Empowering Small Businesses Through Strategic Financial Planning With Hannah Smolinski

Hannah Smolinski is the Founder and CEO of Clara CFO Group, a virtual CFO agency providing small businesses with financial clarity and profit maximization strategies. As a CPA, Hannah’s professional experience with one of the world’s largest accounting firms shaped her vision of bringing high-level financial expertise to the small business community. She founded Clara CFO Group as a trusted resource for small businesses as they navigate key financial decisions, work toward sustainable revenue, and plan for scale.

In addition to her work with Clara CFO Group, Hannah hosts a YouTube channel with over 50,000 subscribers, where she continues her mission of empowering small businesses. Through this platform, she shares financial strategies, best practices, and educational resources that assist companies in understanding their financial statements and achieving financial success.

Here’s a glimpse of what you’ll learn:

• [03:24] Hannah Smolinski talks about Clara CFO Group and how it helps businesses
• [04:21] What attracted Hannah to the financial industry?
• [05:49] The lessons Hannah learned at a large accounting firm 
• [07:34] How Hannah approaches tough conversations
• [09:53] The common financial mistakes small businesses make
• [12:51] What are the critical financial health metrics to track?
• [16:46] How Clara CFO helps clients determine when and who to hire
• [23:13] The most common questions Hannah’s team gets about cash flow
• [33:30] How Hannah finds and keeps talent at Clara CFO
• [37:58] Hannah shares CFO’s tech stack

In this episode…

Finance for small businesses calls for a specialized combination of expertise, communication skills, and adaptability. Hannah Smolinski, an experienced financial strategist, has mastered these skills and offers exceptional guidance to newly established businesses and fast-growing startups on their financial journey.

So what does it take to navigate the ever-evolving realm of small business finance successfully? According to Hannah, the key lies in understanding businesses’ various needs and expectations, building strong relationships, and skillfully managing the complexities of financial forecasting and planning. This approach ensures seamless financial operations and assists clients in making informed decisions that best align with their business goals.

Join Jeremy Weisz, host of the Inspired Insider, in an engaging conversation with Hannah Smolinski, Founder and CEO of Clara CFO Group. Hannah delves into the dynamic nature of business finance, aligning financial strategies with business objectives, the value of comprehensive financial planning, and the need to continuously adapt and pivot in response to the changing economic landscape.

Resources mentioned in this episode:

• Hannah Smolinski on LinkedIn
• Clara CFO Group: Website | YouTube

Special Mention(s):

• Simple Numbers, Straight Talk, Big Profits!: 4 Keys to Unlock Your Business Potential by Greg Crabtree
• Jirav
• Less Annoying CRM

Related episode(s):

• “How to Save Hundreds of Hours a Month Using Top Productivity Tools with Adi Klevit of Business Success Consulting Group” on Inspired Insider
• “[EO Tulsa] Real Estate Investment With Mat Zalk of Keyrenter Property Management” on Inspired Insider
• “Boost Your Sales Team’s Productivity With Robert Hartline, Founder and CEO of Call Proof” on Inspired Insider
• “Putting the Customer Experience First with Jason VandeBoom Founder of ActiveCampaign” on Inspired Insider

Episode Transcript

Intro  0:01 

You are listening to Inspired Insider with your host, Dr. Jeremy Weisz.

Jeremy Weisz  0:22 

Dr. Jeremy Weisz here founder of inspiredinsider.com where I talk with inspirational entrepreneurs and leaders today is no different. I’ve Hannah Smolinski of claracfo.com. And Hannah, before I formally introduce you, I always like to point out other episodes, people should check out of the podcast since we met through EO and you’re an EO, Seattle. I had some amazing EO members on the podcast, Adi Klevit who we talked about the top productivity tools that both of us geek out on. I think we just talked about that for 40 minutes because I love productivity, the more productive I can be the better so we shared everything that we use from the productivity standpoint, Matt Zalk of EO Tulsa. He runs a real estate property management company key rental property management and he shared some amazing tips of how he’s grown his business. Robert Hartline of EO Nashville, talks about how he built up a software called Call Proof and also how he built a chain of cell phone stores that he took it to over 100 million in sales. So just some amazing stuff that he talked about. And check out more episodes on the podcast. And this episode is brought to you by Rise25. At Rise25 we help businesses give to and connect their dream 100 relationships and partnerships. And how do we do that we actually help you run your podcasts are an easy button for a company to launch and run a podcast and we do the accountability, the full strategy and the full execution and production of anything that needs to happen. Hannah, we call ourselves the magic elves than the background that makes sure we make everything happen to make it look easy for the host. And so if you thought about podcasting, you should the number one thing in my life is relationships. I’m always looking at ways to give to my best relationships. And I found no better way over the past decade to profile the people and companies I most admire and share with the world, what they’re working on and what we can learn from that. So you can check out rise25.com. If you thought about podcasting, feel free to email us any questions that you have. And I’m excited to introduce Hannah Smolinski. She’s a CPA and founder of Clara CFO Group, which is a virtual CFO agency providing small businesses with the financial clarity and profit in the profit-maximizing strategies. Who doesn’t want profit-maximizing strategies and her experience working for one of the world’s largest accounting firms really inspired her to make corporate expertise accessible to small businesses and small business owners through their fractional CFO services. She also she’s very modest. I didn’t discover this on my own. But she hosts a YouTube channel with over 50,000 subscribers and uses that platform to help small businesses achieve financial success along with her services. So Hannah, thanks for joining me.

Hannah Smolinski  3:09 

Awesome. Thank you so much for having me. I’m excited to chat today.

Jeremy Weisz  3:12 

So just start off for a second and we’ll go back to what you learned in corporate of what you took into Clara CFO. But talk about Clara CFO and what you do.

Hannah Smolinski  3:24 

Sure, yeah, so Clara CFO Group kind of came about, mostly from recognizing that small businesses usually don’t have as they’re growing, they usually don’t have somebody on the team that really has a financial expertise, and especially looking forward. A lot of times like companies will have bookkeepers or accountants or people who are helping them with kind of the more compliance-driven things and just you know, the bare bones of finance, which is just like making sure you have accounting records. But then when it came to looking forward and making decisions and trying to improve profitability, a lot of small business owners just don’t have that. And so, kind of recognizing that need and understanding kind of the small business environment that’s sort of where the Clara CFO Group came out of.

Jeremy Weisz  4:13 

What attracted you to this industry and CPA and then CFO work.

Hannah Smolinski  4:21 

Yeah, I mean, I think I’ve always been math-minded. So if it me to kind of go the accounting route, just personally, I really liked I thought it would be a business major kind of growing up and I business was kind of always on my mind. I thought I’d own a little shop or something like that. But then when it really came into college, you kind of have to pick a specialty. I actually thought it would be marketing for a little bit, but then I had an accounting professor pull me aside and be like, no, no, no. If you understand this, you need to do this work and be an accountant and I pushed back for quite a while until I had a good family friend. to basically say, if you can understand accounting, you understand the language of business. And if you can do that you could do anything. So you don’t have to be an accountant. But at least if it makes sense, go for it. So really, I took that advice, then decided to dive into it. And actually, it’s a great fit for me. But I didn’t want to be a tax CPA, I didn’t want to have tax season and do that whole thing. And then I kind of just found the route that really both served my brain really well, but also serve the need that I could see in the marketplace. And that’s where the CFO services came about.

Jeremy Weisz  5:39 

What did you learn from one of the largest accounting firms that you bring to small businesses now?

Hannah Smolinski  5:49 

I honestly think the biggest thing was being able to talk to people about difficult things, which you would not think would be the takeaway from a public accounting firm. But it was actually that relational aspect of being able to talk to people really that like, we’re actually in like, a lot of times a very defensive place, because I was an auditor. So I mean, audits are part of compliance, we have public companies, they have to go through audit processes. But we would be these young kids basically coming straight out of school, get our first real professional job, and then asking the controller of a large company questions about how they do stuff, and then actually is sort of dynamic that is uncomfortable, and obviously, it will be uncomfortable for them, and but being able to talk through situations being kind of almost emotionally intelligent about like, what’s happening, that actually has proved to be one of the best things that we learned. And now that’s what I kind of look for and potential hires as I grow the business is that kind of ability to have difficult conversations about money?

Jeremy Weisz  7:03 

How do you think about how do you approach tough conversations? Because people are asking you, I know the companies you’re working with, they may ask, can I afford to hire someone? They may be asking about what metrics should I be measuring, and you may dig into their financials and see things that you want to be brutally honest about, but you want to put it in a way that is it’s oftentimes someone’s baby, right? They’ve spent a lot of time building this. So how do you approach tough conversations?

Hannah Smolinski  7:34 

I think it’s always kind of important to make sure that you’re understanding that the truth needs to be revealed somehow. And that we do need to get to the bottom of it. But also, I mean, yeah, egos come into play, personal passion projects become really, really important to like a business owner. So recently, a new client came on. And they’ve set up a lot of things that are actually putting themselves in a really difficult financial place. And also you have individuals on the team, that their jobs are really tied to these decisions. And when you start to come in and sort of pull things apart and say, hey, maybe this isn’t great for the company, and this isn’t great for the company, it puts a lot of people in that defensive mode. So you have to be really sensitive about that. And I think it’s really important to just kind of say, like, let’s step back, let’s just look at this from like, just a numbers perspective, what would be a way that we can move forward? And then never put any blame on any one decision or any one thing? But just thinking about how do we find solutions to get out of this situation, focus on the solutions, not necessarily on who caused the problem or what caused the problem, but move it in that positive direction can help a lot. And then just listen a lot, I think is the other part is just make sure that you’re really listening to what’s actually happening, because that will keep you kind of attuned to reading the room, and how best to move forward and maybe who can handle a harder truth and who needs a little bit more of a delicate hand?

Jeremy Weisz  9:21 

It is tough because there’s people at stake. And also, people have put things in place and they may have been used to a certain way. So I’m curious, you come in, there’s already been a bunch of things put in place and sometimes you have to be like, That’s not serving you. Like we need to unravel this. What are some of the common mistakes you see when you come in and you start to audit and look at the business before moving forward and giving advice and advising?

Hannah Smolinski  9:53 

One of the things we see first is going to be just a lack of transparency in financials. We will oftentimes look at the financials and be like, wow, we really can’t tell anything about what’s actually happening in the business. Or we’ll have Chart of Accounts, for example, they’re still in alphabetical order. And it’s really hard to group your expense categories together, when you’re just looking at things in alphabetical order, if you can’t answer, how much do our people cost, if you don’t have all your people costs all together in one place, it’s really hard to do that. So that’s kind of one of the first things we try to do is make sure that we can read the financials in a better way. So we have to kind of reorganize and go in there and do that. And then from there, we can start to dissect other numbers and kind of dig in from that to find out what else is happening.

Jeremy Weisz  10:45 

So oftentimes, you come in, and it’s just not organized properly.

Hannah Smolinski  10:52 

Yeah, that can be, the clarity that can be had by having a proper Chart of Accounts and something that makes sense. And that really anybody in the organization or any of the decision-makers can read. That’s step one of providing, like, actionable, real improvements to the financial health of the business.

Jeremy Weisz  11:16 

We’re going to go through some common questions that you get that will serve anyone listening. And I’m pulling up, if you’re watching the video part, we can see here, we’re at claracfo.com. You can learn more there, but I wanted to pull this up, Hannah, which is this is your YouTube channels, be willing to check it out. And I was sifting through it the past few days to see what are the most popular videos, and you can check it out. It’s Clara CFO Group on YouTube. And they have over 50,000 subscribers and all these videos. And it was interesting for me to see one of the most popular ones here, right. And so there’s ones here that are small business passive income, you can see there’s 80,000 of debt gone. There’s how to read an income statement, I was a little bit surprised actually, how to avoid duplicate transactions and QuickBooks Online is a really popular video, it’s very specific. So apparently, there’s a lot of people out there that want that information. So but there’s a lot of great stuff here. What I wanted to start with, and this one, obviously, how to do a full month of bookkeeping. Also got it almost 150,000 views on it. So you check those out. But my question is, what metrics matter when the company comes to you and said, what should I be measuring? What should my KPIs be? How do you approach that?

Hannah Smolinski  12:51 

We are working on kind of like overall financial health metrics that we’re going to be giving all clients. This is something new, we’re kind of working on where every single business we think should work on certain things. And then certain KPIs need to be tailored for the specific business and the specific business model. But overall, we like to make sure that we’re obviously tracking gross profit percentages. So we want to make sure that businesses are profitable, and that we’re not running, basically a breakeven business year over year over year over year. I mean, even if you have outside investment, you’re doing these other things, there should be some goal for small business owners in particular, to make a profit, we need to be able to create that, we like to make sure that we have good gross margins. So that’s like, if you’re a product business, I can’t really tell you exactly which percentage we’re going to go after on that one. But you do want to track your gross profit margin, we’ve got like on the balance sheet, we like to make sure that we have a positive current ratio, which is making sure that your current assets like cash, and your accounts receivable can cover all of your current liabilities, like all your bills, your credit card bills, and everything. We don’t want to be racking up a bunch of like high-interest debt, which credit cards obviously are. And then we also look at like debt to equity ratio, which is, how much are we leveraging debt versus how much are we leveraging equity and like, we see this all over the place, some small business owners are so happy taking on tons and tons of debt, and then some are so scared of taking on any debt. And there’s actually like a healthy balance in between that, because it’s like, if you don’t take on any debt, you’re not taking on a new risk, and how much growth are you potentially holding yourself back from? But then if you’re taking on tons of debt, you could be having high-interest expenses and you’re starting to like, how do you dig yourself out of it unless you’re extremely profitable? So there’s like these definitely these things that we’re looking at, but one of the things that we like the most to look at, and we work with a lot of service-based businesses is something called the labor efficiency ratio. So that came out of, there’s a author, Greg Crabtree who wrote the Simple Numbers, was it called Simple Numbers, Straight Talk Big Profits, it’s behind me here. But he’s actually been on the channel, I have an interview with him. He has this concept of labor efficiency. And that’s where you can track for every dollar of labor you spend, how much gross margin or how much gross profit is that bringing back into the business, and to be healthy and to have a positive usually more than positive, gross profit percentage or profit percentage, that usually needs to be at least two. So a ratio of two or more. So for every dollar you bring in, you should be making $2 of gross profit. So that has worked really well when we talk to a lot of small business owners, because they’re not thinking like that a lot of times. And that really helps when we go to answer questions like, can you afford to bring somebody on? Or who’s the next hire that you need to bring on the team? Are they going to help you increase revenue? Are they going to help you increase. So we really liked that one, and it helps with overall just spending, efficiency and analyzing how we’re using our money?