank you I think so.
Lee Murray
00:34:17
Yeah, I love it. Okay. well, hey, this has been good.
Lee Murray
00:34:21
We'll have to have you back and we can dig into these a little deeper.
Ellen Wood
00:34:24
Well, I appreciate it. Thank you very much.