In this episode, Jamie Nau and Jody Grunden sit down to chat with one of our clients, Greg Bear from Bear Group. Greg has seen some major growth, and we think it’s important for you to hear about it. Bear Group is a successful web design company, and we will be discussing their process of hiring a CFO and how it helped them to uplevel their business.
Quote
“We were growing, I was wearing a lot of hats, and I started to realize our finances should be doing better.” - Greg Bear
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Episode resources
Jamie Nau: Hello and welcome to today's podcast. I'm really excited to bring another one of our clients on. Today we're bringing on Greg Beard from Bear Group. Greg's been one of our clients for quite a while now, and really has seen some major growth that we think is really important for our audience to hear, and to talk through his process. But before we get into any of that, Greg, why don't you give us a little bit of your background, as well as the background into the Bear Group and how it got started.
Greg Bear: Yeah, thanks Jamie. Thanks for having me. So Bear Group is a web development firm, which started in Seattle, it’s headquartered there and started in 2007, actually we started almost our 14th year going into January. So I've been doing it for a while, you know, building supporting websites for organizations, ideally to delight customers and, you know, streamline their operations and help them grow. So we've had a lot of nice transformation stories over those years with clients. We mostly started out as a Drupal shop, so a Drupal content management system, and then started working with Magento about 10 years ago and all the related integrations that go with that. So that's a big piece of our organization. We try and be both the consultants as well as coders. So we're pretty adept at business in general and kind of can help figure out online infrastructure decisions and things like that. And yeah so, you know, it's been fun to work in this 21st century field. We are fully remote. There is about twenty six of us at the moment, today, kind of west of the Mississippi essentially. We have worked with all sorts of wonderful organizations over the years, and clients really look for those long term relationships. So that's kind of our story.
Adam Hale: How long have you been remote?
Greg Bear: The whole time. So we actually started that way. There were those other Drupal folks out there like Lullabot and other folks, who were sort of pioneering on the remote work front and organized that way from the get go. So we just set up that way. Initially we did have a pool of folks in the Seattle area for a while, including the folks on the management team. Then one moved to L.A. and one moved to Montana, and so we were like okay, we need to embrace this. Our director of engineering is now in Kansas City.
Adam Hale: So you are working your way East?
Greg Bear: We are working our way East. We actually have one employee who's actually full time in his RV. So he is ultra-remote.
Adam Hale: Yeah, we have one of those too.
Greg Bear: Yeah, that's cool. He’s got the best bandwidth out of any of us.
Adam Hale: Technology has changed quite a bit over the last 40 years.
Greg Bear: It was this type of technology like Jira, Zoom for primary communication, really made that remote work model possible.
Adam Hale: Yeah now we're all sitting back while the kids are on Zoom with everything and going welcome to our world.
All: Laughing [in audible]
Adam Hale: Yeah. So I mean kind of talk us through the kind of the headspace like what got you to the point, I mean obviously Bear Group is very successful. You have been doing it for a very, very long time. What kind of got you to that point where you're like, hey, I could use a CFO? What were you looking for?
Greg Bear: So I met Jody Grunden at Owners Camp, at the Bureau of Digital' camp. I went to that in 2016 down in Scottsdale. He was one of the presenters. So that was the first time I sort of encountered this idea of a virtual CFO. I didn't realize it existed before, maybe it didn’t. I had run the finance side of our business. I have my MBA and I started a couple of companies, and I felt like I had that piece of it. I knew QuickBooks well. I thought I kind of knew it all. And, you know, hearing him speak I realized there's some big pieces here I don't do well. You know, we were growing. I was wearing a lot of hats. I was wearing a lot of biz dev as well as production teams hats, and I started looking at some of our financial situation and just being like we should be doing better than this. It's like we're making a lot of money. It just seems to be flying out the door. I just don't have a very good grip on it. And so it was around, I guess two and a half, three years ago, I reached out to Jody and just said, hey, you know, are the right size of a company you would be interested in working with? So that was kind of how it started. I think there were just some operational, partly to offload the finance side and get in some additional inputs on it. But once I did it, I realized, I should have done this in the beginning.
All: Laughing [in audible]
Greg Bear: Having you guys our books, just structurally, the approach to it has been really, and we can talk to this more, but it's really up leveled our business in a really great way.
Jamie Nau: So what size on both revenue and team members were you at when you hired us? Because I think the problem you're talking through is very common one. You wearing too many hats. I'm just curious, like what size were you at when you started to feel that, and then when you hired us?
Greg Bear: Yeah, we were probably at like 15 or so employee wise, and doing a million and a half or something like that in revenue. And so, you know, and we'll cross four million this year. So it's been over that couple of years of growth.
Adam Hale: That's a big lift.
Greg Bear: Yeah. Some of it’s been new lines of business for us, but some of it's been just better management, honestly. When I got in touch with Jody its funny, I realized he had written a book. He has this great quote in there about cash making big problem small. And it's like, oh, that's was one of our issues. It was clear, like cash flow and cash flow management is the name of the game in this type of agency. So that was one of the real huge additions for us.
Jamie Nau: It's funny you say that. I was expecting somewhere near year two, I don't know about you Adam, but that's normally when people start to feel that pressure. You know, I'm the marketing director, I'm the CFO, I'm the CEO. So yeah, usually it's somewhere around that 1.5$M – 2$M. So that is what I was expecting.
Greg Bear: Yeah. So we weren't very big, but it was also like one of those where it's like okay, I need more. I'm sure there's better ways to do this than what I'm doing. So at all these elaborate spreadsheets, it was like kind of managing cash flow myself. So it was actually some of it was very reassuring. And we started working with Summit and have you kind of come in and clean house. You were very, very nice about. You know, there's some things here that are good. Then here's some ways we would maybe change it. And I was a little resistant to some of that. I just had my way of doing it for that first decade. But every time I have gone your way everything goes better.
Adam Hale: That's good to hear. Yeah, it's definitely a little bit, I mean, yeah, you don't want to ever take the visibility away because obviously you've been doing a lot of things right. You wouldn't have been in business as long as you were. So no question things were dialed in. Just for us trying to tell the correct story for you, we kind of have to get things dialed in. So I know that can be a little bit of a dating process to at the beginning and moving through that whole thing. So that's good to hear that the transition went well.
Greg Bear: The onboarding was really neat actually. I mean, that was where we restructured accounts. One of the ways that was interesting was always looking to kind of all our accounts together and you broke it up by production and admin and marketing. It was the first time I could really see reporting by like, oh, here's the actual cost of our production team.
All: Laughing [in audible]
Adam Hale. There are a lot of agencies that are you know, 8, 10, 12 million dollar agencies that we run into and they still kind of have everything mashed together too. So I mean, that's not unique at all. And again it shouldn't be just because I mean, we're dorky accountants. That's what we do. So we're the finance. Which is why we make such a great, great team. So yeah it's been great.
Jamie Nau: And that's one of the reasons we do that in onboarding, right? It is very common. So the things that we try to get done in our onboarding are things that we find common errors that one, create discussion. But two, are also things that we can fix pretty quickly that gives you that extra look like, oh, wow, I've never seen my finances like this. And that's exactly how you said it. So I think that those are two of the things, I think you mentioned cash in the restructuring of the financial statements. Anything else during that onboarding process that you can remember that really jumped out to you and helped you move along quickly?
Greg Bear: Yeah I mean, it was a couple of years ago, but definitely connected into all your systems. Obviously, you are QuickBooks wizards so already knew everything around that. The ability to see marketing expenses, admin expenses and then our actual production, not just expense, the cost of revenue and all of that attribution that happened was really very enlightening. And then from there, setting up forecasts was really cool. That was a neat. We're still using the same model that Michelle set up the beginning for forecasts and, you know, which really became more of a planning tool, I mean they should be. But we did both the annual forecast looking ahead for a year and then we're making monthly meetings. You know, just the cadence of meetings that started to happen after that has been one of the huge highlights for me. It's almost that regularity of like checking our forecast every month with Michelle. She's walking through, talking about adjustments to it. You know, there’s usually not a ton, but there's some. And how does that affect, what's going to happen in next quarter? What do we need to plan for? And we started planning out our cash allocation. So for a big larger expenses or big conferences we might be at, or just tax savings, you know, monthly and stuff like that. So just typical budgeting stuff that got all set up right at the very beginning. And it's been something we've maintained all the way through. It's been great. So it's really changed our visibility on the business.
Adam Hale: That's the key right there. You just nailed that visibility. I mean, that's the, you know, being deliberate with the plan. But then, of course, like all good plans, things kind of a break and obviously nobody planned for COVID. So being able to have your hands around all that kind of stuff and what the potential impacts could be, you know, be able to plug and play that in the forecast, I think is key. And I think the thing too is like, a lot of people ask us, you know, so you come in and you help fix things, you get things going. But it's a perpetual service, you know. So it's one of those things that it's always evergreen. So how does that look for you now? I mean, how are you leveraging the team? Is it primarily the forecasting and just knowing kind of the financials are in place?
Greg Bear: Yeah, three things happen. One is forecasting monthly, and then we do our monthly, kind of looking back at our annual or monthly review cycles. So the financials and monthly as well. So those are sort of the bigger picture. Looking at kind of three primary KPIs that got set up also in the initial reporting. Around levels of cash we like to maintain profitability. The net income we're trying to maintain. Just keeping the eye on that scorecard has been really great. And my favorite though, is you know, a plug for Ali, who is great. I'm sure you know that. We meet every Monday and talk cash like it's just this weird, you know, like I was looking at it once a month, maybe twice every year, sometimes I wouldn't. To have that regularity now, I'm looking at our cash situation like what's going on? When I walked in the door, we had like 100k in cash, which wouldn't cover us for a payroll, you know, payroll and a half maybe. We had a lot of long ARs and we had a credit line we were using to help finance invoices for those long ARs.
Adam Hale: Those are painful.
All: Laughing [in audible]
Greg Bear: That cadence has been one of those, just the ritual of it and doing it has been fantastic. We meet every Monday, we look at cash, what happened last week, what's happening this current week with cash, what's happening next week with cash. And that visibility, again the planning that was needed. It really was a year later, we had it fully turned around where we had paid off all of our credit. We had a 500K in cash. So it's like we're sitting in just such a different position. And that has been, you know, just very stabilizing for us as an organization. Then it's like, you know, if there's employee turnover or a client pays a little bit later, or there's an issue in the pipeline for a month with COVID when it sort of totally dipped in March and April before the PPP stuff kicks in or whatever, it was like okay. How are we going to be now? Like we have the cash to navigate this. We're going to be okay. We can run for six months if we need it and never take another job. So it just really changes your whole outlook.
Adam Hale: It's amazing how we're not talking about like selling more, doing more. But I think, you know, an important thing that you said is the cadence of it just makes it more deliberate and just having that cadence of constantly going through that just there's this inertia that builds that can build up those things that you're doing right.
Greg Bear: Yeah, that’s well said. I think that was really interesting to me, is actually the business was a lot more profitable than I realized it was. And we were doing okay I felt. We were making money and you know, but it there was a lot more here than and I realized.
Jamie Nau: So I want to hear more about this Greg, because this is one of the main reasons I brought you on. So we did our six month check in not too long ago, and you kind of talked through how well how things were going. You just talked a lot about these cash numbers. But I know Michelle is great and I know Ali is great, but I think a lot of this has to do with you and your mindset. So I'd love for you to dig into that a little bit more, because, again, we do the same thing with all of our clients. I think a lot of our clients do get better with cash. But your success story is definitely up there in terms of how quickly it happened. So what was your mindset going into that, and what do you think you attribute it to in helping your cash grow so quickly?
Greg Bear: That's a good question. I would attribute it to you guys. I just keep sending you bottles of wine.
All: Laughing [in audible]
Greg Bear: We had a strong pipeline already. that was helpful.
We were moving into a growth year anyway, so that was already also helpful. We had moved in right when you guys came on. We had just done a whole strategic plan around a growth cycle for us where we were going to basically add seven or eight people, which was a lot for our size, but we hadn't really looked at the financial impact of that. And so that really took us under water very quickly and with just kind of getting ahead of ourselves. So when we started managing that our cash accounts closer, we were able to really leverage that growth cycle. So we were able to actually profit from it rather than it taking us kind of down. So I think the timing was really good and partly so, we were growing anyway, but we were growing without much financial fiscal responsibility.
Adam Hale: Having the visibility probably made the goal clear.
Greg Bear: For sure.
Jamie Nau: You know, talking to Michelle and Ali, I think you bought in pretty quickly that, you know, you quoted Jody, but cash is going to make your problem seem a lot easier. I think you bought into that very quickly, which any time you buy into a goal makes it a lot easier. So I think, you know, a lot of it has to attribute to that because, again, we give this advice to some clients and they're like, yeah, yeah, yeah. And they just don't really hear it and don't believe it. And then you have the clients like you, they're like, yeah, that makes a ton of sense. And you buy in, and to Adam's point, you focus on those goals and you know what it takes to get to those goals and it just becomes a little bit easier to. So I think that is a lot of why I think you lead to success as well.
Greg Bear: It's hard for folks to see just the incremental nature of that growth and how it works. It's something I think accountants have in their blood. That incremental growth, like Michelle really broke that down to like, okay, you're going to be at a million dollars of net income if you do these things. Here's what you need to do, break it down monthly. Here's what you need to do. I was like no way. If you say so, but that seems kind of like a bunch of crazy talk. But it happened. Incrementally it just chipped away each month. And we were like okay, we got to hit this goal, got to hit this goal. So that's how it happened. So it's slow and steady.
Adam Hale: Jamie kind of hit on it too, I mean, one thing that is really important for us is just to make sure that we're managing expectations, and we're always being there for you. So I know he checks in on a semi-annual basis, but then we also send out, and I am going to put you on the spot, because we also send out the yellow, red, green emails. Kind of talk to us about, you know, has that made you feel like you always have somebody else that you can lean on? I mean, we talk about that a lot. Like we do genuinely want you to have kind of an account manager outside of that. That's the reason why Jamie's kind of focusing in on that stuff. And I'm usually sending out those monthly touches. Have you found that to be helpful at all?
Greg Bear: Yeah, it's great. Out of the vendors we work with you are the only ones that ever checks in with us. So thank you for that. We were actually modeling on something very similar to the smiley, frowny face emails for our own client base. There’s been nice things that you guys have been experimenting with and we're like, hey we should do that with our clients. That's a really nice just touch point. Check-in and see how they're doing. Something like a net promoter score, because that's key to growth, right? The referral strategy is really important. So, yeah, I love those touch points. I think the account manager side of what you do is great and it's probably about the right amount. I talk weekly with Ali and every other week with Michelle. So we have a lot of touch points with the organization already in there. I am on slack. So it's quick to answer quick questions that have been helpful with things that are like, oh, you know, would you want some personal finance assistance? Or there was like a funny tax differential issue that they helped sort and figure it out. So I mean, you guys have our back, it's really great and the escalation points to other areas, too, has been really nice, too. If we have questions about tax or, you know, a state and local taxes, you guys can help with that.
Jamie Nau: Yeah before we send those out we are like, we don’t want to be annoying by sending too many emails. There's a fine line between that. So I have a question for you as well. And this is something that has always been curious to me. So we pride ourselves on being dynamic and always changing. I'm wondering how that looks from a client standpoint, because obviously we've made some changes to our financial statements. We've made some changes to cash flow and some other areas. Have you seen those changes always being good? Or how has your thought been as we change things in the package we deliver?
Greg Bear: We are pretty flexible. There was a tool that you guys were using in between that was really slow. It just didn't calculate.
All: Laughing [in audible]
Greg Bear: But the one that you're on now, I can’t remember the name of it, but the one that we're using after for our monthly reporting it seems awesome. The cash flow one Ali loves it, can just like matrix her way around in it. They seem like very like useful additional tools. I'm going to forget the name of it, PlanGuru was really an interesting eye opener. Just the granularity in there is awesome. The way it sort of builds up a forecast. I used to do all that stuff myself, so I kind of got it wrenched out of my hands. That took a little bit of like okay, I don't have to go play with our forecast every day. I recognized that's not something I probably should be doing. I asked Michelle first.
Adam Hale: We're going to make sure that we just cut that little snippet that you just said there and make sure that that goes on with all of our on boarding calls. It is one of those things where, you know, you get used to playing in it all the time and you want to tinker. And we definitely have clients who want to tinker, but we want to be a part of those conversations. And it's also one of those things where if you do it too much, you can just overwork the thing. So it's like, well one don't break it please. Then the other thing is like we want to be a part of that. I know it was probably a little bit of a change for you at the beginning. It's really nice to hear that you're able to kind of, you know, hang with us there and get through that.
Greg Bear: Oh yeah f or sure. It's been nothing but good. Now I wouldn't make a forecast change without running it by Michelle. You know, because I want her to be aware of it and it's like, oh yeah, that's what are you thinking? It's really helpful.
Jamie Nau: It’s good to have someone to talk. That's in the know. I think that's a lot of what having a CFO is. It's someone that knows your company but also has a little bit of understanding of finance. I know when I was the CFO, some of the calls I would get, they weren't really finance related. It was just someone to talk to that understood your business. There's definitely some comfort on that.
Greg Bear: That’s for sure. Honestly, as sole owner here, I didn't have anyone in the organization to talk to about finance stuff. We had our accounting group and you know, we talk a lot about project based accounting in the project teams, but the actual business accounting, I was the only one looking at it. But not anymore.
Jamie Nau: So we are right up on time here. Greg, I really appreciate you joining us. I would love for you to give us any final thoughts. Again, for anybody that's thinking about getting a virtual CFO, what should they be thinking about?
Greg Bear: This model was really great because you could ease into it. The fractional model, the cost of hiring you own CFO, like the same team, hiring the same team for myself it just wouldn't be feasible. So what you built is really unique. I think that idea of a fractionalized approach where you can get just the time you need with really clear deliverables is super worth it. I would certainly encourage anyone to give it a shot because it's a neat way for an agency of our kind size to actually get a bunch of professional financial management support for a really, really good price.
Jamie Nau: Great, definitely appreciate that, Adam, any final thoughts from you?
Adam Hale: Just Greg, appreciate you being a client, and being a friend, and coming and hanging out with use. It’s really great to hear your story. You are, kind of like, if we had to draw up the perfect client you would be the model. We just love hanging out and collaborating. So I really appreciate you hanging with us and letting us be a part of your team.
Greg Bear: Thank you. We think of you that way, to be honest. You're in our org chart.
Adam Hale: That’s great to hear.
Jamie Nau: That is great to hear. Thank you both.