In this enlightening episode of the Inner Edison podcast, host Ed Parcaut sits down with Sarah Webb, a seasoned fractional CFO, to discuss the pivotal role of financial strategy in small business success. Ed and Sarah delve into the intricacies of managing unexpected financial obligations, emphasizing the importance of having the right team in place and the frameworks necessary to safeguard against internal fraud.

Sarah introduces the fraud triangle and explains how small businesses, due to fewer checks and balances, are more vulnerable to fraud. She underscores the necessity of checks and balances and segregation of duties in preventing significant financial fraud.

The discussion moves towards niche marketing, with Sarah highlighting her focus on private medical practices and law offices. The conversation covers common challenges these sectors face, including managing cash flow, credit terms, insurance company payments, and collection challenges. Sarah shares her insights on when a business should consider bringing in a CFO, particularly as it aims to scale from $5-7 million in revenue to greater heights.

Sarah’s experience with IRS-related issues, including audits and payroll tax challenges, offers valuable lessons on the importance of being forward-looking in financial planning. The episode also explores various strategies such as outsourcing services like front office and fractional CFO to address staffing and expertise gaps, and selecting the right legal entity structure tailored to future business goals.

Ed and Sarah further discuss the impact of unforeseen factors, such as interest rate changes and political influences on business planning, illustrated by the Covid pandemic and its associated government programs like PPP and employee retention credits.

The episode touches on the rising role of artificial intelligence (AI) in enhancing job roles, with potential to replace lower-end positions, allowing individuals to focus on higher-level tasks. Sarah and Ed emphasize the importance of adapting to technological advancements for better work efficiency.

Finally, the “no jerk policy” is highlighted, stressing the importance of respect and professionalism in business relationships. For listeners interested in learning more or contacting Sarah Webb, her company’s website, webbcfo.com, is provided as a valuable resource.

Join Ed and Sarah as they unpack essential financial strategies and offer practical advice to help small businesses navigate growth and overcome financial hurdles with confidence and professionalism.