283.The Fractional CFO Files: How CFOs get Sales, Ops & Products on the same page with Roger Castle
Episode Details
Transcript
Roger Castle is a fractional Finance Director and CFO with The CFO Centre. In this episode, Roger joins Hannah to unpack what it really takes to lead through change, from persuading a fast-growing team to accept its first-ever cost cuts, to helping SME owners turn vague ambitions into concrete, achievable growth plans. Roger shares the practical realities of working as a fractional CFO across multiple clients at once, and the mindset shift required to move from corporate scale to hands-on SME finance.
In this episode, they cover:
- Leading a workforce through its first-ever cost-cutting exercise
- Reading personality types to get sales, ops and product directors aligned around the numbers
- Turning short-term-focused CEOs into long-term planners
- Blending top-down market data with bottom-up revenue modelling
- Managing a management buyout alongside an incumbent FD
Speaker 0
Welcome to CFO four point o, the future of finance. The CFO role is changing rapidly, moving from cost controller to strategic visionary. And with every change comes opportunity. We are here to help you take advantage of this transition to win at work, drive your career forwards, and lead with confidence. Join Hannah Munro, managing director of ITAS, a financial transformation consultancy, as she interviews key experts to give you real world advice and guidance on how to transform your processes, people, and data. Welcome to CFO four point o, the future of finance. Speaker 1
Hello, everybody, and welcome to this episode of CFO four point o. As usual, I'm your host, Hannah Munro. And with me today is Roger Castle. So, Roger, great to have you on the show. Thank you for joining me. Speaker 2
Pleasure to be here. Speaker 1
So, obviously, you've been working with the the the CFO center, but just give us a little bit of a background. What does your CFO experience look like? Speaker 2
Yeah. So I did finance leadership roles for US tech companies, most notably, Yahoo for Northern Europe, at a time when Google was gaining traction, which was very interesting. A high growth company for ten years, and then suddenly the growth tailed off. So that was a a quite interesting scenario, implementing cost cut where cost cut had never been seen before. And then I, I did a finance leadership role for, Savvis, which was a Nasdaq quoted IT hosting company. And, we we grew those through introducing websites for the likes of EasyJet and ASOS. Very rapid growth grew that to a hundred and twenty million of turnover from thirty million in three years, which is amazing. But we were one of the few hosting companies in town. That was before public cloud, really before Amazon Web Services and Microsoft Azure really, really started moving in the market. We built that company and then sold it to an S and P five hundred company, CenturyLink, which was the US's third largest telco. And then I stayed on two or three years after the acquisition, integrated my role into the States, and then, took a took a package under a compromise agreement. I was fifty one and thinking, what do I do next? I've been commuting to town, commuting to Reading, working very long hours as you do in US corporates. And and I looked at the CFO Center, and, I thought that might be a good way forward for me to, still continue to work, but have more of a balance work life balance. So I've been working with the CFO Center now for for nine years, actually. Covered about ten or so clients, wide variety of different clients in in different markets. Anything from half a day a month right the way up to three days a week depending on what the client needs were. It it's been a lot of fun. And, you know, to some extent, I've been able to work or as much or as little in that period as I like, subject to a minimum of two or three days. And it's been a really great way to spend my fifties, I must say. Speaker 1
And you've got some really interesting experience. I'm actually gonna pick on that first one you told about, like, a Yahoo and going through that cost cutting piece with a with an SMT that almost had a completely different view and culture. That must have been a real challenge in terms of mindset as well as obviously going through the numbers. Speaker 2
Definitely. Yes. I think, I I was there in my kind of early forties. Most of the employees were in their early thirties. They'd known nothing but boom times the whole way through that growth journey. So trying to convey to them the challenge in the numbers, the need in certain areas to cut cost and implement, that was was very difficult. It was one that really required a lot of persuasion and collaboration and explanation of the numbers and the and the difficulty that we were in. Speaker 1
And and what like, if you think about what you're doing now, how does that that you know, what were some of the challenges that you had in terms of getting everybody on board, apart, you know, apart from, obviously do they do they understand the need for change, or was it that they can Speaker 2
have a new Speaker 1
point for doing what you do? Speaker 2
I think one of the skills of a CFO is being able to to relate to the management team. So, you know, to have worked alongside in my permanent role, to have worked alongside sales directors, IT directors, product directors, operations directors. I know intimately what their concerns and what their drivers are and how to appeal to them. And I'm a fairly diplomatic collaborative type of individual anyway. So, sitting people down, explaining them to the the facts of the numbers which are undisputable, and then working with them on a plan that will get us to to a position where those numbers are better. That's equally valid in a large US public company as it is in a small SME. Speaker 1
And what do you think the I not the secret, but what do you think the the key factors are in building those healthy relationships amongst the the SMT? How do you approach it? Speaker 2
I think it's it's being there. It's building those relationships. It's understanding the personality types. You know, often oftentimes, your sales director will be a fiery red type of personality, so you don't beat about the bush with your numbers. You get succinctly to the point and and take them with you. An operations director who's from a more technical background might be more patient, might require some more detail, might require work working through the numbers and and kind of more gradually accepting them. It's it's reading those personalities and and appealing to them in in the right way and make sure that the message that needs to be, implemented in terms of business decisions coming out of the numbers, make sure they fully understand that, fully understand the rationale for that, and that they have the mechanism to, convey that to their team so that their teams work alongside them to accept what needs to be done. Speaker 1
What's the most challenging scenario you've had in terms of either building relationships or managing those relationships within an SMT? Speaker 2
I've worked with some very aggressive, particularly in US businesses, some very aggressive CEOs from a sales background who, are very driven by the short term. So don't necessarily think what the business needs over three or five years are very preoccupied with the current quarter or the current year. So I think, trying to get that correct emphasis between the short term and the long term, developing a long term plan with the business, making sure that they understand that, making sure that they understand the direction that the management team want to go on, be that an exit or just a growth scenario for the business. I think getting the the the key players in the management team on one page on that and taking that forward and then setting targets within the individual teams that draw you towards those numbers is is absolutely key. Speaker 1
And that must be an incredibly challenging scenario to have your your CEO just want to focus short term. Talk us through how how you how you handle that. And have you got any tactics or tips for for others to be how to handle, I guess, somebody with a different perspective? Speaker 2
I think you can normally drag it out of people. Most, CEOs that I've worked alongside. In fact, in SMEs, I've never seen anything more than a one year budget. So, typically, where you've got, own owner owner direct owner CEOs, they will have a concept in their mind of where they want to take the business, but they won't have, ever evaluated that. They wouldn't have put that down in numbers or words. I think that whole process of taking somebody like me who's done that process a number of times, and can tease out of them what it is they want from the business in three or five years, developing a plan to grow revenues by product, by region, what whatever the dimension is within the business. If you can do that, they they they really value that that you can actually quantify that because that is then gives them the mechanism, a, to understand that what they want is achievable, and then, b, to communicate that to their teams to get their teams on-site towards delivery of those objectives. Speaker 1
And how do you approach, business planning, especially at that sort of that small to medium level coming from that big corporate? What things did you bring from the big corporate realm, and what what what are some of the changes you made to make it more palatable, I guess, or suitable for the SME environment? Speaker 2
Yeah. I think one of the key things is to put market concept around it. So what's the what's the size of the market that they're dealing with? So maybe looking at the trends of what they're selling by product or by geography at the moment, extrapolating that forward, understanding from the management team where that might differ from history because they've suddenly got a new customer in a certain area or or a certain market is closed down, and then relating that to the market in general, which, you know, you could do either these days. You could do that quite easily on AI. In fact, I've I've done this that this week for a client. Or there are published informations on the on the size of the market or, you know, we sit in a group of approximately four hundred CFOs in the UK. We're well networked, so you can normally find somebody, without breaching client confidentiality, you can normally find somebody who exists in your vertical where you can share typical gross margins, typical market size, typical growth rates, typical, expense rates as a proportion of revenue. So there's a lot of intelligence out there that you can use for for that type of thing. And I think CEOs and leadership teams really value that you, that you can put their business in the context of the market in general. Speaker 1
And how do you take because, obviously, there's a lot of, obviously, benchmarking side of things, but how do you take the actual SMT through that journey? Talk about, I guess, some of the challenges you you experience with that. How receptive are they to the journey that you're going on? Speaker 2
I find they're always very receptive to that. I I I find, a, it's a it's a good way for me to familiarize with the business because it gives you the whole business and, gives you a flavor for the numbers around the business immediately and gets you involved with the management team. So I think it's it's always really an easy sell, actually. It's something they want and something they value. They want that road map of where they're heading as a business. I think that's important for anyone. In terms of what you take from a big company to transfer into SMEs, it's, it's really just the the same methodology that you you always use. It might not be as complex. It might not have as much detail, but it's still the same things. You know, what are the key drivers of revenue? How do you trend those forward? How do they relate to the market size? What new markets might you go into? What expenses do you have today? How do those relate to the growth of revenue? How variable are they with the growth of revenue? Can you extract improved growth gross margin through through growing the company? And then what are the overheads, which ones are truly fixed, which ones will grow as you grow the business, and really developing a plan both from a revenue, a direct cost, and an overhead viewpoint for how you take the business forward. And, of course, I think one of the things that's much more important in an SME, which I didn't ever worry about because I work for, very large cash generative companies, was, how does that affect them from a cash flow viewpoint. So sometimes, the growth plan that you and the management team want to come up with isn't possible because of constraints of cash flow. So in that instance, maybe you pair back on the plan or maybe you look at other sources of funding, be that bank lending, be that injections of capital from outside, be that outsourcing certain services to to reduce the cash burn on on the cost base. A number of levers you can pull. But, certainly, I think, working in the SME environment, I've I I would say that I'm much more rounded as a CFO than I was ten years ago because I've learned lots of, concerns that don't don't worry you in big companies or are taken care of by the central treasury function or the central tax function. It's been a good learning exercise. And there's always colleagues you can reach out to for advice and materials that you can draw upon, to to get that information. So it's never it it's never been truly scary because there's never been a question that you you haven't been able to answer through being resourceful. Speaker 1
What are you on sort of top down budgeting and planning first bottom up? How like, what's your do you do you do a mix? What's your view? Speaker 2
I think it's good to look at it from both angles. So I I think from a top down viewpoint, as I say, look at trends, look at market forces, and then and then also build it from the bottom up. So get a certain amount of detail around revenues and margins by product type and by geography, and then see how the two correspond. So you might you might find that, in, say, a food vertical, the growth hasn't been great within the company that you're working for. But in looking at intelligence in the marketplace, you might find that that there's a massive, massive sector in food for for the product that you're selling. And, actually, you should do much better. And then maybe the action for the business is to redeploy more salespeople into that area to spend more marketing. Maybe the product set's not quite right for the market, and that needs developing through investment. There there's a there's a number of channels that you can go through to to affect that. Speaker 1
You mentioned, obviously, the, you know, working with owners and helping them figure out where they wanna go. How do you approach that if they if they've not really got that that horizon past that one year point? You know, once yeah. What what are some things you think about? Speaker 2
Putting ideas into their head. So look looking at the numbers, doing that sort of polite, constructive challenge, you know, you've you've you've been growing at twenty percent for three years. You haven't even got a sales function. Why don't we say it's gonna be twenty percent plus some because you need to develop a sales and marketing function? And then, you know, you you might help them to to employ that type of expertise. You might get that type of expertise also on a fractional basis through some of our sister companies. I've certainly done that on a on a few occasions. And then, you know, you can you can persuade the leadership team that, actually, the growth is there and provide the mechanisms to to unlock it. And if you're able to do that, they're incredibly grateful to to you for that contribution. And that that's very satisfying on a on a personal level. Speaker 1
So let's just talk about the scale piece. Right? Because you've obviously worked in some very fast growing businesses and and and done some you know, dealt with some real scale of of business. Tell us a bit about, I guess, how you think about that shift from getting bogged down in the day to day and and surviving versus the the the growing and having that continuous ongoing growth. Speaker 2
Yeah. I I think in in probably, I don't know, around half of the cases where where we're bought in, the client's probably got some issue in the first place. You know? It might be cash flow. Oftentimes, it's cash flow. It might be lack of revenue growth. It might be too high a cost base. But, normally, the the the problem that the, you know, the the the problem that causes the difficulty in the numbers is is, you know, an underlying cause like that. So, I think, you know, understanding that and understanding what the mechanism to solve it is is is probably the the way forward. Speaker 1
And what's been your most challenging business to scale? Speaker 2
I think, the I've I've certainly worked with companies that are selling services. So in in a in the current market, which is not particularly buoyant, if you're if you're trying to sell discretionary services like, travel, like training, then though those are troublesome at the moment because, you know, as a CFO, you know, the first thing you do when the when the numbers are tough and you're not achieving the numbers is you you cancel hiring. You know, you don't replace staff. You you you, control travel. You get people to do, you know, Teams calls rather than go to meetings. You you you canceled training that's that's nondiscretionary. So I think those types of businesses are difficult because the market can be against you. Speaker 1
What's the bit you've enjoyed most, I guess, about the shift from big corporate to fractional? What what was the bit that Speaker 2
I think it's Yeah. Yeah. I think the psychology is very different because in big corporates, you've got management teams who oftentimes aren't owner of that business and then shareholders who are obviously owners of that business but are very remote, and and you don't meet them. Whereas in the SME environment, you're you're generally sat down with the owner. Might be might be a couple of owners. There might be some shareholding amongst the staff. But, generally, the people that own the business are in the room. They they've probably created that business, or their successors are people that created that business. And so they care really passionately about it. It's probably the only place they've ever worked. And it you know, it's very much their baby, and they care passionately about it and its growth. And I think also the other good point about it is you don't get the political frustration you get in large organizations. You know, I used to work in, as I said, in large US organizations, and you go from one one year, you'd be reporting to the European CEO, the next year, you'd be reporting to the US CFO, and you'd be stuck in a matrix organization where it was very difficult to get things done. You know, you you would probably have large deals that were particularly aggressive in the marketplace. You'd have probably have to go to the US for approval. That would probably be on a call about nine o'clock at night because they were on the West Coast of the States, which wasn't good for for family life. But, yeah, I think the satisfaction is you're talking directly to the owners. They care passionately about the business, and the solutions are there probably in one room amongst twenty or thirty people, and it's really easy to get things changed and done for the better. And oftentimes, that wasn't the case when I worked in large corporates. Speaker 1
And what are the what's the flip side of that? What's the downside to to that working with owners and in the smaller aspect outside of Speaker 2
Yeah. So in my last role, I had fifty odd people in the team, so I didn't do much creation myself. A lot of my job was go to meetings, review other people's output, request for it to be changed, review it again. In some of these companies, you if they're bigger, you might have a small finance team. By definition, you're unlikely to have a a CFO. You might have a financial controller or more typically a finance manager. So you're you're much more hands on. So there's not a team to delegate to. So I must admit, I had to go back and backtrack a lot of Excel skills around things like pivot tables to analyze data where I would have just delegated that to somebody within the team. But, actually, that was really interesting, and, you know, I learned it all on YouTube videos and and things like that. So, yeah, it it's fine. But, yeah, you you have to accept that you don't have the team and the resource necessarily. Speaker 1
Yeah. Just a a different a different way of of operating more hands on. Speaker 2
Yeah. Yeah. Definitely. And you're you're also you're not there the whole time as well. So you might be there you you know, a lot of my clients I go to once a month. So it's how do you how do you keep some kind of momentum when when you're not there? Will they forget about what you've talked about in terms of targets and so on when you've gone? Is there a way you can kinda keep involved through reviewing weekly dashboard reports or, you know, having access to their system so that you can kinda remind them have a look at how were the sales figures last week? Are they good? Was was one particular location better than it has been? Why was that? Was there some change that we could capitalize on? Those sorts of things. So I think, I'm always in touch with clients on email, so I'm always reading my email wherever I am. Even even if I'm traveling, I'm reading my emails multiple times a day. So they can always get me, and I'll I'll do a call when I'm traveling if necessary. I don't mind that. So it's it's just making sure that, you know, we say you're you're their part time finance director or CFO all of the time, which which is true. You, you know, you need to be available to be called and to look at information and to try and, keep in contact with that client. If you see something interesting from a colleague that's relevant to their market or if you read something in the press or online that could be interesting to them, just shoot that to them and say, what do you think about this? Could this help? And I think, again, they they really appreciate that. Speaker 1
And, you know, you've been through a lot of different environments. And one of the things we we had a quick chat about prior to the podcast was you mentioned management buyouts. Speaker 2
Yes. So tell Speaker 1
us a little bit about, I guess, the experience you've had with that. And was that at an SME level, or was it a larger Speaker 2
It was with a a local health care company, who was servicing, the NHS with with outsource services and had grown quite nicely, wanted to get to the next state. They they actually had a a founder who wanted to exit the business at that point, and they wanted to raise additional capital to be able to grow the business quicker. So we actually did a management buyout in conjunction with the the they had an incumbent FD who, who didn't have that skill set. So that FD concentrated on delivering the numbers and the day to day, and then I kind of overlaid that person and and, worked with the management team to formulate a a long term business plan, with, you know, balance sheet and cash flow projections, explain that to potential investors. We then found a potential VC investor who who decided to buy the company. And then he's kinda liaising with the banks around the lending that goes with with an MBO, explaining the situation to staff, and and taking it from there. That was around a probably a two year project, probably a day to two days a week, something like that. But, again, very, very enjoyable. Speaker 1
And how was it working alongside another sort of finance leader? How did you find that part of the process? Speaker 2
Absolutely fine. You know, you you just have to be clear about who does what. So as I said, that person did did the day to day running of the of the finance function, the management accounts, and so on, and I concentrated on the business planning on the forward projections and the presentation of that to potential investors. So no no conflict at all, really. In fact, you know, I I think there is a there is a position for us to work alongside incumbent FDs and CFOs, for sure, because there were always times, you know, when I was permanent, there were always times when you were doing an acquisition, launching a new product, you know, changing your market, divesting of the company. You know, there were always projects where you were terribly stretched and and might not not necessarily have done them as well as you could have done, or you didn't have the expertise yourself where you might want to reach out to somebody that's got that particular expertise or provides that additional bandwidth on a on a fractional basis. Speaker 1
Yeah. Because I can imagine there's quite a few opportunities actually to have that extra pair of, you know, pair of hand. It it must work quite well because, you know, I think everyone wishes they've got two of them two of themselves. Speaker 2
Yeah. Yeah. I it wasn't something that was available when when I was doing it. Certainly, at at certain times, you know, the hours were were long and, you know, this you you you kind of worked your way through it, muddled your way through it, but you could do with either the extra bandwidth or the extra expertise for the for the project at hand. Speaker 1
And we've talked a bit about, obviously, you know, one of the great things about working with businesses is working with owners who are genuinely passionate about what they do and how they do it. Sure. How do you how do you find the balance yourself within, you know, managing all of these? Because, obviously, you work with multiple multiple sites. How how do you find the balance between being there and, you know, supporting that individual, but also being able to split yourself across different businesses? Speaker 2
Yeah. I mean, I won't if I'm working with a clients work in all different ways. You know? I've got some clients that like you for a dedicated day once a month and don't really want to see you in between. I've got other clients that just take your time, you know, an hour or two at a time. I record it in the back of my book, and I bill them for that time at the end of the month. It it's kind of I think you have to be prepared to work in the style that the client wants. And that depends on the size of the business. You know, if it's a small business, they don't necessarily have the time to spend a full day with a CFO. They've they've got a business to run, you know, so it's really horses for courses. Yeah. I, you know, I work in all sorts of different styles. But generally speaking, because you've got, you know if you're, say, working three or four days, you've got gaps between those meetings, so you've got time to go back and look at the last set of notes and files and and work out where you were last time. You know, the worst thing is to turn up at a client being unprepared and not remembering the characters or the situation you were last dealing with. So I always spend a bit of time researching where I was, preparing an agenda for the day ahead so that, you know, it's an expensive day rate, so you want to be fully productive from moment one that that that you get there. And then, you know, there's time afterwards to make notes, make follow ups, and so on. So there's always a bit you know, for a day's work, there's always a bit of prep and a bit of follow-up. So, yeah, you you you just have to be flexible, but I don't think it's it's interesting. I think any any of those businesses in their own right, at this stage, I probably wouldn't want to be there full time, and they don't need it anyway. I think that variety across different clients and taking learnings from one transferring to another, you know, the longer you do it, the more you've been through situations. So you can take experience of what you've done either in your full time professional life or with other fractional clients and tailor that information to the client at hand. So the more you do it, the more you become productive because you have materials already prepared. Speaker 1
I guess you're getting, like, the experience of working at ten different businesses, all all in parallel at the same time. Speaker 2
That's right. You know, and some of them, like, I worked with a PPE business, before the pandemic, I didn't know what I had to have PPE explained to me from moment one. I worked with a rheology business, which which is to do with the science of the flow of fluids. So they'll do things like, they will do an experiment for Danone to verify that oat milk frosts as well as cow's milk for baristas, that type of thing. So, again, rheology is a word I wasn't aware of that I learned, and I've learned in that business. But I think, you know, the finance process, and and the CFO process in particular where you're working with the management team trying to influence a business towards better, it's very much a generic skill set across all businesses. It helps if you've got the context of the industry, so, you know, you could you you can really work to to to put it in context for the for the client. Speaker 1
All through this podcast, like, we've talked a lot about guest planning, you know, and helping owners understand sort of the direction where they wanna go. So if, you know, for the for those listening to this podcast, so other CFOs, etcetera, what were your top tips for going through an effective budgeting and planning process? Speaker 2
I think you have to involve all members of the management team. You you have to understand what the owners really want from the business. Do they want a five year exit at ten million pounds, or what what what is it they really want? And then how can you achieve that as a team, which means, obviously, involving the sales director, involving the operations director from a what's practical from a growth viewpoint even if we can deliver it from a sales perspective and what will that cost. Maybe we need some new products in the set. There might be a product director that needs to go and buy or build those products. Understanding where where the owners of the business and the management team, if they're part of the owners of the business, which they are in MBOs, where do they want to take that business? What does that mean in detail? How does that translate at a departmental level such that you can define their objectives at a departmental level that sit alongside what you want to achieve for the business that quarter, that financial year, and that as as part of the journey towards the the three or five year number. What things can you look at today? If that's sales leads or marketing leads, what things can you monitor today that will give you and the management team assurance that you're gonna meet the targets of the business in in the long term? Speaker 1
Brilliant. Well, I wanna say thank you so much, Roger. It's been an absolute pleasure just talking through Speaker 2
Likewise. Speaker 1
The differences in in that shift, and thank you for sharing your experiences. And to all of our listeners, if you've enjoyed this podcast, of course, please do leave us a review, share us on your favorite platform. And if you've got any questions or feedback for me, I'd love to hear it. Message me on LinkedIn. So a massive thank you, Roger, for joining me on the show. Speaker 2
My pleasure. Good talking with you, Hannah. Speaker 1
And, we'll see you next time on the CFO four point two podcast. Speaker 2
Bye bye. Speaker 1
One of the hardest things, I think, is actually putting into words what it means to work with myself and the team here at itas. Because not only are we a financial transformation consultancy, but we do it using Sage technology. So rather than me tell you how awesome we are, let me introduce one of our customers. Speaker 3
Working with Itas has dramatically made our lives simpler, because there's just such a knowledgeable team there to help us. Before we felt the consultants we were working with at another company, it was always a challenge to get information out of them, for them to understand the problem, and it just didn't feel like they're on our team. Working with iTAS, it's almost we just feel like you are all employed with us to, you know, work with us to do it. It's an absolutely fantastic relationship, and it's just made it such a smoother process and an absolute fun process working in Sage Intact and coming on our course. I look forward to it now. 
