Using a Fractional CFO to help grow net worth

John Harcar (00:01.323)
All right, hey guys, welcome back to the show. I’m your host, John Harcar, and we’re here today with Mehak Begemann. Hope I said that right. And we’re gonna talk about using fractional CFOs and helping them increase your net worth. Remember guys, at Investor Fuel, we help real estate investors, service providers, really all real estate entrepreneurs, two to five X their business. And by giving the proper tools and resources to help grow the business they wanna grow, they’re able to live the life that they’ve always dreamed of. I’m Mahak, welcome to our show.

Mehak Begemann, CPA (00:31.116)
Hey, thanks for having me and I’m so excited to be here and talk to you about how as a fractional CFO, the seat that I sit in helps investors like the ones you serve can actually grow profitable businesses.

John Harcar (00:45.803)
And everybody loves a profitable business. And I’m super excited to talk about it because the more I can keep and the more it grows is better. before we get into all that, tell us a little bit about yourself, right? Your background, how you got into real estate or fractional CFO and what got you here.

Mehak Begemann, CPA (01:01.454)
Yeah. Yeah. So I was working at KBMG, one of the big four accounting firms at that time and was starting, I was a new mom several years ago and just like the rest of us, came across Biver Pockets and had this small old dream of like financial independence, know, quitting the W-2 and so on and so forth. Well, while I was transitioning out of my corporate job, I started to work with

real estate investors, they were doing about a million to 10 million in revenue from a fractional safehold perspective. And as I was learning to navigate, the language of accounting and real estate because I was doing my own investing as well, I started to see a change. I started to see value add that I had not seen in my corporate job. And so it seems minuscule, but we all want to do work that’s fulfilling and meaningful. And in working with small business owners,

John Harcar (01:43.167)
Okay.

Mehak Begemann, CPA (01:57.035)
I could actually make a change. I could actually impact some of the decision making simply by taking the financial reporting they already had or improving the reporting and simplifying that to plan and let’s just say, this is where you’re at. This is where you’re going. Where are you going? Maybe that’s a better question to ask each investor because we have different goals. And then creating a roadmap of you’re here, you want to be here. Let’s set a timeline. Let’s set some action steps. What do you need to do?

John Harcar (02:12.908)
you

Great.

Mehak Begemann, CPA (02:25.358)
today to get to this target that you’re setting, right? So that’s how I transitioned into the fractional CFO space and have been there for the last five or six years, actively working with about 10 businesses at a time in the fractional CFO capacity. I would say a key win for me would have been, would be still a current client. We’ve grown from 7 million to 11 million in revenue and top line, we’ll grow in the bottom line. So it has been a very, very meaningful client for myself.

John Harcar (02:40.362)
Okay.

John Harcar (02:48.918)
Whoo!

Mehak Begemann, CPA (02:55.246)
and actually just met with them today and setting the quarterly targets for Q2 this year. Right? So that’s how I transitioned out. also were a full service accounting firm, so we’re doing tax strategy and planning as well. But I wanted to highlight really how you as a business can utilize this fractional CFO model to increase your profitability. Maybe you’re not a place where you can hire a full-time CFO because of the price tag of that role and putting that person into your business full-time.

John Harcar (02:59.935)
Nice.

Mehak Begemann, CPA (03:24.312)
but you can still tap into what you need from a financial reporting and directional perspective, even being a smaller business of size.

John Harcar (03:34.72)
Now before you got into this, what was your previous W-2? What were you doing?

Mehak Begemann, CPA (03:38.734)
So I was at KPMG and I was primarily serving on the tax strategy side, know, tax returns and the whole gamut

John Harcar (03:47.252)
And then when you went out to bigger pockets, how did you find this, this about fractional CFO or anything like that? Were you searching anything specific or?

Mehak Begemann, CPA (03:54.798)
I wasn’t actually. I started to set up contract with another firm and I thought everybody could read a P &L, right? So it’s like a mechanic knows how to fix the car. It’s like, well, my daddy did it and his daddy, or maybe you’re the first in your generation to do it. So what seemed obvious to me was not obvious. And frankly, I had a little bit of rebuilding of myself because in those bigger corporate jobs, you’re paid.

John Harcar (04:05.185)
Yeah.

Mehak Begemann, CPA (04:24.898)
to talk like the account and to talk in words that don’t make sense. And the difference was actually in this case, like I need to simplify it in a manner that actually makes sense, right? And what drives action? Right, and for my own investing, like two things will always hold you back. One is the fear of the unknown, of course, which we can overcome. And the second is like, just we generally don’t buy products that don’t make sense, like meta, like what’s…

John Harcar (04:26.732)
Mm-hmm.

Right.

John Harcar (04:36.428)
Tell me it down for us investors here.

Mehak Begemann, CPA (04:54.382)
What’s meta? If you can’t define it, you probably shouldn’t buy it, even though we all can see it. So I think from a small business perspective, I was running into some of those things myself. Come talk to me about marketing IOS. And was in another language I had to figure out, what does this even mean? Who am I supposed to employ? Which firm should I go with? But you come to the financial side of the business, and this is my wheelhouse. So it seemed like it chose me in a way. I started working with businesses. I could see that.

John Harcar (04:58.602)
Right, right.

John Harcar (05:12.106)
Mm-hmm.

Mehak Begemann, CPA (05:23.286)
It was creating results and then it creates so much more value in a business because tax strategy is again, know, direct savings to your bottom line, but it’s like just one corner of the house. It’s really, this piece of it really drives overall growth because it’s setting direction for going forward, like a forward looking perspective. So that’s kind of how I landed there and I’m here to stay.

John Harcar (05:28.044)
Mm-hmm.

John Harcar (05:38.826)
Right.

John Harcar (05:43.478)
Okay.

Okay, so when you got into your own business, right? When you left the WT, you started this, right? What were some of the challenges that you came across in the first inception and building and development of your business? I mean, you already had some stuff that sounded like kind of working, but what were some of those obstacles that were just…

Mehak Begemann, CPA (06:01.698)
Yeah.

Mehak Begemann, CPA (06:05.868)
Yeah. Yeah. And I’ll compare it up, try to directly apply this to real estate because, my business is one of providing a service and substantially different. Like I don’t have the same constraints of capital. I have the constraints of labor and good labor and expensive labor costs. But, and you do too, as a flipper, you certainly have rehab being

one of your biggest line items on your piano, one of the biggest things that influences either the profitability or lack thereof on a project level. But I would say finding, like building the team, building my team, hardest thing I’ve done yet. And then SOPs, right? Like we all talk about SOPs and the cadence of it. The transition from going to solopreneur to having a team you can rely on is massive. I would, you know, right? So it’s like, once you have that foundation,

John Harcar (06:32.609)
Yeah.

John Harcar (06:45.195)
Mm-hmm.

John Harcar (06:54.892)
Hmm.

Mehak Begemann, CPA (06:58.85)
Then you have exponential growth, going from, if you’re doing about a million in revenue to 10 million, it feels like a hike. It feels like such an uphill battle because, and I’ve seen this with my own clients, like stuff tends to break, especially if you grow too fast or you can’t, you don’t have any direction. like, I have clients sometimes they’re like, yeah, we’re going to 2X revenue from this year to next year. Okay, great. That sounds great on a vision board, but where are the stats?

John Harcar (07:06.401)
Yeah.

Mehak Begemann, CPA (07:28.398)
Like show me the stats, right? So what does that mean from a quarterly perspective? I see also see clients or businesses that are growing top line and shrinking bottom line, right? So they might, you it was great to say you did 10 million in revenue, but only you know how much you took home that year or where the bottlenecks are. Maybe you’re not able to fully fund your projects or you have investor capital sitting out there.

John Harcar (07:28.618)
Yeah. Right.

John Harcar (07:41.59)
Wow.

John Harcar (07:49.534)
Right.

Mehak Begemann, CPA (07:56.334)
that got used up in another project and you’ve got capital calls. Or you got an answer to this private money lender that you weren’t able to pay back on time and you’re incurring 25 % interest on debt. So these are all subtle things that like, they don’t come out, they come out in closed rooms where you just need, you need an advisor who understands where your business is today, do a financial check on like, am I doing really? Like tell me how I’m actually doing.

John Harcar (08:05.324)
Hmm.

John Harcar (08:19.98)
you

Yeah. Yeah.

Mehak Begemann, CPA (08:25.062)
And have being aware of that, right? Like you can’t fix something you don’t even exist. Or maybe you do exist because you see the big swings of cash, cash in and cash out of your bank account and your stomach drops every time you have a big amount of cash to your checking account, right? So those are these all symptoms, right?

John Harcar (08:40.842)
Yeah, and that’s a huge problem, I think, for a lot of investors especially, is that a lot of us don’t look at those, maybe some of those line items, some of those things that we need to, and that’s where we need this type of help to give us that third party perspective on what we should or shouldn’t do. in your new business, how are you going out and finding your clients? What’s your marketing strategy? How are you going out and growing your business?

Mehak Begemann, CPA (09:09.25)
Yeah, so in fairness, it’s platforms like that that directly address, you know, investors who are in that scaling phase of their business, who are actively growing businesses and maybe bogged down with the operations of it. So I compare it to, you know, if you’re a person who’s fairly conscientious of your health and you work out, and I do, and you’ll do your lab work and so on and so forth, I can see the lab work.

and I can see like the physical report, but it’s not very meaningful to me. Like somebody, like a doc or somebody, a physician has to help me understand, here’s where you’re at, here’s where you want to be, and this is what you need to do to get there, right? And so in working with clients and to answer your question directly, a lot of our work does come from referrals of clients. And because we’re a capacity constraint, we’re not a large firm, we serve, like I said, about 10 to 12 businesses that are given point in time.

because we are high quality, we’re low volume, high quality from a firm perspective. So our slots actually fill up pretty fast. We do some time engagements. So let’s say you’re a business that needs a six month engagement. You’re like, come in, do your work, get out, that’s fine. So we’ll do time engagements. Let me have clients who, they see so much value in the…

John Harcar (10:12.3)
Mm-hmm. Mm-hmm.

John Harcar (10:28.244)
Yep.

Mehak Begemann, CPA (10:34.094)
the leadership on the financial side, that it’s an ongoing engagement where it’s like a cadence at like one or two meetings a month depending on. And if they’re acquiring, like I have a client who’s acquiring a property management business right now, so then there’s more work getting done during those acquisitions, for example. But to tie this together to my example of like this health report that doesn’t really make much sense, or a lab report, that’s how I feel like in small business space. I think if you had a dashboard,

John Harcar (10:38.528)
Mm-hmm.

John Harcar (10:48.416)
Yeah.

Mehak Begemann, CPA (11:02.946)
that showed you like eight key metrics that you as the owner care about, you’re more likely to take action on those metrics or at least know what you need to go back to your, let’s say your integrator, your sales manager or your sales team to be very specific on their action steps because you know what you need to be doing at the CEO level, right? So going from an owner, from an operator to an owner is a massive switch where an operator

John Harcar (11:09.804)
Mm-hmm.

John Harcar (11:23.862)
Yeah.

Mehak Begemann, CPA (11:31.966)
you’re bogged down by the weeds of this is a daily grind of running a real estate business. I was recently talking to a client who told me the contractor is still calling him for approving every Home Depot order. Like if you were doing that, you need to stop. So like that would be an example of a missing SOP where it’s like you need to set some thresholds on if it’s below this, don’t call me. If it’s above this, then here’s the approval. Here’s how approvals work.

John Harcar (11:44.138)
Hmm. Yeah.

John Harcar (11:55.169)
Yeah.

Mehak Begemann, CPA (12:01.114)
in our business. as a CFO, yes, I sit on the financial side, but because we’re working with small businesses, you just have to pause and look at certain, I’m not gonna go fix the process, but it may not actually be a cash flow problem. Maybe it’s a process problem. Or maybe you don’t have a roll of decks of private money lenders that I could potentially connect you with. Or maybe you do have access to private money, but it’s going in every single direction. Like you have no idea where…

At the end of the day, which project is well funded? Where are you going to be over or under on projects? So having some sort of a financial scorecard that helps you see high level, because you are a CEO of your business, to influence the next right step is exactly what I think owners need to grow those profitable businesses we were talking about just at the start of this podcast. So I would say I think inaction is primarily caused by not having clear direction.

John Harcar (12:33.91)
Mm-hmm.

Mehak Begemann, CPA (12:58.466)
And if you have clear direction as an owner, I think you could really influence change in your business.

John Harcar (13:05.28)
Why would I go out and find a fractional CFO when I would just have an accountant do it all?

Mehak Begemann, CPA (13:12.11)
Yeah, that’s a great question. I wish that more of us in this space were able to serve small business in that capacity. The way I see my clients set up with their team, they have a bookkeeper, oftentimes a VA that’s overseas over here. It’s very common to have a VA. I think it’s also industry standard to like hire this out, know, Philippines, VA, they’ll do everything, which is great. Then you have your CPA who picks up your books.

John Harcar (13:27.916)
Mm.

John Harcar (13:37.45)
Ha ha.

Mehak Begemann, CPA (13:40.59)
If you’re lucky once every quarter, sometimes once a year, and they’re just trying to minimize that tax bill, that’s their job. And then you have this massive need in the middle, is you would, most of my business owners who are scaling at this level are gonna go find that integrator. They should, they need a COO. But then you have this missing piece, which is so crucial. how are we managing cash flow and how are we managing?

John Harcar (13:42.795)
Great.

John Harcar (13:52.736)
Yeah.

John Harcar (14:01.152)
Yeah.

Mehak Begemann, CPA (14:08.686)
Profitability who’s doing budget to act roles where are we leaking cash and that piece just gets missed because no nobody like if you think about Entity York chart you have all these names and boxes and then you’ve got the massive gap on Accounting because you’ve got and no no shade to oversee Yeah, it’s like yeah multiple things. It’s like who’s yeah, I you were doing that I thought you were doing that but the overseas accounts, you know, they’re doing bookkeeping from my experience

John Harcar (14:19.212)
Yeah, yeah, or you got everybody’s name in that box

Yeah.

Mehak Begemann, CPA (14:38.516)
A trained accountant, you don’t have to be a CPA to be a good CFO, but you do have to be really, really good at forecasting and looking forward and filling in the gap, finding the gap and providing direction. And oftentimes, a VA in Philippines is far from having that skillset. So you might be solving for data entry and that’s great. But I would say most businesses who are scaling, who don’t know where money is going, are missing that key role.

that they maybe haven’t thought about because they thought somebody else’s house is

John Harcar (15:11.008)
You mentioned earlier, know, scaling and getting to a point where you add a COO. Is that more important at first than it would be hiring a CFO or someone to look at the finances? I mean, is there like a certain level of business probably needs to be at before they inquire into someone like yourself?

Mehak Begemann, CPA (15:28.75)
Yeah, yeah, I’m not trying to fire myself from clients, but I would say hiring a CEO and an integrator is crucial. I find that, especially as you scale, you’re doing more deals, you need somebody who’s like, most of my visionaries, they’re trailblazers. They’re going out there, they’re getting deals, they’re finding private money, they’re getting stuff done. Then you need somebody who’s cleaning up behind you, you know?

John Harcar (15:32.694)
Ha ha.

John Harcar (15:55.073)
Mm-hmm.

Mehak Begemann, CPA (15:57.75)
essentially is what a CEO is doing. You need to make sure all the plates that are spinning and you don’t drop any of the glass plates. So a CEO is crucial, right? And that’s also who I’m leveraging in the CFO seat. I can’t handhold the owner’s hand on every step. It’s like, I need to tag somebody and not full time in your business. So when I need this specific report out of Podio, like I can go help you build out Podio, but the CEO can, right? I need somebody else to be able to

John Harcar (16:05.046)
Right.

John Harcar (16:24.682)
Right. Right.

Mehak Begemann, CPA (16:27.448)
take it and run with the direction I’m providing, just because of the fractional nature of our engagement. I would say that clients are serious about really engaging a CFO and driving results. Take ownership to say, nobody comes to us perfect, right? So it’s always about incremental progress. And so part of our job is to assess where we are today and what’s reasonable. So that example of like, we’re gonna 2X growth, like, is that even reasonable?

John Harcar (16:46.806)
Mm-hmm.

Mehak Begemann, CPA (16:55.918)
or do you run out of money on deal 15? Like you don’t even have enough capital to be able to do 75 deals this year. And if you don’t, how do we create that liquidity, the short-term liquidity to be able to like, okay, so the gap is you need more better relationships with lenders or maybe not. Maybe you’re like not able to sell deals and deals are sitting for five and a half months when the average cycle time I’m seeing is, you know, it’s about that. But if you’re selling as is,

John Harcar (16:59.084)
You

John Harcar (17:03.51)
Right, right.

John Harcar (17:19.276)
Mm.

Mehak Begemann, CPA (17:25.698)
maybe it’s like less than 45 days. So maybe you need to pivot some of your exit strategies. So, know, no two clients look the same, but that’s why I’m fractional to your business in terms of being able to provide input at your level on where you need to tweak either the exit strategy or hiring or, you know, maybe you’re, and oftentimes your data is just spread over multiple softwares. It’s like, yeah, we have it somewhere, but like who’s responsible for that?

John Harcar (17:32.862)
Right.

John Harcar (17:49.418)
Right.

Mehak Begemann, CPA (17:54.21)
So, you we’re spending a lot of time in the weeds where your CPA is like, your tax account is not going to go in the weeds. They want a final P &L and a balance sheet at the end of year and they file your taxes with IRS and they kind of, they have hundreds of other clients and they kind of keep moving along on that pipeline work.

John Harcar (17:59.98)
Ha ha.

John Harcar (18:09.505)
Yeah.

What are some of the mistakes you’re seeing people make that go out there and try to do it on their own?

Mehak Begemann, CPA (18:16.93)
Yeah, yeah, I’m not going to beat anybody over the head because let’s be honest, we’re all evolving in the process of business. You think you got the market figured out, just wait six months, right? And the market changes and, or we have a new president or, you know, something changes and you’re like, wait, I thought I had it. So I would say the number one would just be like not having a scorecard, like not having any sort of a financial scorecard that actually tells you how you’re doing right now. Like how are you performing right now? That would be one.

John Harcar (18:26.016)
Yeah.

John Harcar (18:44.876)
Mm-hmm.

Mehak Begemann, CPA (18:47.31)
Another big one, time that scorecard, your books are like a year behind or six months behind or three months behind. Like you’re don’t have, like you’re, we’re antsy as investors to look at current market trends and data. We are heavy on marketing our wise. We know how our channels are performing. So we’re measuring, we’re good about measuring. But then for some reason, books get behind because of volume of transactions. And it’s like, oh yeah, we got to clean up 90 days of bookkeeping.

John Harcar (19:11.862)
Yep.

Mehak Begemann, CPA (19:15.64)
We look at it as historic when we’re missing an entire data set, which is our data set of like multiple years of business performance to say, what does history tell us about what’s upcoming in every quarter? So I think that’s one of the biggest missing pieces is just not having good clean data or processes to get that data to be able to predict future behavior. that would be one. Number two would be, are we optimized for exits? I think a lot of our…

John Harcar (19:23.862)
Mm-hmm.

Yeah.

John Harcar (19:38.73)
Got it.

Mehak Begemann, CPA (19:44.814)
clients are missing this from a like we know market like so we kind of know average days on market you know about your local market that’s great but what is the enterprise needs needs are so for example I had this is a true story I had a client he was doing he did eight owner fives in the month of January which is great huge win right you’re like that’s great he was drowning because he had no cash or to bake make payroll that week

John Harcar (19:50.38)
Mm-hmm.

John Harcar (20:05.044)
Okay. Yeah.

John Harcar (20:13.995)
Hmm.

Mehak Begemann, CPA (20:14.156)
So, okay, so let’s think about this. It’s like, had he had the insights of how much cash is needed, what is monthly burn as KPIs, what is his monthly burn, what is his operating cost, how much cash does he need to make sure that the lights stay on, he would have chose, yes, it seems so obvious, but he had all the data sets. He just wasn’t looking at the right frame, right? Like he had all the pieces, they couldn’t find the thing that he needed in the kitchen, which is like.

John Harcar (20:22.4)
Right.

John Harcar (20:28.844)
And then everybody’s paid.

Mehak Begemann, CPA (20:41.806)
Okay, I need to make sure I have enough reserve, it sounds simple, 60 to 90 days of reserve. And know, owner fi is actually a privilege. I need to make sure my flipping business is actively producing enough cash to keep me in business. And yes, the longer term, there’s a long tail exit on an owner fi. The wholesale, full tail flips would be the shorter term exit. So that’s what I mean by exit strategy. Like sometimes I do see that most of the time.

John Harcar (20:46.027)
Right.

John Harcar (21:01.846)
Yep.

Mehak Begemann, CPA (21:11.246)
clients will have to pivot in light of what they know to be true. How much debt is out there? So there’s all these variables and I can’t really title it to get in a pretty little picture, but all those high level, like the macro decisions will influence the micro decisions of deal by deal exit. So that would be number two. And number three would be, how are you actually doing? Like, are you happy with your current business? Like, are you running into the ground? And not just owner comp, right?

John Harcar (21:14.924)
Mmm.

John Harcar (21:27.83)
Sure.

Mehak Begemann, CPA (21:40.834)
So most of us here in the States, we like capitalism, I love it. I immigrated from India, so I’m living the dream. However, how are you really doing? Like, can you operate the business model you have for the next 10 years, 15 years, 20 years? Like, are you completely burnt out? If you are, you gotta make a change, right? So, and a lot of my clients will ask me, hey, how much, what do I need to do to bring in an integrator, for example? Maybe they haven’t hired that person.

John Harcar (21:49.215)
Mm-hmm. Yeah.

John Harcar (22:02.433)
Yeah.

Mehak Begemann, CPA (22:10.22)
and they don’t know if they can afford to hire that integrator. So that’s a mathematical problem we can solve. We can set targets and understand your monthly revenue needs to be X for you to be able to afford an integrator at, say, 150K plus some sort of equity comm type structure. What does the comm structure look like? So these are mathematical problems. They feel very emotional when it’s your business, but you can have a roadmap of like, yeah, you can’t hire them yet.

John Harcar (22:16.309)
Right.

John Harcar (22:30.625)
bright.

Mehak Begemann, CPA (22:40.418)
But in six months time, with this roadmap, you could be at a point of hiring an integrator. So I’m going to highlight those three. I really say this. All the pieces are there. It’s like a chess board. All the pieces are there. But if you understood how the game is being played in your business, then you can make the right moves to position yourself in the best possible place to be able to win.

John Harcar (22:40.544)
Yeah.

John Harcar (22:53.1)
Mm-hmm.

John Harcar (23:04.012)
Got it. Okay. And if someone has a business and they’re growing and they’re, you know, they’re just not sure if that now is the right time and they want to reach out to you and talk like what information they need to have to be prepared to speak with someone like yourself to see if this is a feasible option for their business.

Mehak Begemann, CPA (23:21.954)
Yeah, yeah, a lot of times I think the question and maybe they’re even asking that about like they’re already here and investor feel that can I afford the mastermind can I afford

John Harcar (23:57.227)
Yep.

John Harcar (24:08.774)
Yeah, opportunity costs. Yeah.

John Harcar (25:00.777)
Uh-huh.

Yeah. Yeah.

Got it. No, that, and that makes a lot of sense. mean, it’s funny with the story of the guy who got six or eight order finances and couldn’t pay their people. But I mean, that’s kind of what we are as entrepreneurs. don’t look at that part. like to more, more deals, more deals. Man, you shared a lot of information and we can probably go talk for another 30 minutes or so. But if folks want to get ahold of you and talk to you a little bit more about maybe hiring a transactional CFO or just really is it for me?

they reach out to you, how do they get in touch?

John Harcar (25:56.833)
Mm-mm.

John Harcar (26:26.379)
Yeah.

John Harcar (26:38.54)
Right right right there is a location specific the US side

John Harcar (27:01.9)
Mmm.

John Harcar (27:18.015)
Mm-hmm.

John Harcar (27:24.648)
Great.

John Harcar (27:32.629)
Mm-hmm.

John Harcar (27:43.754)
Bright, exactly.

John Harcar (27:52.172)
It sucks and you get no results. Right.

John Harcar (28:09.644)
Mmm.

John Harcar (28:16.01)
Yeah.

John Harcar (28:33.706)
bigger impact. Yeah. Well, awesome. Man, you shared so much information. Guys, I hope you guys jot it down and I hope that you folks that are in that position would reach out and look for maybe a fractional CFO to help you grow your bottom line. Thank you very much again for being on the show and guys, I had a great show. I hope you did too and we’ll look forward to seeing you the next one. Cheers.