Here’s a tough question I had to ask myself:
What if the biggest bottleneck in my firm… was me?
In this episode of The Secrets Behind Success Podcast, James Donovan and I dive into the shift that changed everything for me – moving from technician to CEO, and what that actually looks like when you’re in the weeds of client work, hiring, and growth.
Table of Contents
Podcast Notes
In this episode we talk about:
- Why “hiring before you’re ready” can be the smartest move you make
- The moment I realized I had to fire myself from parts of the business
- How to remove emotion from tough financial decisions
- What most CFOs miss when trying to scale with clarity and control
If you’re building something bigger than yourself – not just a high-paying job – this episode will hit home.
Video
Watch the podcast below or you can watch it on YouTube by clicking here.
You can also listen to it on Apple Podcast or Spotify.
Full Transcript
James Donovan: Today I am joined by Tom Dillon from Frak Finance based in Chicago. Tom, I know we were going back and forth a little bit here before the recording. I’m super excited to dive into your story, hear a little more about you, and for the listeners to learn about you as well. So welcome to the show.
Tom Dillon: Thank you. Thank you for having me. It’s a pleasure to be here.
James Donovan: Awesome. I want to start off real quick because your background, it’s showing a picture, what looks like a golf course. You have a flag from one of the pins. I would love to hear a little bit about that golf course. There must be some significant meaning if that’s hanging up in your office.
Tom Dillon: Yeah, so I couldn’t. Normally I blur that out. I couldn’t get the thing to upload on Zoom, but yeah, that’s Arcadia Bluffs. It’s where I got my first hole in one.
James Donovan: Okay.
Tom Dillon: It’s a top public course up in Michigan, right on the bluffs of Lake Michigan. It’s a beautiful course. I would highly recommend it if you can get out there to play that one, for sure.
James Donovan: Well, congratulations on the hole-in-one. And you mentioned that was where you got your first one. So how many holes-in-one do you have?
Tom Dillon: That’s just the first. I’m hopeful.
James Donovan: That’s awesome. Well, hey, hole-in-one, that’s… I’m not a great golfer by any stretch, but every time you get up to the par three, it’s like, is today the day? Is it going to happen? So it’s cool that that happened.
Tom Dillon: Isn’t that the best feeling? Especially heading to the Masters with everything kicking off today.
James Donovan: I…
Tom Dillon: You just get that good feeling, that first birdie of the season. Yeah, it’s coming. So I’m super excited to kick off the season, that’s for sure.
James Donovan: That’s so good. So, Tom, tell me a little bit about how you got into becoming a fractional CFO. Is this something that you knew growing up? You’re like, I cannot wait to be older and get into accounting and work with numbers. Or how did you get to where you are now?
Tom Dillon: You know, that is a great question because no one just starts out as a fractional CFO. It’s a leadership position that everyone has to build toward. So everyone has a story, and I guess here’s mine. The original origin story of how I got into numbers was I had tripped and fallen into success with selling Cutco cutlery and made a bunch of money as an 18-year-old. I talked to my dad about what I should do with it, and he said, maybe I’ll try to get you a meeting with my wealth manager, and he’ll sit down with you. So I sat down with a guy named Chris Crawley who was at Citibank at the time, and he taught me the Rule of 72, which is if you divide the interest rate into 72, it tells you how long it’ll take for your money to double. Immediately, I was hooked. I knew I wasn’t going to go into any other profession but finance. So that’s what I did. I signed up for a finance degree. After school, I worked at William Blair, which is an investment banking firm here in Chicago. From there, I quickly realized that there was this entrepreneurial bug that wasn’t going to go away. It’s a sickness in all of us. I had to do something about it. Being in finance, you’re trained to be risk-averse, so I wanted to de-risk this crazy jump out of the plane. Before doing that, I wanted to make sure I had some experience in what I called ops chops. At the investment banking firm, you’re sitting in the ivory tower pontificating on people’s business decisions, but you’re not really making any of your own. I wasn’t hiring, firing, or managing people. So I knew I needed that experience if I wanted to be successful. I had this big idea of wanting to change the world. Before doing that, I worked at a private equity-backed company as their CFO and then was promoted to CEO. Ran that for a bit and then went back to school to start putting this idea through the ringer. At the end of it, the night of graduation, I raised money for this blended idea. It was a tech company that was going to disrupt the market for ordering and payment in hospitality. This was pre-COVID, and we had a QR code-based ordering and payment system. We had a successful pilot, and we were launching to the public the week COVID hit. We had a native app in both operating languages, which, looking back, was a huge execution error. We ultimately realized this wasn’t going to be sustainable. So I fired myself financially, not operationally, to keep the team together and keep operating, which I’m sure many entrepreneurs have done, digging into credit cards just to make payroll. In those moments, I realized, man, I have to pay the bills. How are we going to do this? So I went back to my roots and started moonlighting as a fractional CFO. Eleven years ago, that’s when that started. At the point where you come to the realization that you’re going to have to swallow this painful, disgusting-tasting pill of failure was the real entrance and commitment into the fractional CFO space. It was born out of necessity and then turned into a real passion and love of mine.
James Donovan: That’s so good. I mean, failure only happens when you quit, though. And it doesn’t sound like you’ve quit. It sounds like you’ve just kept going and you’ve adapted and found a way to make it work. So I wouldn’t chalk this up as failure at all. Or maybe I’m missing something, but it seems like things are moving, things are in a good spot.
Tom Dillon: Things are great.
James Donovan: Yeah. That’s awesome.
Tom Dillon: I appreciate that. Yeah. I think it’s only a failure if you don’t learn from it.
James Donovan: Yep.
Tom Dillon: Raising capital and being a fiduciary, having that fiduciary duty to your shareholders, is tough. When you’re a steward of people’s capital, it’s a very tough position to be in. It sucks when things aren’t going your way, but it’s the reality most entrepreneurs who raise venture capital face.
James Donovan: Yeah. What do you find is one of the biggest challenges that you’re facing in this season right now or something maybe in the last year that you faced and overcame where you can look back and be like, wow, that was really hard, and I’m so happy I pushed through?
Tom Dillon: I would say it’s the J-curving of the business model. Hiring ahead of growth is one of the most challenging things to do in business. Before, we didn’t face this problem. I’m so happy to be here and love everything you do for this community, James. Part of that is the transition from being a one-man band and being at capacity, where cash flow is good, to then having that conversation with your wife, realizing I don’t have a transferable asset, I’m going to get burnt out, I need to build a team. Honey, we’re going to be cutting our margins in half. If your significant other doesn’t know what margins are, they’re going to quickly realize it means you’re going to have half the cash flow. That’s ultimately what we did here in the past six months, well, seven months. We’re going to continue doing it for the next five months, which is J-curving the business model, hiring ahead of growth, and continuing to build out our pool of talent, our bench, where we are looking to bring other fractionals onto our team and develop them as well.
James Donovan: Yeah. One of the intensives I was at a couple of months ago, one of the speakers there, a really successful marketing company owner who’s been doing it for 10 or 15 years, spoke about hiring ahead of growth. The point he made that really stuck with me, and it’s interesting you’re bringing this up, is that you’re always either overstaffed or understaffed. So you might as well be overstaffed because if you’re in that sweet spot, it doesn’t really exist, it means you’re not growing. If you’re understaffed, you’re putting too much strain on your team and resources. It was a hard reality for me to accept hearing that from someone significantly more successful. But that is the reality. I look back at our team at times, and I’m like, yeah, I know we’ve been understaffed, and it’s tough. It kind of makes everyone in a more panicked state all the time because you feel like you’re chasing your tail. But on the other end of the spectrum, it’s hard as the owner to be like, let’s carry more payroll than we technically need right now, all the time. So how are you handling that mentally, knowing the bills are just going to be more expensive on payroll, and we technically don’t need this person right now?
Tom Dillon: I have an abundance mindset, not a scarcity mindset. For me, it’s keeping the positivity, knowing that there are a lot of opportunities out there. As you know, the success and failure rates of many entrepreneurs mean people need help. For us, it’s the same thing we do with our clients, which is seeing those micro-traction metrics of success. It’s those little wins that build upon each other that encourage us to keep going, that we’re heading in the right direction. But it’s about having a roadmap and building a roadmap to do that. So we’re always thinking about what goals you want to achieve. Are you looking to sell your company? Are you looking to double the size of your team? That is the point of critical mass where you really start to cover overhead, and you’re earning the cash flow as a business owner that you want in distributions. Then reverse-engineer that. How do we get there, where are the KPIs, what’s our marketing funnel, and our conversion rate in sales? Really focusing on those KPIs and making sure we’re headed in the right direction or making tweaks to ensure we’re moving and pulling the levers the right way.
James Donovan: I love what you mentioned about the abundance mindset because that is so true. A mentor of mine in the past used an analogy that was kind of burned into my brain about the hand. When it’s closed, you can’t grab anything more, but when you open it up, it sounds so obvious, but really opening up your hand for that abundance means more can come in, and there’s more available instead of holding onto every last dollar. So yeah, I really love that you’re looking at it that way. The other thing I’ll add here is I don’t know where my business would be if I didn’t choose to start working with accountants and fractional CFOs. I feel blessed more than other marketing companies or other business owners I speak to. I get to talk to fractional CFOs and accountants, people who are so smart with money and strategic thinking all the time, to get that insight into the business that I think a lot of people don’t have access to without hiring a fractional CFO. That’s been a massive step for me and our business’s growth. What are some of the things you notice when you jump into new clients where they have that penny-dropping moment or their brain just breaks when you give them some information that might seem so basic to you?
Tom Dillon: A 13-week cash flow is a big one. Giving visibility to a business owner to feel comfortable that money’s going out, but it’s coming back in, and having predictability around that, there’s no better peace of mind and clarity. It’s very scary to make decisions about your personal cash in a void. That, I think, is the number one aspect where it’s not just a light that goes on, it’s more that now I can see. I can actually look and see where we’re going and not be in the dark. Those moments of realizing I’m not in a siloed echo chamber of decision-making, that I have a strategic partner who’s the financial adult in the room who I can bounce anything off of and get strategic insights like, yeah, we’ve been here before, we understand this, here’s a playbook on what’s been successful in the past, are super helpful. The same thing with you, when you talk to people in our community, James, you’re like, yep, we’ve been down this path, I know it works, let’s ride. I think it’s very similar there. A lot of times when you ask about how you know if things are going in the right direction, for me personally, we focus a lot on our depth and experience, and we really lean into that in a heavy way where we can’t service clients the right way without that experience. So continuing to grow our bench and experience with new team members is really how we continue to grow. Having that abundance mindset, hiring ahead of growth, allows us to do just that. For the clients, it’s the same thing. It’s bringing that extra level of experience that they otherwise would not have had on their team. Those moments are wonderful when they feel like they’re making the right decisions and have someone in the room checking to ensure that financially this is the best and sound decision.
James Donovan: That’s… one of the biggest things I’ve noticed with your industry and the clients we work with, the conversations we’ve had with other guests… You guys do such a good job of removing the emotion from decision-making. Then it just makes it so clear: this is what the data tells us to do. There’s no emotion behind it. Emotional decisions generally don’t lead to good outcomes for the most part, especially in business. You guys do such an amazing job of saying, here’s the math, here’s the numbers, this is telling us what we should do. But not every business owner knows how to look at the numbers that way. So it’s pretty cool.
Tom Dillon: We’re not completely callous. We do have emotions, but it’s a very good point. Removing them takes a lot of effort. I think you have your physical health and your financial health. If you talk with a lot of doctors, they’re trained to remove emotion from decisions when giving bad news or putting a path in place to rectify issues and problems someone has from a health perspective. I think it’s the same thing that’s somehow ingrained in us along the way, and you do become a little callous, but the emotions are still there. You just learn to move past them quicker.
James Donovan: That’s cool. Is your team all in-house, or do you have some remote workers as well? What’s the structure of your team like?
Tom Dillon: Yeah, so we’re mostly remote. We have three people here in Chicago, which is incredible. We’re bringing on a new CFO this week, which is, you know, just wonderful. The best feeling, helping the clients, growing the team—those are the most wonderful feelings you can have as an entrepreneur. We really have three core services. If you’re buying a business, growing a business, or selling a business, we look at the entire life cycle of an SMB owner. From that perspective, our team is a little diverse. We have bookkeeping, forensic accountants doing quality of earnings, and then our fractional CFOs looking at growth and M&A from a sell-side perspective if companies are looking to sell their company. So our team’s a little diverse; it’s not just fractionals.
James Donovan: Yeah, that’s cool. What’s been your success recipe when it comes to hiring talent, or where do you source talent? Do you have any insight you’re able to share there? Because I know a lot of other firms out there are also growing and hiring, and finding good talent is tough. What’s been working well for you?
Tom Dillon: We look for people who have been battle-tested, in a sense, who have worked with companies that may have been distressed or in hyper-growth mode, where cash has been a huge focus, and they’ve managed that cash appropriately for capital allocation and resource allocation, with a proven track record there. Talking about it and recruiting in that way has led to an extremely strong team because if they understand that you get it, and they’ve done it before, they want to work with a team that’s equally strong and will help add perspective. If there’s an issue, maybe someone hasn’t done an M&A deal before, but they have a client who wants to grow through acquisition for inorganic growth, we can tap someone else. That’s where you recruit the talent you want by offering more resources to people who are already high-caliber.
James Donovan: That’s cool. What’s your firm doing to get new clients interested in working with you or to get on the radar of potential new clients? How do you guys market?
Tom Dillon: Yeah, that’s a great question. Just two years ago, we really branded ourselves, and it was just me as a one-man band. Now we’re shifting our entire mindset to growing as a team and focusing on leads, our marketing funnel, and the sales conversion funnel. I’m thrilled to have found you, James, because we’re in the process of going through that as a firm, figuring out how we can improve in this aspect. Originally, it was just, hey, I’m at capacity, I get clients, now we’re here making great cash flow, and you don’t really have a concern because a lot of those easy wins are from referrals and a handful of networking events. But then it goes beyond that. Once you have a team, you have to start feeding the machine consistently. We’re in the process of learning a lot of that and trying to expand and learn. I was listening to all these incredible guests you’ve had the past two days, and it’s super impressive, all the talent out there, and all the people assisting and helping this community of fractionals and accountants from that exact angle. For us, what’s been working is trying to be an authority, getting on podcasts, speaking engagements, and putting yourself out there. I think the only way to do that, if you’re starting out and looking to transition to becoming a fractional CFO or an independent accountant and hang your own shingle, is in the early days, maybe go work for another firm, learn best practices, get some clients, get some experience, get battle-tested. Once you’re stepping out and hanging your own shingle and worrying about that business development aspect, that’s where you really lean into those experiences. A terrible word, but case studies—when you’re speaking and able to pull from those experiences, whether on a podcast, webinar, or getting on stage at a conference and being a value-add speaker to the audience, that’s where you draw from. In terms of cadence, how do you get there and become an authority? If you feel like you have imposter syndrome, you’re not alone. Everyone who started had that. You have to break through it by getting experience. One of the best ways is to just start doing. Now you can draw from those experiences and be the authority, saying, wait a minute, I remember when we did this for a client, and that was super successful, maybe this could help other people.
James Donovan: Tom, is getting on podcasts and getting on stage something that comes naturally to you, or did you have to develop and level up into this version of who you are right now?
Tom Dillon: I grew up with three brothers, so four boys in the family. We were a pretty rambunctious group of boys. So I think there was some level of competitiveness that’s constantly driving me and pushing me into probably the uncomfortable. I was the third in my family, so with two older brothers, you’re always trying to keep up, probably always uncomfortable, pushing yourself and trying to compete. Innately, there’s something inside that’s driving. But from the perspective of, do I love public speaking? No, I don’t think everyone loves public speaking. Have I gotten to the point where the nervousness goes away? Yeah, but that’s all through preparation and reps. When I was thinking of coming on here last night, driving home from Milwaukee after a networking event, I was thinking of some amazing people I met there, and I was also thinking about what I was going to say. There was a little nervousness that pops in. You know, James has had these amazing guests; how am I going to add value to his community and audience? I don’t think that ever goes away. It’s with preparation and reps that you move past it and learn to kind of love it. Do I like it now? Yes, absolutely. I enjoy it because I find that it’s helpful and gives you a clear picture of what you’re trying to convey to your audience. There’s still a ton of work to do. I was listening to one of your guests, Ken, and I thought he was just such an incredible speaker.
James Donovan: Yeah, he’s good. Very well-spoken.
Tom Dillon: That’s motivating. It’s like, okay, let’s get polished. I was telling my wife, man, one guest was incredible, super well-spoken. There were tons of them, but he was one of the more recent ones that came to mind. So, you know, I know that was a long-winded answer to your question.
James Donovan: No, it’s great.
Tom Dillon: That’s greatly helpful to those who are a little more nervous, who don’t want to put themselves out there.
James Donovan: You’re extremely well-spoken. That’s why I had to ask, because it seems like it comes so naturally. I was wondering if this has always been like, hey, I can just jump in front of the camera and speak, or if you’ve morphed into that version. That’s a great answer. I was the best man at a friend’s wedding two summers ago, and I was so nervous to speak and give a presentation. My friend told me, and the way he presented it erased so much of the nerves, and I’m going to try to carry it into any talk. It’s not about you. People aren’t looking for you to fail. They want to hear what you have to say, and you can leave a lasting impact. So it’s that mindset shift of what can I give to the audience instead of, where are they looking at me, what if I trip on a word? It’s not about you as the speaker; it’s about who you’re delivering the message to. That’s helped a lot, and you’ve provided a ton of value and awesome insight. So thank you so much for that. My last question for you, because I know we’re running probably a little over time. I hope you’re good for another minute or two.
Tom Dillon: Yes, I’ll be a couple of minutes late to this call. Not a problem.
James Donovan: Okay, so last question, real quick. What advice would you give to any other entrepreneur out there listening?
Tom Dillon: Failure is a good thing. The most monumental change in my perspective as an entrepreneur was failure. Failing. I failed. Okay, that was horrible. It feels terrible. That’s it. I can keep going and keep moving forward. Yes, you can. So just fail quickly, move past it, and keep going. Just keep going.
James Donovan: I love it. That’s so valuable.
Tom Dillon: So powerful.
James Donovan: Tom, thank you so much for coming on, for hanging around a little bit late. This was an amazing conversation. Where can people get in touch with you if they want to continue this conversation with you?
Tom Dillon: FrakFinance.com, that’s F-R-A-K Finance.com, or [email protected], and then you can follow me on LinkedIn at TomDillonCFA.
James Donovan: We’ll put all those links in the show notes so people can get in touch. Again, Tom, really appreciate you coming on. Thank you so much.
Tom Dillon: Thank you for having me and thanks for everything you do for this community.