Overcoming Your Financial Fears with Melissa Houston, The Fractional CFO Agency

Overcoming Your Financial Fears with Melissa Houston, The Fractional CFO Agency

September 7, 2022

Although accounting may not seem like the most exciting part of running a business, if you properly understand your finances and take the time to put a financial plan in place, you will be doing yourself an enormous favor. Tune in today to hear Melissa Houston’s take on the importance of overcoming your financial fears and taking control of your finances as an entrepreneur! 

About Melissa Houston:

As the founder of The Fractional CFO Agency, Melissa’s ultimate goal is to help business owners understand their businesses’ financial side so they can create more profit and live financially secure lives. She is also the host of the She Means Profit podcast and a columnist for large publications, including Forbes. 

Melissa Houston empowers entrepreneurs with her book, “Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business.” This book offers a clear, step-by-step framework and practical insights on money management, equipping readers with the knowledge and tools they need to become financially savvy and achieve business success.

For a comprehensive book review, check out this page.

Entrepreneurs must overcome financial fears

Many entrepreneurs start businesses without fully understanding finances. As a result, they miss a lot of opportunities and fail. How can you prevent this?

Understanding business finances is critical for you as an entrepreneur because it allows you to make better decisions, achieve financial stability, acquire capital, manage cash flow, plan for expansion, comply with regulations, and achieve long-term success.

Also, you can make informed decisions about pricing, investments, budgeting, and resource allocation by understanding financial data and prevent financial fears. This understanding enables you to assess your venture’s financial stability and profitability, monitor important financial indicators, and take corrective actions as needed.

Understanding finances is also important when seeking funding or collaborations because it shows credibility and attracts possible investors. Furthermore, it can assist you in managing cash flow, forecasting future cash demands, and ensuring adequate money are accessible for operating needs and expansion projects. It also contributes to compliance with legal and tax duties, as well as increased transparency and trust among stakeholders.

Episode highlights:

  • Most people don’t think of accounting as something that is going to generate revenue, but 82% of businesses fail due to financial mismanagement. To ensure that you don’t become part of this statistic, optimize profit as early as possible by putting sustainable financial management systems in place. (04:53)
  • Fear and overwhelm are common emotions that people experience when it comes to looking at their finances. But when you take the emotion out of it, you will unlock the ability to use your money as a tool to your advantage. Your financial information should never be a source of shame. It is just data; treat it as such. (12:20)
  • As a business leader, every decision you make has consequences for your bottom line. Knowing your numbers will increase your confidence and ability to make decisions that positively impact your company. (15:10)
  • If you want to succeed as an entrepreneur, get clients in the door! There’s no secret to it and no tricks that will get you there faster. Overnight success is a myth; it takes hard work to achieve big goals (15:46)
  • “Finance is the backbone of a business.” You’ll be lost if you don’t understand how your business works from a financial standpoint. Success lies in understanding the numbers, so it’s time to get learning! (20:06)

Melissa’s best advice for entrepreneurs:

“If you take the emotion out of [your financial information] and you look at it as data, it becomes less fearsome, and you can use the data to your advantage.” (14:20) 

Connect with Melissa:

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Affiliate Disclaimer: Some links in this episode are affiliate links. If you make a purchase through these links, we may earn a commission at no extra cost to you. Rest assured, we only promote products/services we believe will benefit your entrepreneurial journey. 


[00:01:20] A.J. Lawrence: Now we’ve had other people talk about how to do finance. We’ve talked with Rocky with Profit First, that old types of people, about how to look at your books and do this. What I found very interesting about Melissa is she’s talking from a very straightforward set your books, do this, get these things ready.

[00:01:40] And then use that to help you better understand the process, which scarily enough is what I learned when I got my MBA when I was attempting not to grow up 28 years ago. God, a while ago. And I just kind of ignored for a while. It’s pretty basic. But what I find with many entrepreneurs, we either overcomplicate our books or we don’t give them the attention they’re due.

[00:02:07] So Melissa’s really interesting is she’s built this whole practice based around helping people. So I thought this would be worthwhile for us to kind of talk about what it takes, what we should be looking at. So just pay attention as she talks about. Also, I found interesting about Melissa’s background was she’s coming out of the Canadian Government.

[00:02:24] And that wasn’t exactly what I would feel would be like, oh wow, she gets entrepreneurs yet because she was working with businesses and stuff, she understood the requirements specifically around Canada, but then also more broadly US. And it’s interesting because as someone who has had even very, I’ve had some accountants who just haven’t had the right attention to the details when things kinda adds up, especially when you’re playing with taxes.

[00:02:52] So Melissa’s background and where she’s coming from and her focus on getting the books ready and set and using them as your growth model, tying everything together with your operations, et cetera, is just gonna be worthwhile I think for us to listen and learn a little bit more. So go check out melissahoustoncpa.com and then listen to this interview. Now let’s go talk with Melissa.

[00:03:17] Hello, Melissa. Thank you so much for being on the show today. I’m really happy you’re here.

[00:03:21] Melissa Houston: Thank you so much for having me. I’m really looking forward to this talk.

[00:03:25] A.J. Lawrence: At the least given that you are to what an American, even though I’m living in Spain as an American, you’re kind of in the frozen wastelands of Canada on an OWA. No, it is really kind of cool because as I was just telling the audience, the work you do is I think really, very cool. And I think it’s very hard for people who are in that kind of position as the owner of a business, a CEO, a startup founder, because we don’t know what we don’t know. We just know we should be doing better. And I know having gone through your site, I really wish I have had a clean understanding of so much of that when I sold my last business, when I was building my last business and everything because I just, it was all catch as catch can be. And so much just didn’t happen that you talk about. And so before we get too much in, I would love to kind of learn a little bit more of how you feel you are in your own entrepreneurial journey these days.

[00:04:27] Melissa Houston: Wow for me personally, in my entrepreneurial journey, I am two years into it, but I’ve had a lot of activity in two years. I’ve definitely been 150% into growing my business. I’m still at the point where, I mean, I think we all go through this. And it never ends where we’re just experiencing different challenges, right?

[00:04:47] So my startup stage is definitely much different than my growth stage that I’m in now, but I certainly still have the feels of like feeling overwhelmed and feeling fear and feeling like, wow, am I ready to take this next step on? But from what I gather from my colleagues and peers, it’s always going to be regardless of what stage we’re at, it’s filled with different challenges. And that’s where I am right now. I love doing what I’m doing and I love learning and growing as an entrepreneur. And I don’t see it stopping anytime soon.

[00:05:21] A.J. Lawrence: And given that what you do is so much tied into working with other entrepreneurs, other CEOs, business owners, what level, because there’s such a wide variety, where you are in the journey. Who’s the typical customer that you work with? Who’s the typical person you’re working with here?

[00:05:39] Melissa Houston: So the clients that I work with are all business owners and they tend to be in varied stages of their business. So what I often tell people is when they’re ready to work with me, it’s you have to be earning some revenue so that we can actually look at your numbers and manage your financial information, right?

[00:05:55] So generally when people come to me, they’re at least making six figures and that’s a blanket statement. It could be a little bit under, whatever, right? The main point is that you’ve established yourself enough, that you’ve got sales coming in, and now you realize, okay, if I’m gonna make this business work, how am I going to manage my money so that I can, first of all, create profit and then reinvest that profit into growth. And then grow the business.

[00:06:20] And I love working with entrepreneurs and business owners who are ready to grow their business. To me, that’s the most exciting part of the business cycle.

[00:06:28] A.J. Lawrence: Yeah, it is. It’s funny because as someone who has struggled so much with the concept, you do find many people who kind of find points in their business, in their growth, where they’re just happy where they are. And it’s kind of like, okay, yep. I have a few hundred, whatever it may be, a few million. And it’s like, okay, why do more?

[00:06:48] And then I do want to get back to you, but just given your background in finance, the amount of skill you’re bringing in, when someone’s looking, what should they be thinking of? Like where should their head be? And then how should they start moving to engage with someone like you or you specifically?

[00:07:04] Melissa Houston: So just going back to the point that you made a little bit earlier, where you said you don’t know what you don’t know. I love that expression, right? Because it’s so true. Especially when it comes to managing the money in your business. The majority of us don’t know how to do that. And the reality is there’s nowhere we would’ve learned about it. People don’t talk about it. We hear a lot of marketing and sales and branding and all sorts of other things out there in the podcast and online world. But we’re not hearing a lot about how to create that sustainable business that’s going to create profit for you and have a business in there for the long term.

[00:07:43] So typically what I say to clients is you’re ready for me when you realize that you need to grow your business. You need to manage the finances. You need to understand how to implement an accounting system. Accounting, a lot of people think of it as bookkeeping. They think of it as boring, tedious, something that’s not going to generate revenue. And a lot of people keep it off and keep it off until they just realize that they can’t keep it off any longer.

[00:08:11] But the thing is, if you set yourself up for success at the beginning, then your chances of creating more profit, more money, cuz profit is what you get to keep for yourself, right? So you want, ideally you want to optimize that profit in your business. But having those systems in place, having the support systems in place as well, will help you create that business and keep you in business for the long term, because sadly 82% of businesses fail. This is a common statistic I use. 82% of businesses fail due to financial mismanagement. So knowing that you are having trouble managing the finances in your business is a red flag and that you need help.

[00:08:50] A.J. Lawrence: You know, it’s funny because I talk a lot with other business owners and especially in that transition, there’s a lot of things you can do early on just because you’re trying to survive. But then all of a sudden, it’s not that you have to do it, well eventually, but what happens is you’re increasing your risk and finance is definitely something like that because it’s like- I jokingly, you know, the first to about a million, my idea of finances other than quarterly tax preparation early on had always been like daily looking at my accounts and always knowing sort of in the back of my head, what our receivables and what our payables were and what we had on hand. And surprisingly, I was pretty much on through the upper sixes. And then all of a sudden around seven, there was a couple times where it was like, Wait, wait, we should be fine. Or, oh, we’re not good. And then the accountant going, no, no, you’re fine. It was like, oh yeah, that the risk increases and the variables increase.

[00:09:51] And I think that’s something a lot of entrepreneurs you can get by, but then all of a sudden the complexity increases as you start growing. As you said, and this is where a good bookkeeping system, and then even more importantly, a good accounting system and then eventually, a good financial system. Each step kind of takes you a little bit further in decreasing risk because yes, as you grow your businesses, I have learned the hard way, you increase complexity quite rapidly.

[00:10:21] Melissa Houston: Exactly. It’s so true.

[00:10:23] And it becomes harder to manage, especially on your own and cash management, right? Cash management is so important and the larger you get, you’ve got so many things coming in and out the door. It just becomes really hard to keep up with. If you don’t have a specific system in place.

[00:10:40] A.J. Lawrence: I remember the panic I had. I had this one credit card that had like nearly a 100K in a cash. I could cash out a 100K at any given time. Never did. But in the back of my mind, that was payroll for the longest time as we were growing. It was just like, okay, worse comes worse, I know I can do a payroll cycle. Worse comes worse. And then all of a sudden we got bigger than that. And I was just like, Oh, shoot. What do we do now?

[00:11:07] So it was like, oh yeah. That like how to remove you are taking on risk. Other people’s lives are on your hands. There’s all this stuff, your own future, into this thing. So putting in the systems correctly is such a huge thing. What do you normally see as they go through, I know you talk a lot about finding profit, finding things. But what is the typical experience of like a year in?

[00:11:35] Okay, you’ve started putting in these systems, what do you see with a lot of your clients here? What’s going on with their businesses that’s different from when they started?

[00:11:43] Melissa Houston: Talking about what we were talking about earlier, where it’s like, there’s different challenges at different levels of your business. So typically when I start working with business owners, as I mentioned, they’re making six figures and then they’re growing their business. So there’s a lot of challenges with hiring, bringing on new team members, ensuring that they’ve got the money, the cash balances to sustain bringing in those extra hires.

[00:12:06] If they’ve got sales commissioned team members, implementing commission plans, like it gets complicated. And it also, when they’re growing, especially for product-based businesses, when they’re growing the cash, outlay tends to be like at the beginning of the product cycle and they don’t get the cash until they sell the product.

[00:12:25] Having all these things in place to manage, what we really focus on is creating that financial plan for your business so you understand what’s going on each and every month in your business and how you need to plan your financials. And how much you need to sell in order to meet your commitments too, right?

[00:12:43] So it’s getting all the pieces working together so that you can see how you are going to keep your business in the long run by ensuring that you’re managing your finances to keep it going.

[00:12:55] A.J. Lawrence: Now, what do you normally see just from how they look at their business afterwards?

[00:13:02] Melissa Houston: I work one on one with clients and I do fractional done for you services. So depending on what stage you’re coming at to me and your business, quite often what I do see the commonality between these two different types of clients is the fear and the overwhelm when it comes to looking at your finances, right?

[00:13:20] Because it also goes back to you don’t know what you don’t know. But there’s a lot of fear of looking because when you look, it’s like is it going to tell me am I failing or am I succeeding? There’s a lot of emotion tied to the results.

[00:13:35] And the other thing too, I often see is the shame. A lot of people feel like they’re ashamed. They feel like they should have known. It’s common like I’m so smart, why do I not know this? This is the common shame reaction I get. And the reality of it is, is you don’t know this because nobody’s taught you this. A lot of professionals go to school for legal, doctor, healthcare, whatever it is, but they’re not gonna teach you how to run a business.

[00:14:03] And if they do teach you, if you did take like an introductory course, chances are, you learned about debits and credits and assets and liabilities and stuff like that. But that doesn’t teach you how to manage a business, right, especially with the finances.

[00:14:16] So I often reassure clients, I respect the feelings and I’ve seen a lot of feelings. I’ve seen a lot of tears. I’ve seen a lot of frustration and I hold space for those emotions. But you also have to look at it as your money is a tool, right. And creating that ability to use it as a tool is really what the goal is. To try to separate your emotions, because regardless of whether you’re a 6-figure business or an 8-figure business, you will always be looking at your financial information and you will always be looking at it as feedback on how you’re performing.

[00:14:54] So if you take the emotion out of it and you just look at it as data, it becomes less fearsome and you use the data to your advantage so that you understand what’s not going well, so you can improve it and what’s going well so you can capitalize on it.

[00:15:09] A.J. Lawrence: That is true. It’s like facing or not facing Pandora’s box, but it is being comfortable with the understanding that you probably need to open that thing. And just so you know what to go.

[00:15:22] Melissa Houston: Mmm-hmm and the first step is always the hardest, right? Having that first look under the hood, so to speak. And once you get over that and you start learning how to manage your business, instead of that fear and that overwhelm, it gets replaced with confidence, right?

[00:15:37] And when you know your business numbers, that increases your confidence as a business leader. If you’re the CEO of your business, as the business owner, every decision that you’re making in your business affects your bottom line. So when you understand your business numbers, you understand how your decisions are going to affect the profitability of your business as well.

[00:15:57] A.J. Lawrence: You get a lot more control. Well, what’s something that you think you’ve learned that’s helped you the most with your entrepreneurial journey here?

[00:16:06] Melissa Houston: Wow. Okay. So that’s a really good question. I love this question because when I first started out, I thought, well, I’ve got a strong business acumen. I’m gonna be fine. It’s not gonna take me long to grow my business and do all the things that I need to do.

[00:16:19] But I was not an entrepreneur. I was never a business owner. So what I did carry in my financial knowledge, I lacked in my marketing and messaging and branding and stuff like that. So for me, the most valuable lesson I learned is getting those sales in the door.

[00:16:37] You don’t need the fancy websites, you don’t need the expensive marketing agencies, you just need to start reaching the clients that you can help. Get those clients in the door, get that money coming in, and then reinvest that money into growing and scaling your business. That is definitely the most important lesson I learned.

[00:16:56] A.J. Lawrence: Without a doubt. And it’s tricky because it’s always, everyone will say, oh, well you need this, oh, you need that, or, oh, it’ll be easier if you do this just to get to that point where you can actually make sure there’s a dollar coming in. There’s so much more you can do from that position than from the chasing of position.

[00:17:14] Melissa Houston: Exactly. And you bring up such a valuable point, right? There’s so many shiny objects. And I know when I started my business, I felt like I needed to do it all. And I was very distracted with these shiny objects. And these business coaches and gurus that were promoting I have the answer for you. I know how to turn you into an overnight success. I know this, this and this and falling for it and realizing nobody really has the secret. You have to do it on your own. So getting out there and getting those clients is the secret.

[00:17:46] A.J. Lawrence: It’s crazy cuz so many of the gurus, really their only business knowledge is the business of convincing other people to give them money for that. And some have built some amazing businesses but with no other experience. I always find that so fascinating. It’s like you have a huge business but you’ve never had, okay.

[00:18:06] No, I like that because yes, it is that dollar one. And I think it also becomes, for your clients, for the customer, that type of person, it’s not so much that they’re looking at dollar one, but it is the fact that at the end of the day, there’s so much we can do. But if it’s not directly correlated to the movement of the dollars into your organization, into your efforts, then it’s useless and it’s probably wrong.

[00:18:34] I very much have really been impressed with a lot of entrepreneurs who are mission driven and take on different types of causes. But that fine line, tying it back to the dollar is that they’ve spent that extra time and effort ensuring that what they’re doing and their mission is tied to their ability to generate revenue.

[00:18:57] And that’s that fine difference that I think so often people, oh, I have to be this, or I wanna be this. Yeah, it’s great. You can want to do whatever you want in the world. That’s the fun part. The thing is a business needs, it’s hard enough to understand how to convince someone, to give you something for some form of value that you generate. That’s tough already. Going that extra little bit is yeah that much harder. Get the dollar in and then more things can happen.

[00:19:28] Before I ask you how you’re going about defining your success, how do you go about helping your clients define their success financially with inside their businesses?

[00:19:38] Melissa Houston: I think success for my clients financially is really in the understanding of their numbers.

[00:19:44] You could be six figures, seven figures, eight figures, whatever. It doesn’t matter how much revenue you wanna bring in. If you don’t understand how your business works financially and how you generate profit and what your profit margins are and stuff, then you’re essentially lost as a business owner, right?

[00:20:01] Because finance is the backbone of a business. And there’s so much value in knowing your business numbers, that once you get to that place of financial confidence, that is an indicator of success. Knowing that you have profit margin that you want to maintain, knowing that your business is profitable, creating that profitable business is key, but understanding it is success.

[00:20:26] A.J. Lawrence: That is very, very true. So how are you going about, separate from the business, how do you look at success as an entrepreneur for yourself? What does that mean to you?

[00:20:38] Melissa Houston: For myself, it means that I have happy clients who are learning and growing for my knowledge and experience, and really getting that transformation into understanding what’s going on in their business. Like that is my main goal in everything that I do whether it’s through podcasting writing, workshops, whatever. My main goal is to help business owners create more profit in their business so that they live very financially secure lives.

[00:21:12] A.J. Lawrence: And if they do that, then you should be doing quite well too through your services. So that is a good kind of position.

[00:21:20] Melissa Houston: Exactly. It all pays off in the end, but it has always been my main focus to ensure that they’re getting quality service.

[00:21:29] A.J. Lawrence: In going through your site, I was checking out your podcast. Can you maybe tell us a little bit about your podcast and then how people can get in touch with you to learn more?

[00:21:39] Melissa Houston: Yeah, absolutely. So my podcast is called The Business Society and I have been doing that podcast since October of 2020. It consists of interviews with different entrepreneurs at different stages of their business, whether they’re larger celebrity entrepreneurs who have large platform versus smaller businesses such as myself, business owners.

[00:22:01] And we talk about any sort of challenges that they’ve had in their business and how they overcome them. And then when I do solo episodes, I spend a lot of time talking about the financial things that you should be aware of within your business. So a lot of my podcast focuses around creating that financially sustainable business for business owners.

[00:22:22] A.J. Lawrence: You also have a really cool Instagram. What do you like to talk about on the Instagram compared to maybe separate from the podcast?

[00:22:29] Melissa Houston: On my social media, in my podcast, in my writing, the main message I get across to people, I mean, I do these different mediums because I want to reach as many people as I can. Because the important message is manage the money in your business and the profit will come.

[00:22:46] Because I don’t feel like there’s a lot of business coaches or thought leaders or whomever who are speaking about this stuff. And it’s so important for business owners to know this. So I talk about stuff like that, but I also talk about how I’m human and how I make my own mistakes.

[00:23:05] And I’m totally okay with that because I am a person. And I am a person who is a financial professional who made their own financial mistakes and to hide that is not only deceitful, but it’s just not being true to who I am. So I do talk about my own personal journey with debt. I talk about why it’s important to make mistakes, but learn from them.

[00:23:30] A.J. Lawrence: It’s a hard thing because it can get scary and then yeah. Takes longer to dig out than it does to just what’s left famous it’s stitch in time saves nine. Yes. Without finances, definitely.

[00:23:44] Melissa Houston: Mm, exactly. Or sweep it under the rug and you’re just building a bigger mountain. Yeah.

[00:23:50] A.J. Lawrence: Yeah. Wait, you have a rug that looks like a small creature. Yes, I know. Yeah. Yes, my rug is big.

[00:23:58] As our listeners a lot are really kind of trying to understand how to improve their business, where to take their next steps, where to reduce that noise as I always, from a lot of my conversations that’s a phrase I hear a lot. How should they go get in touch with you? What should they do if they would like to learn more about how you can help?

[00:24:18] Melissa Houston: Absolutely. So, if you want to meet with me and learn more about how this would fit in, you can go to my website at melissahoustoncpa.com and book a consult. If you just wanna look around, kick the tires, whatever, grab the five step roadmap to biz finance freedom. Check out the podcast, follow me on social media. There’s always tons of information I’m putting out there. I have my column at Forbes where I write at least twice a week. I’m always putting out free information for people to get to know and understand their business finances.

[00:24:52] A.J. Lawrence: Very cool. Thank you very much, Melissa, for being on the show today.

[00:24:55] I really do appreciate it because I do think it is so tough. For so many entrepreneurs to like all of a sudden realize that their finances are a lot more complex than they ever thought they were gonna be and finding someone to help them transition to a nice running order. It feels like it’s gonna be impossible.

[00:25:17] But as you said, it’s better to take care of it than it is just to wait. And I know that feeling. Well, we’ll make sure we’ll put, everyone, in the show notes. We’ll have Melissa’s website, we’ll have her social media and we’ll have her podcast everything down below. And no, Melissa, thank you so much for coming on the show today. I really, really appreciate it.

[00:25:37] Melissa Houston: Thank you so much for having me. I really enjoyed this talk.

[00:25:44] A.J. Lawrence: This episode of Beyond 8 Figures is over, but your journey as an entrepreneur continues. So if we can help you with anything, please just let us know. And if you liked this episode, please share it with someone who might learn from it. Until next time, keep growing and find the joy in your journey. This is A.J., and I’ll be talking to you soon. Bye bye.

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