The Role of the Fractional CFO - with Josh Aharonoff, Your CFO Guy and Founder Mighty Digits

**Ray Rike** (0:00)
Hello, I'm Ray Rike, Founder and CEO of BenchMarket, and your host of the Metrics It Measure Up Podcast. We talked to a wide variety of the top B2B SaaS and Cloud thought leaders, CEOs, executives, investors, and people just like you to discuss the metrics and benchmarks they use to make metrics informed and benchmark validated decisions. Now on to today's show. Welcome to today's episode of the Metrics It Measure Up Podcast. Today, I am joined by Josh Aharonoff, your CFO guy, and the Founder and CEO of both Mighty Digits and ModelWiz. Today, we'll be covering four main topics with Josh. First, the role of the Fractional CFO. Second, when to consider an internal VP or finance or CFO. Third, why Excel is still a CFO's best friend, or not. And fourth, building a LinkedIn following, the business case in the process. So with that, Josh, please take a moment to give a brief overview of your journey to becoming my guest here on the Metrics that Measure Up Podcast.

**Josh Aharonoff** (1:21)
Thanks, Ray. Well, I started my journey like most accountants at the big four accounting firms, thinking that that was the holy grail. And it took me a few years to realize that it wasn't really the best fit. And I really took that experience to think, hey, I may have chosen the wrong major. So I just started at that point after a few years to start my own company with two of my close friends and co-founders. And that was an amazing experience, and I loved it, but unfortunately, it didn't really love me back. So it was after that second failed experience that I decided to combine my passion for entrepreneurship with my background as a CPA. And that was when I got involved in consulting with startups.
And then about six years ago is when I started our accounting firm, Mighty Digits, where we work with fast growing companies and helping them through anything related to their finance and accounting function.

**Ray Rike** (2:12)
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**Josh Aharonoff** (3:04)
I did. I remember hearing whenever I admitted defeat with my first startup and I checked a few message boards. Someone said, the cycle is you admit defeat, you swear you'll never do it again, you go back to working for the man, you start the process then all over again. That's pretty much exactly what happened.

**Ray Rike** (3:22)
Hey, for some of us, it's a little bit like dating or marriage, but that's a different story and a different podcast. Okay, so let's talk about all the work that you've done with companies, both from a kind of outsourced accounting firm perspective and also from a fractional CFO perspective. When is the right time for an early stage company to consider going beyond their outsourced accounting partner and having a fractional CFO?

**Josh Aharonoff** (3:48)
So, generally when we're talking about tech companies and startups, that usually is around the Series A level. But I actually like to think of this in what I call four different stages of a finance and accounting function. And the first stage, when you're, let's say, five or below people in the company, I like to call staying compliant. And it's oftentimes just the founder who's doing their own books, and they then have a tax consultant who makes sure that they're filing all the necessary things each and every single year. That's just stage one, and that's again, less than five people. When you then get to stage two, it's generally between, let's say, five and let's call it 20 people. You have a basic bookkeeping and operations function. Maybe you hired a bookkeeper, and that person is really good at taking instructions and doing really basic things, but they can't really give you those strategic insights. So typically, once you migrate past stage two, and you're actually a developing function, that's when you either work with an accounting firm or you bring someone in in-house. And there are a lot of nuances on when you should go with one approach versus the other. The most important thing at this stage, though, is the fact that now you actually need strategic insights from your business. Things are going at a much quicker rate. You have a lot more capital. You have potentially investors, board of directors, people who need that information. So you need to tighten things up a lot more.