In this pecuniary episode, Stas Sukhinin, Founder of Sorso, shares how to master financial oversight and boost profitability at scale. If you struggle with unclear financials and profit leaks, you won’t want to miss it.
You will discover:
– Why hiring a fractional CFO prevents costly mistakes
– How to regularly review financials to spot issues early
– What proactive CFO insights can transform your strategy
Episode Transcript
Scott Ritzheimer
Hello, hello and welcome. Welcome once again to the start, scale and succeed podcast. It’s the only podcast that grows with you through all seven stages of your journey. As a founder, I’m your host, Scott Ritzheimer, and there’s something that I see quite often is founders who’ve built successful companies. They’re generating multiple millions of dollars in revenue. It’s like the goal that we all start off with right? They’ve got managers running departments. Things look good on paper. They might even be writing magazine articles about you, but inside, you can’t help but shake this nagging feeling that there is money leaking out somewhere that you can’t see. Where does it all go? You’re working harder than ever. You’re making more money than ever, at least on the top line, but for some reason, you’re keeping less and less of it every year. You’re making decisions that that might be powered by financial reports, but you don’t fully trust them or maybe even understand them, and no matter which way you turn it seems like something’s wrong and there’s a financial piece associated with all of it. And so what’s happening here? We call this the disillusioned leader stage. You guys know that, but what makes this so dangerous is that you’re not enough to handle all the day to day stuff yourself and your financial systems haven’t evolved to the point where you have the data or the confidence in that data that you need to succeed at this level, it’s kind of like you’re flying a 747, at night and still trying to, like, navigate by looking out the window. It doesn’t really work very well, and the cost of getting it wrong at this altitude is a big deal. Well, today’s guest has spent nearly two decades in high stakes finance, and he knows exactly what founders in this stage need to see in their numbers. Stas Sukhinin has over 19 years of experience in the financial sector, where he’s played a key role in developing and launching mezzanine loan products that help shape the Eastern European market. At just 29 years old, he became a senior partner at one of the region’s largest mezzanine loan providers, lending, leading a team of 20 finance professionals and managing a $450 million loan portfolio. Today, Stas works in as a fractional CFO for business owners, generating at least $3 million in annual revenue by helping them to unlock greater value and profitability from their companies. Well, Stas, welcome to the show. So excited to have you here. It’s been a minute coming. I’m glad to be able to get you on this show. I’m wondering if we could start off just briefly, what is a mezzanine loan and why does that matter to folks that are listening today?
Stas Sukhinin
Thank you, Scott for having me mezzanine loan. It’s kind of like a complicated debt with the equity component, and you need these when you run out of the options to secure a debt, and it’s usually for companies that growing, they have at least 510, 20 millions of annual revenue, and they get a certain senior debt, because it’s hard to get mezzanine debt. If you don’t have a senior debt, it’s usually mixed, and it’s kind of like you have a you have a cap, if we’re talking about in terms of EBITDA, like, how many EBIT you can get as a senior loan, and then on top of that, you can get a mezzanine. It’s kind of like a debt, and it’s high interest rate, but you can postpone to certain interest, even interest payment and the principal payment, and it can help you grow or like, kind of like, help you to achieve like, these strategic goals, but you need to be very, very cautious with this instrument. It’s just like, it’s risky, and it’s riskier than even, like a debt, and you take it when you kind of out of other debt options.
Scott Ritzheimer
Yeah. So you’ve seen a lot of dire circumstances being in that space for so long, so when you’re you know, when you look at a company’s financial reports for the first time, and having done this so many times, what would you say are some of the most common problems that you see that they don’t even know, that they have inside the organization?
Stas Sukhinin
Yeah, across the board, across all sectors, across, I would say, even different stage of companies. I think, like, I think to the stage when they hire some fractional C for full time, CFO, then they kind of like, figure out before that, like, it’s, it’s almost like out of 10 owners, business owners that you meet, nine, nine will tell you the same thing, oh, I have an accountant, or I have this bookkeeper, I have this CPA, or I have this, like, sometimes they call it controller. I just onboarding a new client. It’s like a 20 plus million network of clinics and, like, the same story. Like the donor said, like, yeah, I have a, like, a controller. Like, everything goes. It’s perfect in terms of financials. And of course, it’s like, it’s disaster, and it’s all the time. Owners like, think that they hire like, the biggest, biggest, biggest mistake. The owner thinks that if they hire like an account or bookkeeper, CPA, whatever, like the title is, they financials. They start out, they kind of in the best shape. And if they, and because, like they is not really, kind of, like, this feedback loop, right? Like, they don’t really, if they don’t engage with bankers, if they don’t have a board of directors, if they don’t have, like, someone external, like user of these financials, it’s only them, like, they don’t, like, see the problem, right? Like and, and they they start seeing the problem when, like, they look at the QuickBooks, so like, whatever they use, and they see, like, a certain number. They thinking, they making money, but like, they bank account is lower and lower and, or vice versa. They kind of, it’s kind of like it’s known, it’s the best financial framework that a lot of business owners use, especially like first time founders. It’s called, like, a bank account check, like, they go to the bank account, like on a regular basis, like, I know, once a week, like once a month, and if the if the time, then they log in, the number is higher than the previous time, they think they doing good. If it’s lower, they think maybe, like they underperform. It’s kind of like how they measure the financial success. Yes, yeah. And it’s the biggest issue. And, and it’s make, for me, in terms of marketing, harder to appeal, because they don’t see the issue right. And, and usually it’s, it’s very, very late when they kind of like like, they really like, like, they have so much debt, or like they like all, like, they render so much money that they can go to this, and especially it’s very, very tricky. Then your revenue is growing, and in they thinking, Oh, my issue is just like, I need more capital because, like, my revenue growing. But there’s so many cases where your business is growing, but you actually losing money on each unit of what you’re selling, and you need to be cautious. And I like, I remember one call this guy with Upwork, and he said, like, he needs help on the fractional seafood. And I had this call, and he was doing consumer goods business, and it’s like, heavily, you need to invest heavily in inventory. And if you don’t properly follow, like, consider your margins, gross margins. Like, you know how much you get, like, this inventory and how much you sell it like, you can’t, you can sell, sell, sell, but you’re actually losing money on each sale. And, and these guys say, like, yeah, I was doing it for 15 years now. I’m like, I owe like, a few millions, like, I almost run out of the inventory. I don’t have anything, and it’s just like, I’m about to file a personal bankruptcy, and at this point, it’s kind of like, too late. It’s just like, too late. And I really, really, you know, I’m kind of, I’m really, I really feel sorry for him, and it’s just like I really want to help him, and it’s just like I feel kind of this pain, like this personal story behind, like, he was working for 15 years on this business, and like, end up just with the, like, huge, huge pile of debt and nothing in there. And it’s just, like, it’s super, super important for only just, like, hire someone like it it’s cost you, like, I don’t know, like, one hour, two hours, like, any experience, fraction of CFO. Like, even, like, a CFO, they’re just looking at your financials. It needs, like, two, three hours to speak with accountant, like, to just get, like, a sense, like, I don’t know, for me, it’s like, I speak with accountants, like, one hour, two hours, and I can tell you before, like a shot on, like, the quality of your financials and what’s happening in the business.
Scott Ritzheimer
yeah, yeah. It’s so important. Because one of the things that is happening, one of the things that I think strikes folks as odd is like, how is that even possible? Like, how everyone’s sitting and thinking, Oh, we’re not selling anything at a loss, you know, yeah, there’s probably a very big percentage that are selling at least something at a loss. Why is that so hard to see at this stage?
Stas Sukhinin
Yeah, because I think it’s kind of like this transition when you start selling like, your business is very simple, like, from the very beginning, usually, right? And especially if it’s like bootstrapped like, I know you start selling like one item, you know the purchasing price, like you, I know, if you order it from China, you know, like, how much you pay, like, the custom broker, you know, like the rock, and it’s kind of okay. And had the, I bought this inventor, I brought it, and then I sold it for, like, I know, the average price, and that’s it, right? But then, like, as you start ordering more, you expand your assortment. You have, like, more units in different kinds of units you’re ordering from different vendors. Then your your terms changing someone it’s advanced, someone’s, you pay later, someone’s. You receive kind of like, a factoring financing. And then you, like, use different vendors, and you pay in different like, you completely start losing track of what’s happening if you don’t try. Records properly. And I can tell you that accountants, they not really, like understand your business until you really, like pay attention and like bring attention, like, the attentions to certain things, like they don’t will go, like, your invoices and compare it like, oh, you order these, these kind of, like inventory for this price or day is going to be discount, or this on the discount, it’s like, it’s, it’s, it’s not there. And, like, for example, inventories is one thing there so many businesses screw up, and you need to be on top of this from the very, very beginning. It’s kind of like it’s so crucial. Like, if you’re doing consulting, you can be kind of, like more, kind of, like, not really looking for, like, certain financials, because I know you have a project, you kind of like a contractor, so you have a team, they perform, you’re probably gonna be okay. But, like, with other type of businesses, yeah, especially if it’s inventory, like, you need to be on top of this and knows, like, the cost of goods sold for each parts and these so many, like, kind of these nuances, and if you start missing them like you like you, don’t understand what’s happening.
Scott Ritzheimer
Yeah, yeah. What is it? What is it about the CFO approach that’s so different? Why is it that your what your accountant is doing or what your CPA is doing? Is it that it’s wrong. You know, what’s the difference?
Stas Sukhinin
Yeah, the difference is huge. I kind of, like in our like sphere, like our sector of fractional C force, it’s like a non, non thing that now accountants and accounting firms, they start providing this, they go take advisory business, just expand their margins, they revenue, and they start providing CFO service. And they they mentality, and they approach is so different from the what’s like c4 should do. And they thinking, it’s about like providing numbers, right? It’s what they do, right? Like accounts is what they do. They about history. So, like, the main difference between accountants, bookkeepers and CFOs, it’s like bookkeepers, accountants, they look in the past, right? That they’re looking okay last month, last quarter, last month, look at what’s happened. We reconcile. Reconcile, like all the transactions. Add something that we think we need to add, or like that. No founders, business owners told them to add, and then it’s going to be about past like CFO. It should be proactive and looking in the future. It’s a one thing second. It should look strategically, like, Okay, what we’re gonna do? Like, are we like? How we if we like, it’s most of the time about growth. How we can grow. Like, should we get, like, a debt or, like, should we finance Bootstrap? Like, should we expand? I know I’m working with the outpatient clinics. How we open, like, new five clinics? How will finances? Like, what’s, what’s the maximum lease that we need to sign for each clinic? What we can afford, what we can afford, right? Like, what’s the location? Like, all these strategic questions and accountants, they just, they’re not wired. They just, they don’t even understand strategic part. They are not get used to looking into the future, and they are not proactive. But I think, like, the main, main, main differentiator, and it’s actually, it’s a big one, you should like, I’m as a CFO, I have these obligations. If I thinking that the business owner is doing something wrong. I should tell him like it’s his decision or her decisions at the end of the day, but I should be very explicit again and provide details why she’s or he’s about to do certain things it’s gonna be detrimental to his business. And accountants never, they, never, like, did not get used to escalate and kind of like, say no to certain things, right? And I think it’s super important. And it’s actually like, when we’re talking about like these stages, it’s a good point, because, like, yeah, they, they, I see the founders, when they get, like, into three, four or five millions, they could, like, a hiring, like this team of, like, low meets, meet kind of managers, like, I know sales managers like, like the person who’s responsible for bringing deliverables, but they very, very hesitate to bring any sea level. And it’s, of course, it’s expensive, right? Like, it’s expensive. And they kind of, like, very, very hesitant to bring anyone, like, a C level. And of course, like financials, is not They first choice. They either bring like a marketing person or like a chief operating officer, or like, know someone who is, like, really into the business operations. And it means that, especially if it’s a solo business owner, is nobody who can tell them what is going wrong, because usually the team underneath is just like, executing orders or, like, yes, executing like business process. There is nobody who can tell them no. And accountants and CPAs and like, I know tax advisor not gonna say they just like, they will file if they’re missing certain information, they will ask and follow up. But they not even in this mode way. They. You need to challenge to, like, the business owners, I think, right? And just like, kind of like, be persuasive. And like, be kind of like, okay, like these the one side how you look at the business, but like, there’s another side you also need to consider, yeah,
Scott Ritzheimer
Yeah. It’s crazy when you think about it, because what you really need at this stage is someone to tell you no, appropriately and skillfully, and yeah, a great fractional CFO can certainly be a source of that. Not that that’s what they that that’s all that they do, but being able to speak up when something’s wrong. There’s a little bit of an emperor has no pants kind of a thing going on there. But stas there’s, there’s a question that I have for you. I want to make sure we get to it, because it’s something I like to ask all my guests. And the question is this, what would you say is the biggest secret that you wish wasn’t a secret at all. What’s that one thing you wish everybody watching or listening today knew?
Stas Sukhinin
Yeah, I think, like the big, the biggest secret that, especially in the very beginning, like, you need to go, like, as a business owner, you need to, unfortunately, you need to review, like, your financials. You need to be on top of the financials. I think it’s a big secret. And I think, like, very few people actually even, like, accountants, like, they don’t really, kind of, like, tell this, right? Like, they don’t really explicitly say, like, oh, you need to review, and you need to go, like, you know, like, sound like, and business owners, like, like, they don’t log in into the QuickBooks for, like, I don’t know, like, six months, right? Like, I think, like, the biggest secret, you need to be on top of the financials. Like, in the very beginning, it’s just there’s no way around or, like, oh, hire someone who will review this if you cannot afford it. And understand there is a short run cost. And it’s probably in the very beginning, it’s, it’s kind of, like, very costly, and you cannot afford it, but that means that you need to do it yourself. And I think when you, especially in the very beginning, like, business owners wearing, like, multiple hats, right? Like, they’re like, Chief Marketing Officer, the Chief like, operating officer, right? Like, and they need to be chief financial officers. Like, it’s just like, they can avoid it otherwise, right? It’s just, yeah, at some point this will stack them, it’s like, it’s, it’s not if it’s when, like, they can be for a while, kind of like not paying attention if they growing like and margin like originally is really good. But at some point it will stack them, it’s like, they will run into the issue.
Scott Ritzheimer
So, Stas, there’s some folks, invariably listening to this, that have a good accountant, they have a good CPA, but they’re realizing that’s just not enough for the business that they’re building. Now, where can they find more out about you? Where can they learn more about the work that you do?
Stas Sukhinin
Yeah, so I have the website, The Sorso, T H, E, S O, R, S o.com, so you can go, you can structure a call. And I highly, highly, highly encourage, I mean, it’s just like, hourly rate for experience, fraction of say for, I don’t know, $200 expand, like, you probably spend on a dinner, like, on Friday night, like, kind of the same money. Just, like, just get a different perspective. Even you think, like you have a perfect financial team, like your CPA is amazing, like answering all your questions, like everything is perfect. Just get a second opinion. Like, I can tell you, like, when you go to the doctor, like in these, like, big decisions to make, right? Like you probably will go ask for the second opinion, if it’s like a surgery, a big kind of like intervention, be financials itself, right? Like, you don’t want to spend, like, years and years working thinking that your margin is x or your your net profit is one number, but it’s actually completely different.
Scott Ritzheimer
Yeah, yeah. So true. So true. We’ll get that link in the show notes for everybody. Well, Scott, thanks so much for being here today. Really a privilege and honor having you on the show. And for those of you watching and listening, you know your time and attention mean the world to us, I hope you got as much out of this conversation as I know I did, and I cannot wait to see you next time. Take care.
Contact Stas Sukhinin
Stas Sukhinin has over 19 years of experience in the financial sector, where he played a key role in developing and launching mezzanine loan products that helped shape the Eastern European market. At just 29 years old, he became a senior partner at one of the region’s largest mezzanine loan providers, leading a team of 20 finance professionals and managing a $450 million loan portfolio. Today, Stas works as a Fractional CFO for business owners generating at least $3 million in annual revenue, helping them unlock greater value and profitability from their companies.
Want to learn more about Stas Sukhinin’s work at Sorso? Check out his website at https://thesorso.com/