S3E1: The OG Fractional CFO

Watch this episode on YouTube: https://youtu.be/7b4S1SNFM9A

Surprise! We’re back with a special mini season of the Agency Navigators Podcast by AgencyCFO™! 

In this episode of Season 3, let’s start by taking a trip back in time to learn the backstory of the original “OG” Insurance Agency Fractional CFO. 

AgencyCFO™ officially launched in 2018, and the business that launched the program was founded in 2013 by married partners, Don and Roe Polczynski. 7 years later, we’re still working with agencies across the country and have no plans to slow down! 

We’re proud of the team we’ve built in the last 7 years, yet it was a decade of prior experiences that turned a concept into a program, a business, and now an industry-wide service.

Tune in to episode 1 to learn why a Fraction CFO is important to your agency and one of the most valuable services you can invest in. 

Next episode will drop early next week! Stay tuned for “The Looming Change”. 

Connect with us!
Meet with Us: www.agencycfo.com
LinkedIn: www.linkedin.com/company/theagencycfo
Facebook: www.facebook.com/AgencyCFO
YouTube: www.youtube.com/@AgencyCFOAgencyNavigators

Transcript

Roe Polczynski: Welcome back to the Agency Navigators Podcast. It's been a while, so we have some updates for you. I'm Ro. 

Don Polczynski: I'm Don. 

Roe Polczynski: And thank you so much for joining us. So, we have some new updates, but today we're really talking about the OG fractional CFO. Don, why are you the OG fractional CFO? 

Don Polczynski: Well, we tested the concept about 10 years ago with a smaller agency.

Don Polczynski: That was losing their CFO and at the time, 10 years ago. The idea of having a virtual fractional CFO for your insurance agency wasn't even a thought. It wasn't something that readily was available. 

Roe Polczynski: No, and at the time you were a full CFO at a very progressive agency. We were, we were actually traveling together at an industry event and they hunted you down.

Roe Polczynski: It was hysterical. 

Don Polczynski: This agency was losing their full time CFO. And again, they were Under five million in revenue, they didn't need a full time CFO, so they were looking for a solution. 

Roe Polczynski: And through an industry mentor, this came to be, you worked through the, your employer at the time, so it was just a part of your job function.

Roe Polczynski: Absolutely. And it really showed, it really built the foundations hands on. We call it the beta test now, but we had no idea at the time what was going to transpire. Not at all. 

Don Polczynski: We didn't know if this would work. So I made a trip out to the agency and it was an interesting experience. 

Roe Polczynski: So one of the things you've heard us say before, and we've said it on our own podcasts on being guests and just in general, is that you cannot save your way to prosperity.

Roe Polczynski: There's only so much you're going to cut expenses in an independent insurance agency. This is where it comes from.

Don Polczynski: So I was meeting with the bookkeeper. Correct. I made a site visit, and I asked her to print a report for me. And she did. And I noticed there was a stack of paper next to her printer that already was printed on.

Don Polczynski: So she took, you know, 50 pages or so from that stack, put it in a printer, and then she generated the report that I requested. And I thought to myself, wow, I've never seen that before. That's frugality. That's expense control. And it was turned out to be very indicative of the whole agency. They were very dedicated and disciplined when it came to expense control and from a CFO perspective, no operating expense issue with them.

Roe Polczynski: So that is OG CFO lesson number one. You can't, that's where it comes from that you can't cut your expense. There's only so much you can cut. The next, that leads right into it is that 50 pages. What was it? 

Don Polczynski: 50 pages, essentially nothing. So the owner sent me, well, he said, here's what I receive. Here's my financial report that I get every month.

Don Polczynski: And I get this 50 page document and I'm worried because I'm not planning on producing a 50 page document. And I started leafing through it and it was just numbers. And I looked at, and I said to myself I don't think there's any information here. I think it's a lot of numbers. But I don't think there's any information.

Roe Polczynski: So OG CFO tip number two, it's the AMS systems. That's really one of the foundations is the lack of financials in AMS 

Don Polczynski: agency management systems. They'll spit out their financial reports, you know, PNLs balance sheets, but I don't think that really is a great source of information for owners and leadership teams to manage their agency.

Roe Polczynski: So again, this is over 10 years ago. You are developing the first custom report set. Absolutely. In your mind, what were you thinking about what to include? 

Don Polczynski: Well, surprisingly. The world of finance for insurance agencies really doesn't change. So our key five were in the initial report. We we had revenue recognition and only comparison.

Don Polczynski: Are we growing or shrinking? There was the new business. There was retention analysis, profitability, cashflow, and those five cornerstones are the same five that we still teach and report on today. 

Roe Polczynski: At a different level. 

Don Polczynski: At a different level. 

Roe Polczynski: So in this innovation, and we were married at the time, I didn't even know some of this was going on.

Roe Polczynski: What was going through your head because you literally were looking at a blank Excel workbook as you started? 

Don Polczynski: Yeah, it was a lot of unknowns. But what we learned within the first couple of months was this really works. I, you didn't need 50 pages of nothing. We replaced with 15 to 20 pages of great material and we interpreted the results.

Don Polczynski: We held an earnings call with the owner. It worked extremely well. 

Roe Polczynski: When you say we, it was just you. Well, at the time, yes. It was just you. Let's be, you know, you're very humble. We appreciate that. But let's be real. As this custom report came to be and took life of its own, what did the owner, and the agency was since sold, he got a great valuation years ago for it, it went really well for him, he rode off into the sunset, but what was the key thing that stood out to you, what did he say?

Don Polczynski: Yeah, years later he told me, Don, what you taught me, the most important thing was that I was tripping over dollars to save pennies. And that was exactly the case. They were so concerned about conserving that copy paper, that printer paper, that they reused paper. They were extremely disciplined on all aspects of expense control.

Don Polczynski: But they weren't disciplined on new business generation, prospect management, being disciplined in their prospect pipeline. 

Roe Polczynski: In retention. 

Don Polczynski: Absolutely. So. And 

Roe Polczynski: even salaries, probably. 

Don Polczynski: They were disciplined on salaries. 

Roe Polczynski: But everything. We've seen other agencies since then. 

Don Polczynski: Absolutely. But what they neglected was their prospecting and their growth.

Don Polczynski: And. From a financial perspective, if they had applied the same discipline from their expenses, or led up, it didn't need to be so disciplined on their expenses, they needed to apply that discipline to their growth, to their new business generation, that would have been far better for value creation.

Roe Polczynski: Okay. So now there's an evolution going on. In the same story, Yes. So the OG, fractional CFO, point number three, Is you were doing the one month, the call once a month. Once a month, and then it was time for renewal. 

Don Polczynski: Absolutely. And as we looked at it, we said, well, how can we make this a better experience? And then we realized, well, it would be better if we met twice a month.

Roe Polczynski: Mm-hmm . 

Don Polczynski: And the idea is still used today? Yeah. That we hold an earnings call. So we look at what are the results of the agency. And then the second call is the strategic call about how do we become better. And we now call that the magic cadence. 

Roe Polczynski: Absolutely. So it is a cadence to us and it's a relationship cadence.

Roe Polczynski: It is. And I'm going to give a little sneak preview of an upcoming episode. We are obviously not where we normally record a podcast or any videos or anything. We are with our dear friend Mark at Trailstone Insurance, and he's going to come on later and we're going to chat. We are in his studio that he's graciously letting us use.

Roe Polczynski: And it's because we have deep relationships. [00:08:00] We care so much about our agency partners, and we love when they care about us. 

Don Polczynski: Absolutely, and we did build this great relationship. And I say we, because 

Roe Polczynski: Now I'm involved! Yeah, the 

Don Polczynski: owner actually came out to our home and stayed with us. Oh yeah, 

Roe Polczynski: absolutely. So back to the first case.

Don Polczynski: We absolutely built a tremendous relationship. And that has been one of the surprises. About this industry, agency CFO, fractional CFO, is the depth of the relationship that is built. And that is built because we're always talking at minimum twice a month, often times a lot more. 

Roe Polczynski: Absolutely. And so, to wrap up that OG thought, this, all of this knowledge base compounds.

Roe Polczynski: It's from that first beta test case to, you may, some of you may know the story, may not. How did agency CFO actually got, become a standalone product? It was the owner of your home agency. What did he tell you? 

Don Polczynski: Oh, he said, Don, you're so good at doing these strategic financials that why don't you go, go out and do it for other agencies, make it your baby and I'll be your client.

Don Polczynski: And I said. Yeah, it's time. You're on 

Roe Polczynski: seven years in. It's seven years this month. That conversation took place, and they are still a client. It's still that close, and we so appreciate all of that. And now we've got this incredible knowledge base. We have a great team, incredible tools, and that's where we're going next.

Roe Polczynski: The future. So why are we quiet sometimes? Sometimes you'll see us at industry events or on a podcast, and then we get super quiet. 

Don Polczynski: Yeah, I fear, you know, our partner agencies wonder, what is my CFO doing when I don't hear from them? 

Roe Polczynski: It's because we are deep in development. It is about the future for us and where we're going next.

Roe Polczynski: We're staying where we are. We still have our partner agencies. We still have our mastery program and our cadences. But what else can we do? How else can we bring value? 

Don Polczynski: Every time we talk to one of our agencies, or we talk to a new prospective agency, We're learning and we go back and we're not long after we're applying that learning.

Don Polczynski: Okay, how do we take that and make a better product? How do we do a process better? How do we make it better? How do we make the experience better? And how can 

Roe Polczynski: we serve more? 

Don Polczynski: Absolutely. Absolutely. And that's our focus. And that's hard work. 

Roe Polczynski: It is very hard work. So there has been some, some previews on it on social media.

Roe Polczynski: We have developed the agency CFO intelligence suite. It is software as a service. 

Don Polczynski: Absolutely. It's still provide you with a great holistic financial report each month with, along with an earnings call. 

Roe Polczynski: So it starts with that financial model, just like we do now. Custom everything's included. And there's so many upgrades with seasonality and. 

Roe Polczynski: How you're doing the model is we can be as 

Don Polczynski: sophisticated. We've had a lot of sophisticated cash flow, monthly budgeting, if you want, departmental budgets, absolutely very sophisticated. So 

Roe Polczynski: that turns into the monthly financial report. His automation engine really has to be seen 

Don Polczynski: well, and this something that's not apparent to the, the end owner or the end agency is how long does it take us to put together their monthly financial report?

Don Polczynski: And if it takes us a lot less time, we can spend a lot more time in the strategic and that's where the value creation really is. Mm-hmm . And that's why automation, the more that we can automate the, 

Roe Polczynski: the do, pulling the data out of the a MS and 

Don Polczynski: completing the report, some buttons. 

Roe Polczynski: shooting it out. 

Don Polczynski: Absolutely.

Don Polczynski: Allows us to focus much more strategically with our partner agencies and that creates more value. 

Roe Polczynski: Now, you know, you know, we have our CFOs this year. Earlier in the year, we added an Adam. Adam is our business intelligence suite analyst. 

Don Polczynski: There was one glaring blind spot we saw almost universally with our partner agencies.

Don Polczynski: And that is, yeah, they had great understanding. Standing now. of their top financials, revenue, profit, cash flow. But what they didn't understand were the dynamics that were going on within their book of business and the impact that that, those dynamics were going to have on their future financials. So, we had great clarity of what's going on.

Don Polczynski: Financials, which are very historical, but we knew almost nothing that was going on in the book of business. And the book of business is somewhat of a leading indicator to the future financials. And that was a blind spot. 

Roe Polczynski: And so much so, you recognized this quite a while ago. So he was actually spending his off hours learning Power BI, watching videos and doing online courses to learn Power BI before we found Adam.

Don Polczynski: And 

Roe Polczynski: now you have this great partner in Adam. So the whole business intelligence suite that we provide with the dashboards and everything else we're going to talk about next in the next podcast. But really importantly, know that we're balancing this forward progress. Because just like an independent agency, we have compensation costs, finding the right talent to serve.

Roe Polczynski: And so this is going to help us serve more. 

Don Polczynski: Absolutely. 

Roe Polczynski: And provide better quality results on our end. 

Don Polczynski: Absolutely. This is a blind spot that needed to be addressed. It's taken a tremendous effort. But what we found is you don't truly understand the financial picture of the agency only looking at the traditional financial reporting.

Don Polczynski: We have to understand what's going on in the book of business as we are experiencing, for most agencies, a very hard market. As that shifts, the repercussions are absolutely crucial that we understand the future financial impact. 

Roe Polczynski: And we're going to talk about that a little bit more in our next episode.

Roe Polczynski: Finally, this is the call to action to all of you, whether it's us or any one of our worthy competitors out there in fractional CFO world. Having an extension of your team, that's what we consider ourselves, we're not consultants. That extension of the team to help you, your agency, with your strategic financials, your book of business, your compensation costs all of it.

Roe Polczynski: that core model. 

Don Polczynski: I don't believe someone 

Roe Polczynski: that works for you. Going 

Don Polczynski: alone is a good strategy for almost anybody. Everybody needs strategic financial support. Again, every time we do this, there's, there's something that comes out as a surprise. And again, we come in with a different perspective and you may think, you know, everything about your business, but when somebody else walks in from the outside and they look at you from a different perspective, Oftentimes, it's a very interesting situation.

Roe Polczynski: I'm going to leave you with this. I've been witness to this many times, not only with Don, but with all the rest of our team. Is, there's always that first interchange of, I don't believe you. And we're like, that's okay, you don't have to believe us. The numbers will show it. Watch it play out. And ultimately, I've heard many, many agency owners admit, Alright, I You were right.

Don Polczynski: It it happens. It does happen a lot. 

Roe Polczynski: And in the best way. 

Don Polczynski: It does, in the best ways. And it was the same story here with our original story that we shared with you about, you know, how they were tripping over dollars to pick up pennies. And we see that time and time again. It is not unique. 

Roe Polczynski: So the OG Fractional CFO is still out there, still developing, still being an entrepreneur.

Roe Polczynski: We are still innovating. And stay tuned there is really some great things to show. 

Don Polczynski: Yeah, and we'll give you more detail. 

Roe Polczynski: More detail coming. 

Don Polczynski: Alright. 

Roe Polczynski: Thanks guys. 

Don Polczynski: See you soon.