Does Your Distillery Need a Fractional CFO?
Raise your hand if you are a fan of the Breaking Bad spinoff, Better Call Saul? I absolutely love the show for its dark comedy edge and gripping plotlines. One of my favorite episodes is “Bagman” from the fifth season. It is acclaimed for its masterful storytelling and direction, and although I do appreciate it from those perspectives, I also felt connected to the episode on a professional level as a fractional CFO.
What does Better Call Saul and fractional CFO-ing have to do with one another? More than you might think.
In the episode, Jimmy (the star of the series) has a seemingly simple task: go to the desert to retrieve a bag of $7 million that will serve as bail money. For this, Jimmy will be paid a quick $100,000 in cash.
Easy money, right? Not so fast.
Jimmy arrives to find himself in the middle of a gunfight, which nearly kills him. After escaping with his life, he has to find his way back to civilization with an unlikely partner in crime, Mike, who he is not entirely sure is trustworthy. By the end of the ordeal, Jimmy is pretty sure this was not such a great way to get some quick money after all.
This leads me to the connection between this plot and my professional experience in fractional CFO services.
When it comes to bringing in money, there is no such thing as quick, and things are NEVER as easy as they may seem. On top of those big nuggets, there is also this: to get the money we need, where and when we need it, sometimes we have to enlist the help of someone who has been there and done that before.
This is especially true with industries that have specific conditions related to cost and revenue realization, such as the distilleries I work with in this capacity. I was interviewed for an episode of The Distillery Nation, and we got into some of these ideas, which I will share with you here.
Fractional CFOs Versus Accountants: What’s the Difference?
Chances are that if you run a business, you employ an accountant. This person may be on your staff, handling accounts payable and receivable, tax prep, and payroll, to name a few things or you may hire them for specific tasks throughout the year, like tax filing. But many small businesses do not have a CFO, fractional or otherwise.
A fractional CFO takes on the roles and responsibilities of a CFO but on a fractional time basis. For example, your business may need a 25% CFO, meaning that CFO would spend 25% of a full work week (or about 10 hours a week) on your business.
A fractional CFO is not an accountant. A fractional CFO holds a strategic position and brings a wealth of financial experience and knowledge to bear to guide a business forward toward future plans and goals. They offer insights, expertise, and vision that far exceeds that of an accountant.
Distilleries stand to benefit enormously from having both an accountant and a fractional CFO on the team. Two lenses are incredibly valuable. But even more important, the things each role is looking for through their unique lens differ greatly.
Distilleries Have Special Financial Considerations
Businesses that make things, such as distillers, have a great need for the type of support a fractional CFO provides. This is because of the special financial considerations that exist in the industry.
Distilleries have barrel-aged inventory. This means that distillers are sitting on a mountain of expenses that will not generate revenue for a long time. There are intricacies and advantages around barrel-aged inventory related to securing financing.
As a distiller, you know those barrels are liquid in two ways! But your lender may not see it that way. The person presenting your business to the bank needs to frame that potential revenue as an asset.
Those intricacies and advantages cannot be leveraged by someone who doesn’t understand them. A fractional CFO will have the knowledge and expertise needed to present the business and its assets in the best way possible to secure much-needed financing.
Going to the bank and securing financing may seem easy. But as many distillers know, it’s never as easy as you think. Having the support of someone who has been there and done that before, like a fractional CFO, will make a big difference when approaching a lender.
How Distilleries Benefit from a Fractional CFO
A fractional CFO will have a deep knowledge and understanding of your business. As I’ve already mentioned, this can mean the difference between securing that financing and being denied. But there is more to gain for your business by having a fractional CFO than just succeeding in borrowing funds.
A CFO can perform business forecasting, which opens the business owner’s eyes to new growth opportunities they may not have seen otherwise. CFOs are tuned into trends, investments, how to optimize working capital, and much more.
A fractional CFO can fill gaps that the business owner simply cannot fill for the best of themselves or for the business. Business owners often spread themselves too thin, wear too many hats, or take on roles they are not uniquely qualified to take in an effort to reduce costs. But this is shortsighted and results in the business missing out on growth opportunities or even falling into avoidable financial traps.
A fractional CFO will be able to see cash flow shortfalls coming long before they impact the operations of the business. This is invaluable information for the business owner. Having someone on the team who can help avoid these traps and help establish systems to manage them moving forward is a future-proofing move that sets up the business for long term success.
At KBS CFO, we offer fractional CFO services to a variety of businesses in different niches. We especially love working with our distillery clients and not JUST because I personally enjoy a great glass of bourbon.
The unique challenges and opportunities that exist in distilleries are ones that we are uniquely qualified to take on. Get in touch with us today and let’s start a conversation about how we can help take your distillery business to the next level. And I guarantee, there will be no bags in the desert or over-promises of easy money to get there. Cheers!