Intro: Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for High Velocity Radio.

Lee Kantor: Lee Kantor here. Another episode of High Velocity Radio, and this is going to be a good one. Today on the show, we have the president with Next Step CFO, Michael Barbarita. Welcome.

Michael Barbarita: Thanks. Thanks for having me.

Lee Kantor: Well, I’m excited to learn what you’re up to. Tell us about Next Step CFO. How you serving folks?

Michael Barbarita: Well, business owners hire us to double and triple their profit using business and financial strategies that their competition isn’t doing. So we combine the financial analysis and management with strategy, business strategy. You know, if you look at fortune 500 CFOs, they all know strategy. Otherwise they don’t get the job. But for some reason, fractional CFOs have a tendency to be able to draw away and fade away from the strips from the business. Actual business strategy. We have 23 strategies that we actually help business owners implement and show them how to implement. So in addition to the financial, which is basically the forecasting, the cash management and the critical metrics in the business, we also do the strategic side, which is, you know, how to increase revenue, how to reduce costs, how to increase margins, and so forth.

Lee Kantor: So what’s your backstory? Have you always been a CFO?

Michael Barbarita: Nope. Uh, actually, most of my my experience is an actual business ownership. I’ve owned retail manufacturing service companies. So back in the 80s, I owned a chain of ski retail stores. We grew the company from 2.5 million to 8 million in five years. And then in the late 90s, I bought some frozen cookie dough recipes from a husband and wife team in in Massachusetts and built that company up. Sold it. Then I had a failure. Uh, I wanted to serve the aging population. So I started an outpatient rehabilitation facility called Freedom Therapy Center. And, uh, essentially, I fell on my face. And the reason I fell on my face is in the aftermath of all of that, I analyzed what I did when I was successful and what I did when I wasn’t. And the critical component was that when I wasn’t successful, I implemented business strategies and financial strategies that my competition was doing. Whereas in the successful businesses I owned, I implemented business and financial strategies that my competition wasn’t doing, and it made all the difference in the world.

Lee Kantor: So taking that contrarian view was helpful.

Michael Barbarita: Yes. And you know, I must have taken stupid pills when I got into the medical business. That’s all I could say.

Lee Kantor: Now, when you’re working with folks, are they are they businesses right now that have a CFO that’s not working. Like, what are some ways you even know if your CFO is working or not? I mean, what are they charged with in your mind in growing a business?

Michael Barbarita: Well, first of all, as a fractional CFO, we really don’t take the we we don’t take the the place of somebody who has a full time CFO. They they usually don’t have a CFO at all. And we come in on a fractional basis to help them grow their to grow their business. As like I said, you know, things like identifying the critical metrics in the business. Things like, uh, forecasting so that they can make better decision making, uh, improve to improve the decision making.

Lee Kantor: So right now they’re they’re just they’re just kind of winging it or they have QuickBooks and they hand it to a CPA and they’re hoping that it all works out. Like, is that what a typical small to midsize business is doing without kind of a dedicated CFO?

Michael Barbarita: That’s very true. Uh, wouldn’t some of them, some of them are not that. Some of them definitely are exactly what you described. Some of them are not that seat of the pants, but almost.

Lee Kantor: So in your mind, though, a CFO is a is a key member of the team. And if you’re neglecting that in any form or fashion, you’re really limiting yourself.

Michael Barbarita: Oh, without a doubt. And and you know, it’s especially, especially what we do at NeXTSTEP CFO, where we combine the financial management with the strategy and the strategic side. And in terms of putting it all together as to how to grow, just like a CFO would in a fortune 500 company. They’re a they’re a driver. They drive they drive the, uh, the PNL.

Lee Kantor: Right. But in most kind of small to midsize businesses that are kind of founder led, if the founder isn’t kind of a CFO, then the odds are they probably don’t prioritize it in the manner you’re describing.

Michael Barbarita: I think that’s very true. Very true. That’s correct.

Lee Kantor: But. But what is what’s the pain they’re having where it’s like, dude, you’re neglecting something that if you get this right, it changes the game. Like, what is kind of some of the symptoms or signals that they could have a problem that the right CFO could solve.

Michael Barbarita: They’re competing on price. Number one. Number two, they’re losing money. Number three, they’re making money, but they don’t have any cash. So those those three things right there are pretty painful.

Lee Kantor: And those things, if you put the right CFO in place, you can fix that.

Michael Barbarita: Turn it right around.

Lee Kantor: And then when you say turn it right around, is this I can turn around in 30 days, 90 days a year.

Michael Barbarita: Uh, you’ll see, you’ll see, uh, a change within 30 to 60 days. Uh, you know, you’ll definitely see the ship starting to turn. It’s like turning around the Queen Mary. I mean, you’ll be you’ll you’ll be able to start to see the the the turn. But I think it think usually it usually takes a year for for everything to settle in.

Lee Kantor: So if you kind of, uh, give NeXTSTEP CFO a year commitment, things will be different next year.

Michael Barbarita: Totally.

Lee Kantor: Now, you mentioned a lot about marrying strategy with the role of the CFO. And, um, what are some of the strategic rules or formulas you’ve learned? I know that you talk a lot about sales. Is there something that you can share when it comes to converting prospects to sales?

Michael Barbarita: There is. There sure is. We have you know, when I was doing research for my book, uh, I found that the key to successful marketing was getting into the mind of the prospect. Well, anybody can say that, so. But what? I dug a little deeper. I found that when you get into, in order to get into the mind of the prospect, it’s centered around two emotional issues. Number one, the problem the customer has and doesn’t want. Number two, the solution they want they can’t find. So what we did is we took those two principles and we created a formula called the conversion formula. And it’s a four part formula needs to be done in the right order. And it’s like any other formula, you know, like for example, water is H2O, two parts hydrogen, one part oxygen. If I give you one part hydrogen and one part oxygen, I don’t have water. Well, it’s the same concept here. If you don’t follow this formula to the T, then you know you’re out of luck. So the four parts are. The first part of the formula is called captivate. That’s the problem the customer has and doesn’t want this. This is the headline or the first thing that you should say, or that the prospect should see when they come in contact with your brand. That’s the captivate. The the fascinate is the second part of the formula, and that is the solution that they want. They can’t find. So the captivate is the problem. Fascinate is the solution. The third component of the conversion formula is educate. Now that I’ve captivated them with the problem, fascinated them with the solution, I now need to educate them on why my solution is superior. And then the fourth component is what we call the close, where you have to submit an offer that’s so compelling and so irresistible that the client can’t turn it down. And we have five components that make up.

Lee Kantor: You couldn’t get a word that rhymed. How about activate.

Michael Barbarita: I, I like that that’s right. We couldn’t find it.

Lee Kantor: So you need somebody to write a check at some point. So try activate. That might work.

Michael Barbarita: All right.

Lee Kantor: Um, so if they just kind of think in those terms. Now, does your fractional CFO actually do they just hand them the formula and say, okay, go at it or they’re kind of there.

Michael Barbarita: Oh, there’s a oh God, no, there’s a whole process in determining what the problem the customer has and doesn’t want is. There’s a whole process behind it.

Lee Kantor: So you’re a CFO who’s not coming in there with a playbook and saying, here, do all this. They’re kind of joined at the hip and they’re working together to to move the business.

Michael Barbarita: No question. Yeah. No, we just don’t give you a bunch of manuals and stuff and or read my book, and that’s the end of the ballgame. No. We walk you through a step by step roadmap, um, to, uh, you know, to be able to implement these strategies because, yeah, there’s one thing to learn them. You can you can basically learn everything by just googling it. Right. That’s just it’s just how to learn. It’s the the point is, is to implement and to put things in action. And that’s and that’s where the process, that’s the process that takes place. I gave I just in the with the conversion formula as one minuscule example, I gave you the framework for, for for strategic thinking. But that’s not how to go about implementing because it, because a lot of business owners can listen to my formula and come up with the wrong problem.

Lee Kantor: Right. So it’s like they say, you know, if you’re climbing the ladder of success, make sure the ladder is on the on the thing you want to climb to the top of, because if you put it in the wrong place, then it’s not helping much.

Michael Barbarita: Right? Like for example, let me give you an example. So let’s say a painter is listening to the show. Oh, I can implement the conversion formula. The problem the customer has is that they really don’t know what color paint to pick. Well, to every painter can do that. So that’s not really the problem that the customer has. It’s deeper than that. And it’s usually something to do with the industry. For example, every time I call a painter, they never return my call. It’s an example. So there’s there’s it’s usually the problem that the customer has is an industry specific problem usually. But, but but there’s a process in order to capture the real problem because you have to capture the real problem. Otherwise, you know that Mickey Mouse problem that I gave you with the paper? It doesn’t work. It doesn’t work.

Lee Kantor: Right? Because then the painter, the painter thinks that it’s just I gotta help people pick colors. Then they’re spending all their energy learning how to pick colors. But if their real issue is, you know, they’re frustrated or their wife wants something that, you know, to freshen something up, that’s a different problem.

Michael Barbarita: Different problem. And so that’s, that’s, that’s that’s what I mean by how we go deep into it.

Lee Kantor: So now, um, it sounds like you have two clients. You have one client is the business owner, but you also have to attract team members, CFOs that want to go out there. How do you find those folks?

Michael Barbarita: When you say CFOs that want to go out there, what do you mean.

Lee Kantor: Like your team? How do you or do you do all the work?

Michael Barbarita: Oh, no, I don’t do all the work. I have a team.

Lee Kantor: Right. So how do you find is that are these people former CFOs or are they former accountants? Like, what’s the prototype of your team member.

Michael Barbarita: They are CFOs. First and foremost. And they’ve been trained on, uh, strategic implementation.

Lee Kantor: Now, was that a is that a big lift for them? Because a lot of these, that personality type, you know, they think they know some stuff.

Michael Barbarita: Oh yeah. No, it can be it can be a big lift. But the but our training program and the strategies that we train on are just so, um, you know, they’re not state of the art. They’re just hardly used.

Lee Kantor: So this is kind of the common sense. It’s not so common.

Michael Barbarita: Yeah. I mean, let me give you another let me give you another example. I call it I hope so marketing. All right. Just about everybody says largest selection, lowest prices, best service, highest quality, most convenient. Been in business since 1941. Largest in the state. We’re the experts. We work harder. We’re honest and sincere. Just about everybody. Okay. That’s how they promote the customers. Say. Well, I hope so, I hope. I hope you’re honest and sincere. I hope, I hope that you’re most convenient. Why would I do some business with somebody who’s inconvenient? That’s inconvenient. I hope you’re the professional. Why would I do business with amateurs? So this is how everybody markets. They market with? I hope so, marketing. And so you know when, when my when my team gets getting trained this this stuff resonates with them because that’s all they’ve seen.

Lee Kantor: So then you’re going into the business and you’re really kind of going layers deep to get to the big why behind what they do or what makes them unique and special. You’re you’re not just saying, okay, you’re this business has, you know, I’m going to get their financials in order. You’re really looking to fundamentally change the course of the business.

Michael Barbarita: Right? We do both. I mean, we get that financials in order. That’s definitely.

Lee Kantor: Right. But that’s like you said that’s like everybody else does that. Like that’s not the hard part that, you know AI could probably do that next year.

Michael Barbarita: Um or 15 minutes. Yeah, I get it.

Lee Kantor: So you’re bringing something a lot different to the table. So your value goes well beyond what a CFO does. You’re you’re really helping change fundamentally change the trajectory of growth for these organizations.

Michael Barbarita: Correct.

Lee Kantor: Now what is um, I would imagine folks that are considering this, they’re going to be a little skeptical. Like how do you help them get over their skepticism?

Michael Barbarita: Well.

Lee Kantor: Um, is there a way to kind of limit the risk or to kind of alleviate some of what they might perceive as risk?

Michael Barbarita: Well, here’s here’s most business owners situation is that they want leveraged revenue or at least want an increase in revenue, and they want time freedom associated with that. So they want time freedom and consistent profits. It’s a real quick way of saying it. That’s what most business owners want. And you know, the way we present it, the way we present it to the business owners is the way we implement the strategies. You know, whether you work with me or someone else, uh, there are five steps that you have to take in order to properly implement business and financial strategies that your competition isn’t doing. And step one is clarity. So before you could do tactical things, you got to strategically understand why am I doing this? Where am I headed and what does success look like? But not for your business, for your life. And I’ve seen Lee. I’ve seen this mistake happen over and over and over again, where people are so excited to make their impact in the world that they jump out there, they create this business, and all of a sudden they’re building their life around this business thing that they created, because the way it’s supposed to work is that you create the life you want, and then you let the asset, which is the business, serve you, allowing you to get to that life. That’s the order and that’s clarity. So that that’s that’s what like once again, this is where this is what we show the business owner. We show them that clarity. And then the second thing that we do is we give them a step by step roadmap to get to that life and a step by step roadmap of the strategies to build the asset that’s going to serve them.

Michael Barbarita: The third thing we do is we upgrade their skills because the business doesn’t grow unless they do the fourth. The fourth thing we do is we optimize their environment. Why is that? Well, they have saboteurs. I call them saboteurs. Sometimes I call them organizational terrorists. They’re normally family and friends, by the way, and they’re always constantly questioning what their what the business owner is doing, the spouse or friends or family constantly questioning because they have a W2 mentality. And of course in business we don’t have to be two mentalities here. So that’s the fourth thing you want to do, is you want to put them in an environment that’s supportive. And then finally, um, after that, we want a massive what’s called master of the psychology, which basically is mastering their mindset because the mindset that got them there, they are where they are today with the mindset that they have. And that could be, you know, it could be, you know, a decent business, don’t get me wrong, but that but it’s the mindset that got them there, the mindset they have today. In order to grow, your mindset has to shift, because the mindset that it took to go from 0 to 250,000 is totally different from 250 to 1 million, million to 3 million and so forth. So we work on mastering your mindset, mastering your we call it mastering your psychology. Um, And, uh, so those five things we have to work on, because those five things are critical for a business owner, uh, to implement business and financial strategies. And like I said, whether they work with me or somewhere someone else, it’s clarity step by step roadmap. Upgrade your skills, uh, optimize your environment and master your mindset.

Lee Kantor: So now is your ideal customer. Are they like a startup that just started or are they, um, kind of a business that has maybe plateaued? Or are they somebody that’s close to exit and wants to, you know, kind of get the business in shape for an exit?

Michael Barbarita: Um, we don’t really deal with startups that often. Uh, we’ve done it. We’ve done it. You know, it’s in our history. We’ve certainly done it. We look for businesses between 500,000 and 3 million, 4 million that, you know, that are kind of plateaued at those revenue levels. And, and they’re kind of stuck. Those are ideal, uh, clients for us because we can unstuck them.

Lee Kantor: So they’re. So they might have. Maybe they had been growing, and then maybe they’ve stopped growing, or maybe they’ve gone a little backwards. But once they’ve gotten over kind of the critical mass and got a little escape velocity, then they they have something that’s kind of somewhat proven that you feel like you can really make an impact and get them to a new level.

Michael Barbarita: That’s right. And their revenue might be increasing, but so aren’t their hours.

Lee Kantor: Now, is there a story you can share that maybe illustrates how you work? Like maybe you don’t have to name the name of the company, but maybe share the problem they came to you with and how you were able to help them get to a new place.

Michael Barbarita: Okay, sure. Um, you know, the one that comes to one that comes to mind, uh, and this might not be a situation that everybody’s in, but there was a construction company who, um, was, uh, ready to file, uh, bankruptcy. And they came to me. Uh, and we worked out a workout plan with the trade. Uh. And, uh, we, uh, changed some things relative to how he was collecting receivables. Uh, we changed some things relative to how he was promoting his business. We changed some things relative to his cost structure. We changed some things to increase margins. Uh, and he’s a thriving business today.

Lee Kantor: And how long did that take about.

Michael Barbarita: Uh, the turnaround itself took, uh, took 12 months to where he was now square with the trade.

Lee Kantor: And they he just keeps growing.

Michael Barbarita: Right.

Michael Barbarita: And now he’s just elevated.

Lee Kantor: Good stuff. Well, congratulations on all the success. If somebody wants to learn more, get Ahold of your book or connect with you or somebody on the team. What’s the website? What’s the best way to connect NeXTSTEP CFO.

Michael Barbarita: Net. That’s NeXTSTEP CFO. Net. Uh, and uh, we, uh, there you can download a free copy of my book called Powerful Business Strategies. Uh, and then you could also go to the contact page, which is on the website at. Or just click the contact button on the, on the main site. And uh, as for ask for an appointment. And I’d be happy to be happy to discuss your problem. Uh, free consultation, no charges. Be happy to discuss your situation.

Lee Kantor: Well, Michael, thank you so much for sharing your story today. You’re doing such important work, and we appreciate you.

Michael Barbarita: Thank you. Lee.

Michael Barbarita: Thanks for having me. A lot of fun.

Lee Kantor: All right. This is Lee Kantor. We’ll see you all next time on High Velocity Radio.