EP 002 | Growth Under Pressure: How I scaled from $0 to $500M in 6 years (and almost lost everything) — with Maney Mazloom

Show Notes

Maney Mazloom built EncompassRx from zero to nearly $500 million in annual revenue in just six years. But explosive demand for a new hepatitis C drug nearly sank the company, leaving him checking the mail multiple times a day just to keep cash flowing and patients supplied.

• Watch on YouTube
• Listen on Spotify
• Listen on Apple Podcasts
  

—

🌟 Highlights

• How to scale to $500M without losing control
• What to do when cash flow lags behind growth
• Why a co-CEO model can accelerate scaling
• Balancing patient care with investor pressures
• The hidden costs of delaying financial systems

—

⏱️ Timestamps / Chapters

00:00 — Intro & setup
02:45 — Leaving corporate pharmacy to build something better
08:20 — Recognising the entrepreneurial mindset as an employee
14:30 — Managing explosive growth and cash flow crisis
22:15 — Co-CEO partnership dynamics and decision making
28:40 — Scaling KPIs from revenue to profitability
35:10 — Building a pharmacist-centric service model
40:25 — The critical mistake of delaying proper financial systems
47:30 — Current ventures and economic concerns in real estate
52:00 — CTA & wrap-up

—

🙌 Want more from AdaptCFO?

Maney’s story is proof that rapid growth without financial infrastructure is dangerous. If you’re scaling and want to avoid the same mistakes, check out AdaptCFO’s free resources below.

• Free CFO consultation
• Financial fitness scorecard
• Other episodes
• AdaptCFO case studies

—

Transcript

[00:00:00] Maney: I would say the first three years we literally almost took every single opportunity that came to the door, and it was chaotic.

[00:00:13] Eric: Welcome to Growth Under Pressure. I'm Eric Josovitz, founder of AdaptCFO. Here to pull back the curtains on what it takes to scale fast from near crisis moments to epic turnarounds. The leaders of the fastest growing companies in the US unpack the solutions that got them through their toughest moments.

Ready? Let's get started. Maney, thanks for joining me today. I obviously know a lot about your background and how you've been able to grow under pressure. Let's dive into your story. Excellent. Take us back. What problem first pushed you to launch EncompassRX

[00:00:45] Maney: So initially for me it was I think very personal, but also also sector specific.

I worked in the specialty pharmacy space and personally was recognizing I was at the store level for the larger corporations pharmacy corporations. Everybody knows and. I was finding that the job working at that level was not really satisfying to me from a, it wasn't really utilizing all of my skillset and kind of strategy and business development and kind of thinking about how to progress business forward and trying to do that from a single store location in a context of a larger company was extremely challenging and trying to find.

Upward mobility within those companies in and of itself was also extremely challenging. They're very political organizations, and it's a lot of who knows who. And they if you don't know the right people or have the right conversations they're pretty comfortable leaving you where you are.

You're, you really do become like a faceless, nameless number. And if you choose not to accept that role, they have a line of people waiting outside the door to take that number from you. Then also from a sector perspective we saw an opportunity, my business partner and I we talked about it as early as when we met in 2007, about the way these, the companies we had exposure to at that time, the way they were developing business, but also managing patients and providers.

It was very, it was very structured and organized and didn't take into account almost that you're dealing with healthcare. Like these are people's lives. And even with the providers, like the, the providers are essentially your really your first customer. You have really two customers and that you have to get the business from the provider and then you have to provide the service to them and the patient.

And they just, were not approaching either one of these, I'll just call them customers. In this scenario, they weren't really approaching them from a perspective of what are their needs. And that every CU customer may have slightly different needs that need to be met based on where they're at.

They wouldn't go to where the patient or the provider was at. They are the big bad machine and you come to them, they don't come to you. And so we really thought there was an opportunity there to go out and. To use our, the network we had built from working in the space and expound from that.

And really our goal initially was just to, we started as a metro Atlanta specialty pharmacy with intention to, to grow it, potentially to, like we definitely wanted to grow as statewide, but maybe even regionally. But as we scaled up and our, both of our, my, my business partner, my leadership styles, our leadership styles came into play, and our cut, our general aptitude for business and growing business, scaling it and developing it really started coming through and we just grew it way beyond what we ever initially anticipated when we started the company.

[00:03:54] Eric: That's fair. So you guys had a regional Yeah. You had a local focus at first, you wanted to perfect the, the product and make sure your offering was great locally, and then you could expand out. Can you speak on, when you made the transition from an employee to a business owner, do you remember the decision making and how you're, 'cause a lot of people have that question, it's like, how do I go from an employee to starting my own business and.

Affecting many lives directly with my own visions.

[00:04:29] Maney: Yeah. So I think that for me it actually happened before I made the jump. I think I recognized it when I was an employee that I wasn't treating my work as an employee. I, I wasn't just leaving the work at work and clocking in and clocking out.

And I, so I think, that they you have to be honest with yourself about whether you have that inherent trait or not. And I think it's one of those things that sounds nice and splashy to say that I don't leave work at work and it lives, but really there's a significant downside to that experience, right?

Like it literally never shuts off. And when you're a business owner, it shouldn't shut off because it, especially in those early years where you're building and scaling. There real, it's hard to, and I don't know that it would be in the best interest of becoming a highly successful business to separate and really take a lot of time away from the business in those early years.

But I think I noticed it as an employee that it wasn't resonating that I was an employee because I wasn't treating my work that way. It felt like. I wanted to dig into the weeds more. I wanted to continue growing the business. I was doing like taking every opportunity there was after hours, whether it was dinners with physicians or events with patients, or whatever it was, I was participating in it all in the name of learning more, developing more strategy, and developing more business.

And so when the transition actually occurred in, in real life and became a business owner it still was an exponential jump up because now not only am I doing that in the role I had as an employee, now all aspects of the business fall on you. And very quickly you're like, there are only so many hours in a day.

And now I am, especially at the beginning. You are everything. You are C-E-O-C-O-O-C-F-O logistics manager. Acting as a pharmacist, a clinical pharmacist, we are the sales team. You're literally everything. And I think if you can recognize that you have that mindset even before you make the jump, and you're honest about where your limitations are from that aspect, like from the perspective of are are you able to really live and breathe this thing?

While the work is still very intense to switch over to business owner, I think it start, it also simultaneously can fuel fulfilling even while you're stressed out and dealing with 15 problems and learning all these new aspects of business that you've never been exposed to before.

[00:06:57] Eric: Yeah, that's fair.

There's definitely a balance between tough, hardest thing you've ever gone through and fun at the same time. Yeah.

[00:07:07] Maney: And we would experience the same thing in the same day, and sometimes even in the same moment, you would have both of those experiences because you're, some maybe your biggest account is at risk.

And so it is one of the most stressful things you're facing. You're like, if this goes away, if I don't figure this out, we are in trouble as a business. But then also figuring it out and being able to land on your feet on the other side of it. Creates a very you can look back on that and say, I did that.

Like I was able to, you can figure that out and really understand kind of your own capabilities, like really, the breadth of your own skillset and the growth you experience in that process.

[00:07:48] Eric: Yeah. So couple steps forward, couple steps back. And it should be a net positive in the end.

[00:07:54] Maney: It should be. And it's not always, it's not, we don't want to give the lots of businesses fail and it's not always a it's not always due to the skillset or experience of the own, of the founder or the operator. There's a lot of different factors that go into play here.

There are very few sectors that don't have large corporate level players that. Dictate rules and augment how things should be run. And you sometimes you can't control those things and you might be an excellent entrepreneur or leader, but that, there's lots of factors in terms of whether a business can be successful or not.

But ultimately, to your point, the few steps forward, few steps back, and you're hoping, as you look back at different metrics over six months, a year, multiple years, you're finding there's more steps the steps forward, add up to more than the steps back.

[00:08:42] Eric: For sure. You and your business partner ended up being co-CEOs talk.

Gimme a little bit about how you guys came up with that, but ultimately give listeners a snapshot of when you sold. 'cause you sold the company eventually, I and the team size, company stats and, maybe one headline metric that you guys track to. To scale up and eventually sell sell.

[00:09:06] Maney: Yeah.

So from a, from the co CEO perspective. So he and I we had been friends and coworkers and really, got, had gotten fairly intimate in each other's lives for the five years before we even opened up Encompass. And. Really, I think we were in it together as true partners. It was really a 50 50 dynamic for between the two of us.

And we have fairly different personalities and different strengths and weaknesses and I think it was excellent to have that counterbalance because things he did I was maybe weaker at and things I do he was maybe weaker at. But not only that, but just when you come to critical. Points in the business of making decisions that are forks in the road and you've gotta go one way or the other, and sometimes we would've knock down drag out fights in the pharmacy about it, about how we handle things that were quite esoteric in nature. What is our theory behind how we treat our employees and pay them and compensation which direction are we going on that? And as we did that, I think having that counterpoint of someone who has a very different approach to it.

Really ended up being quite beneficial because it's easy to be in your own echo chamber and see things and think you have a 360 view of something. But really it's almost impossible to do that as a as one person. You never have 360. So even if you don't have a true 50 50 partner as a business owner, I think it's always important to have people around you that are.

Knowledgeable enough and intimately aware enough of your businesses that you can talk to them about these scenarios that come up to get counterpoints that you're maybe not contemplating while ultimately you'll still be the decision maker. I think it, it will really beneficial in terms of our scaling and into that, to that second question, it's bleeds to that scaling.

At the time that we exited, we were almost at a half a billion dollars a RR. We were just over a hundred employees. We had gotten to that scale in about, in six years. We sold almost like six year, like right before our six, six year anniversary, like two weeks shy of it, of opening the pharmacy.

And I think there were at different stages of that six year. There were different KPIs that we looked at for scale. Initially it was really high. It was a very high level. It was revenue it was just patient volume and revenue. We were taking on patients that lost, we lost money on, we were taking everyone and anyone, because in our sector size and volume are put you in a position to negotiate everything else.

If you don't have a lot of patient lives, you can't win payer contracts, you can't speak to pharma about. Reporting data back to them or direct purchase agreements or any of those kind of things. I would say the first three years were really just about take, we literally almost took every single opportunity that came to the door and it was chaotic.

We exploded overnight and trying to, it felt like even almost all the way up to the end, we were constantly trying to. Scale up our staff and resources to match the volume we had grown to because we had just such a growing perspective, like a growth perspective on the business that we were taking on.

And it got a little more selective the last half of the business. And really, I think then the KPI kind of changed from revenue to more of profitability.

We didn't necessarily turn away patient lives that weren't profitable, but we were now in position to make. Decisions around payers and pharma and wholesaler, these other avenues that don't negatively impact the care you provide patients, but significantly impacts your bottom line and your ability to continue scaling.

'cause then once you hit that, number where you have more employees, more families that are reliant on you and the business decisions you make it does cause you to pivot like you realize. We can't just take on revenue for the sake of revenue anymore. We need to, really be a little more selective about the opportunities we approach.

'cause we, we want our business to continue to grow and now we have, dozens to now a hundred lives that are reliant on our business succeeding, beyond just are we profitable as a business?

[00:13:19] Eric: Yeah, absolutely. I firsthand saw the dynamic between you and John and it's.

You don't think co CEO would work or, you guys would clash, but ultimately the titles, whether it's CEO or COO, the titles don't necessarily matter. It's how you can speak to each other and work on the challenges and find solutions to them. And I think, there's different personality types and you guys absolutely were that like yin yang.

Yeah. Yeah.

[00:13:48] Maney: You still find that to be true. We're still in contact often and we still find that to be true. I think for all the differences we have that, we have a lot of things that we have similar beliefs about that I think land more on this kind of like leadership and entrepreneurial level.

Because we approached our, I, we feel like we, even when I look back, we feel like we approached our staff that way where we weren't closed off to ideas that they would bring to us because they're a pharmacist or a pharmacy tech or whatever title they had, like ultimately. People have opinions and perspectives on things that you don't, again, I keep coming back to this nature.

You have to part of, to me, part of being a good leader is recognizing like that you need to have flexibility in how you solve problems. Not every problem requires the same approach and depending on the people you're dealing with and trying to solve a problem, you might come off authoritarian or you might come off too passive and indecisive.

But you change the people that you're surrounded with and all of a sudden it's a perfect, same problem, but different people. And all of a sudden your leadership style seems exactly correct. And so really it's about you being flexible with your style. That I think having dynamic, a dynamic approach really benefits in the long run.

And John and I had that between each other, but also with our staff.

[00:15:10] Eric: Great. So you could have, different ones. You could have you or John going into the conversation. That's right. Or the speaking to a different person depending on their needs. That need might be, or what's going on.

Exactly. So it's not just empathy, it's strategy behind the conversation.

[00:15:27] Maney: Yep. And you have to be honest with yourself about what you're not good at. Like maybe this isn't my conversation as much as you might have an opinion on it. Sometimes you have to say, I think if I to have, if I'm the one leading this conversation, things might not go exactly the way I

[00:15:43] Eric: like, I'm gonna be in my office.

That's right. Great. That gives a scale. Let's rewind to your first, oh, no moment. So describe to me the single highest pressure financial moment you've faced so far. Throughout that timeline, you know what triggered it and how did you dig out?

[00:16:00] Maney: Yeah. So in, in our space, as probably most people know, any, with any kind of exposure to healthcare, no.

Cashflow in, I'd say our space, but really almost every space. Cashflow is a major challenge for a growing business. And in healthcare specifically because the, the timing of your cash coming in from payers is quite disparate from the timing of your cash going out to your wholesaler or pharma manufacturer if you're buying directly.

Your payment terms are generally very short while you're receiving terms are very long. Yeah, so when we had our first kind of exponential growth with the release of some Hepatitis C drugs back in 2013. It was really, it was jarring when the, when those drugs got approved, doctors had wholesaled warehouse patients and kind of wholesale started prescribing to all of them.

These are patients whose lives were going to be significantly altered by a massive advancement in treatment from a technological perspective of kind of what they were getting. How they were going to respond to it and the side effects so that they'd held these patients who really couldn't take the previous therapies because they were too challenging with not very great outcomes to overnight.

Now, there's an easy pill you take for 12 weeks that cures you and you have none, very little, if any, side effects. And so as those patients started flowing in and the dollar amount on the drug is very expensive, we. Within weeks had a cash flow issue because we were dispensing the drugs. We were very good at our job.

Like we, from the service we were providing with helping the doctor and the patient, get the medications approving, making them affordable, and then getting the patients through therapy and being compliant. We were almost too good at it. So we were loading up on patients very quickly, dispensing the drug, but we might be 30 to 60 days out from receiving that.

Payment for that drug. Oh really? Their insurance company and from whatever other programs are helping pay them for that, pay for that drug. But the wholesaler is you have two, seven days to two weeks to pay for that drug. And so it was, we were at the point where we were checking the mail three to four times a day.

'cause the checks would still come in, paper checks at that time. A lot of them still do. For those paper checks and doing multiple runs of the bank to deposit. Then at the end of the business day, writing the check for the wholesaler, faxing them a copy of the check that was being mailed out to them that day.

So they would release our order the next day, otherwise they weren't gonna ship us our meds because we had hit our credit limit with them. And the timing of the cash coming in was just not matching the timing of the drug going out. Some of what relieved this is that thankfully the therapy was 12 weeks, so patients come off, they're not lifelong treatments.

So you have, while you would get like this three months of $90,000 roughly of revenue and expense kind of going in and out, patients would stop after eight to 12 weeks. And some of that timing helped us catch up because then. As that patient came off there, those reimbursements are now also coming in to help pay for the next patient.

So we really have a three month window there where it was really like we, if we can't get drug and provide a refill to a patient, we are now failing because we are actually harm these people, like in healthcare wise. But we navigated it. We didn't have a single one of those si circumstances happen.

We were able to make that. Make that transition, but it was not, without its challenges and sleepless nights of kind of what is going to happen. Some nights just staying very late in the pharmacy to take care of all the different nuances around getting the cash flow worked out so that patients could get their prescription then, the next couple of days and having our inventory managed accordingly.

[00:20:06] Eric: Yeah, it's incredible to go through that and still not have, turn patients and still have strong retention sometimes. I don't

[00:20:15] Maney: know how we did it. Like I don't know how that, like how it exactly, so there were definitely days where I was like, this is not going to work. I don't know how this is gonna work.

And sometimes it would just be the luck of you go check the mail at 5:00 PM and there happens to be another a hundred thousand dollars check in there. And that's all you needed to like, barely cover the drugs that are coming through the next day.

[00:20:36] Eric: How do you navigate that? Do you just have to be as patient as possible.

You have to be like a monk.

[00:20:41] Maney: No. There is some of that, like internally, yes, you have to be mentally prepared. There are operational things we implemented with the timing of refills and the timing of the drugs coming in and out with what we anticipated receiving. That day or that week in reimbursement and when you can.

Again, because we were so good at our service, we were often well ahead of when patients needed refills. So it gave us a buffer of sometimes even a couple of weeks to order their medications and wait for the reimbursement and all the things that kind of happen to get it to them just in time.

So just in time is a very like. You hear this talk about that inventory style a lot. We would do a lot of just in time delivery. So our inventory at any given time was very lean rel our turns were are were crazy because of how lean we kept our inventory versus how much revenue we were doing.

[00:21:38] Eric: Yeah. So it's a mix of

[00:21:40] Maney: process, patience and controls, free internal controls. There's no value to that. You can freak out internally, you're going to Yeah. But there's no point in letting that freak out go out into the pharmacy space because that impacts the entire team.

John and I might have had some like 10:00 PM walking out the door, freak out when no one else is around. But again, this was the benefit of the co CEO model is you have someone who is right there in the weeds with you. And feeling the pain with you and everything, you got, you're like holding onto each other for dear life to get through it.

Yeah, I think the patient component and really you, again, you've got to just be honest with yourself about what your skillset is and what you can tolerate because you have to have the mental acuity to problem solve in really challenging circumstances. And for some people that's not their strength.

Like they just can't, that's not what they're really good at.

[00:22:35] Eric: Yeah, and it's hard, it's easier said than done. Now I want to unpack the partner dynamic just a little bit more, because there's a lot of folks that they're like, I wanna start my business by myself with one partner or three partners.

What do you think about the dynamic between having two decision making partners? I know you also had a third that was, more passive, but. Like what's your suggestion to hey two is really just a good number and that's what you would suggest to most businesses.

[00:23:12] Maney: Yeah. Again, I think this becomes a very, I would be doing it disservice by giving it a general answer, because two people could be right, or it could be absolutely wrong depending on the two people.

If it was another person who was exactly like me, had the same personality traits, it would not have gone well. I think the differentiator is not so much do you have a partner and that helps you and is that one partner or two partners? I think the differentiator is do you and your partner or partners have.

The ability to understand each other and yourselves from an entrepreneurial leadership, business development characteristic model, personality model. And can, if you understand, if you, again, like I could, this is probably not going to be the theme of this one, if you're honest about about what you can and can't do, what you're good at, what you're not good at.

The other person as well, and you can be honest to each other about that. One partner could be enough, maybe two partners, maybe it's a few, because sometimes if you have a third, ours was a passive, but if you had a third that was more involved. Sometimes that can help, when we were at a roadblock and couldn't really make a decision.

Sometimes the third voice is beneficial. But that's just one more person and one more set of like personality traits and dynamic that you have to contemplate. I would say overall that makes it more complicated and less likely. But it's not to say that there aren't circumstances. Again, that's why it's I don't think like a general answer is really, if the answer is you have to have the right two people or the right three people.

It doesn't matter if it's two or three just by itself. It has to be the right fit for it to work. Yeah.

[00:25:07] Eric: Did you guys draw the lines in the sand in the beginning and say, Hey, these are our roles and responsibilities, I'm gonna stay in this lane, or did that evolve over time?

[00:25:16] Maney: Yeah, it happened more organically and also evolve and changed as we were, as the business grew.

And our roles and demands on us changed. And a lot of it early on was, when we started was just the two of us in a little 700 square foot space. And as we were even contemplating hiring the first person, there was a lot of, there was just a, we had, we spent as much time having conversations about our ideas of the business as business came in.

And I think that's what helped develop the early on ebb and flow of who's taking the lead on what, then as we as the business kept growing, because it grew so rapidly, our roles were constantly evolving. Like we stopped, within three years, two, three years, we stopped doing any of the pharmacist work.

Like we had pharmacists we had hired and scaled up and our best, use of our time was no longer doing clinical work in direct patient care, but rather higher level like business development and team development and the, those kind of things. Building out the rest of the infrastructure around finance and human resources and logistics.

And so our roles changed. We had to be, we had to do different things and we just constantly communicated through the six years it was, we were always in touch with each other. Just a very high level of communication between the two of us to help flesh out who's doing what.

[00:26:39] Eric: Sure.

Makes sense. Alright, look, being in the healthcare space where patient privacy and, care mistakes can get expensive real fast. So looking back, can you think of one decision that had the biggest impact on cash flow or margins? I know you spoke on cash flow, so maybe more on, on margins.

[00:27:02] Maney: Yeah. I think we were generally a lower margin model. Because we were, we're both pharmacists by trade and we really invested in the patient care aspect. So we were an unusually pharmacist, heavy pharmacy most specialty pharmacies. And even now to this day they'll have some pharmacists, but then a lot of the work gets doled out to pharmacy techs and caseworkers and they'll create different titles.

But essentially folks that don't really have like healthcare. Specific training or education. And we really didn't do that. We felt like one way to build the business was to have this be a pharmacist centric, pharmacist focused pharmacy. So our pharmacists were heavily involved in all aspects of the business.

Like they actually, we would pick pharmacists to hire that we thought would do well going out. Co-marketing with our salespeople to the doctor's offices. So they would often go to the doctors and pitch the service and build the relationship, but it was a qualitatively different conversation because they're clinical in nature versus just, Hey, I, I'm a salesperson and let's talk about your interest and talk a little bit about our service now, let's talk about lunch.

And it was really like, what are you doing for these kind of patients? And like, how can, here's our input on how that drug may best work or what we can do. To help your patient population. And so we, but the flip side of that is pharmacists are very expensive relative to these other staff members.

They're easily twice as much, if not sometimes three times as much. And so it, it absolutely impacted our margin. I don't know that, I don't know that I would call it a mistake. I would say that maybe. As we grew, we needed to be a little bit more open to bringing in ancillary staff to do some more of the work that maybe wasn't as clinical.

And I think we were a little too slow maybe to let that make that transition because we were so entrenched into the service model and making sure it was at the, this particular way. I think that from a business profitability perspective, without hurting that service model and still being very pharmacist centric, very pharmacist focused, patient healthcare oriented first and primary, we could have still transitioned some of that away to help our margins some.

[00:29:30] Eric: Wow, that's great. It's, it sounds pretty clear that investing in. People more operational and, customer support and making that investment ultimately grew the volume and, it, it all trickled down to the bottom line, right? It's not just saying, Hey, you know what it, it increased your retention.

It allowed you to retain all those patients.

[00:29:54] Maney: It directly led to our growth as well. So while we had the model of course of having salespeople in territories new regions and new territories, we often got into new regions and territories because of the physicians we worked with, being thought leaders in their space and recommending us to other region and territory thought leaders.

A physician that was here, that was maybe at in Atlanta at Emory. Makes an introduction to a physician at Duke who then makes it introduction to a physician at NYU. And all of a sudden you are expanding through the, the physicians are almost doing your sales and marketing for you.

They'll call up because these are really challenging drugs. They're not easy to get into the hands of patients and get them on therapy and have them stay on therapy by the nature of them being specialty drugs. And so when a physician would find a solution that worked and got their patients taken care of.

They, their physicians by nature as well, they want patients to do well, not just their own. And so they're quick to recommend you to other folks as well that are having a hard time with a large patient volume needing these medications.

[00:31:00] Eric: That's great. That's great. At what point did you guys realize that spreadsheets weren't enough or, back to the, too late.

[00:31:07] Maney: Too late? We had QuickBooks from the beginning actually. It's just that our silent partner was managing them and they just didn't go very well. I think we just we had this false sense of security that we are using QuickBooks and like we are doing some actual, we're not just doing kind of basic Excel spreadsheets.

Like we're using something that is. A financial ledger by nature. But then again, because that initial pop of growth happened so quickly, we fell, be quickly, fell behind. Like it was not, and you're not focused on that initially, right? Like you're so entrenched in, it's the same as hr, like we did HR too late.

But because you're you're so involved in kind of the growing of the business and providing the service. You start loop. It's hard to maintain that level of attention to the things that are, I call them ancillary, even though they're not, they're ancillary when you're thinking about just growing the business and that kind of tunnel vision.

But all of these things play a huge role in the growth of your business. Keeping your books and having the ability to do deep analysis on what's driving your KPIs one way or another. Or, what, whatever trends you're see, being able to see trends and using the financials to help understand the trends.

So we were behind for sure. I would say, I think probably about six months into the big explosion of patients we had, we recognized that our books were not in order and we like had to use outside sources to do an audit and get 'em corrected. And then, so really focusing on bringing in a dedicated financial team.

And really I think for us, if we had had the, for the forethought at that time. To start with a fractional CFO right out of the gate, it would've made probably, we probably would've handled things varied, even like that cashflow issue. We probably seen it much earlier, had better decision making less sleepless nights, but also just fixed the problem quicker.

Had we have a partner there that, even again, if it wasn't a true CFO in building like a fractional CFO that's managed helping us manage things monthly or quarterly, it would've made a tremendous difference in the trajectory of our business, even beyond the amazing like growth we had.

[00:33:16] Eric: Yeah.

I mean it, from my experience, finance and accounting is the last thing that people add, which is a mistake. Yeah, I agree. It

[00:33:25] Maney: informs so much of what is actually happening, not what your perception of what is happening, because that and the ability, what would happen when we finally did have like real, we had real reports and books to look at.

You start realizing like you feel oh, I'm losing business here and I'm gaining business there. But then when you see the actual numbers, you're like, oh, that was just my feeling. That's just a perception. It's not the reality of what is happening and it helps you focus in on the actual problems or actual opportunities that are there in front of you.

I think that most, I agree with you fully, like we were guilty of it, so I can say firsthand, and I think if we had seen numbers like that early on, would've changed some of our decisions. In our trajectory.

[00:34:08] Eric: You'd be making data driven decisions, versus gut. Gut failing. That's right.

Awesome. So after that growth, it sounds like you were six months, you got the audit. Did you hire A-C-F-O-A full-time CFO next? Was that the next

[00:34:24] Maney: Yeah, so like part of that auditing was bringing in the f it was like a temp CFO. Then the temp CFO once that, like once the books got corrected and we like figured out all, like really had a formalizing of our finances, then we immediately moved to bringing in a full-time CFO and then built out a small finance team under there from there where we had a controller and an accountant and kind of in-house all of those things developed over the last few years of our business.

[00:34:53] Eric: That's great. You definitely helped answer a ton of my questions, obviously. Yeah, please. Thank you for having me. Yeah, of course. Couple more. I obviously, you pointed out that needing a fractional specialist could've solved a lot of issues, and I think that market has evolved over time and there's a lot more offerings out there where you can get fractional CFO fractional controller even.

Even just getting your bookkeeping on repeat, where the founder's not working on the books. Thanks for pointing that out. Yeah.

[00:35:24] Maney: I'm, I know we're talking about Encompass, but I'm currently doing it, again, to the, to my original, thesis of this is, I know my weaknesses.

I'm not a QuickBooks guy. It doesn't, I can look at the, when I see the p and l on the balance sheet. The different, statements, I can navigate that, but like creating them is not my strength. I would absolutely ruin it. So in my current ventures, I have already engaged AdaptCFO to help me with all of my, by multiple accounts of QuickBooks now all running simultaneously that are all being managed.

I'm doing the bookkeeping as you mentioned, but also often in conversation with you around more cFO level, decision making processes around what we do with our different businesses.

[00:36:05] Eric: Yeah, that's true. And thanks, thanks for being a client. It's absolutely safe to say that you can get your books done for, the, fraction of the cost or of a handful of subscriptions, right?

Absolutely. I think a lot of people have trouble wrapping their head around that. You don't have to pay for a full-time accountant full-time CFO. So obviously appreciate you pointing that out. Yeah. If you've got somebody that's experienced,

[00:36:28] Maney: they don't need to be in your business every day.

They can do touch points like that and still, they, they've got enough experience and background to be able to navigate different sectors and come in on a monthly or quarterly basis and be able to inform your business significantly.

[00:36:46] Eric: Absolutely. Alright, I want to ask you one more question then we're gonna do a rapid fire.

Uhoh, you're in real, you're in real estate. What looming risks keep you budgeting extra buffer right now in real estate and, with the government changes and our economy, what kind of keeps you up at night?

[00:37:03] Maney: Yeah, I think goes from the large to the, like kinda large scale, scale concerns to minutiae.

You don't know when you have so much uncertainty in the economy with a lot of economists saying we're headed towards a recession, potentially. Depression obviously significantly impacts, real estate in all kinds of ways, right? It's what happens to the people that need home that are.

Are looking for housing and what they can afford and can't afford. But also creates opportunities where there's going to be probably some real estate that is gonna come up. That is, if you can be aggressive, mindfully aggressive, there's lots of opportunities to be had. Obviously the low hanging fruit everybody talks about is what's going on with the interest rates.

That significantly impacts our profitability as we leverage money to, continue to grow our portfolio. That is a significant factor in terms of our ability to move forward or have to be more conservative in our approach. And, their a hundred basis points makes a huge difference when you're talking about, I'm primarily right now in, in long-term rentals and in that space.

Financing or refinancing and having a point here and a point there makes all the difference in terms of what rents you can offer to tenants and still be viable. The idea much like kind of Encompass, my idea is not to maximize profits to the nth degree that I'm. These are people's homes, like people are living and having families and, experiencing life through them.

I'm not interested in having them a live and squalor, like I'm not that type of property owner, and b I'm not looking to rake them over the coals, over their rent and have constant upward pressure on them because, they're, I don't want living to be untenable from Icon for my tenants.

Yeah, you are the things that kind of keep you up and going into a market where there's a recession, you get concerned about what that is going to look like. What does that look like for the tenants and our ability to provide affordable living to them?

[00:39:08] Eric: That's super interesting.

So the interest rates and the cost of capital absolutely have an impact on the living quality, which, you'll be able to have more improvements, more repairs. Better living quality. That's great. That's exactly right. Alright quick, rapid fire favorite leadership or finance book you gift the most?

[00:39:31] Maney: I wouldn't call it a leadership or finance book, but I guess I'm, that's fine. My weird individual when it comes to these things, I would say I, okay. Give it to us. I do profit over people from Noam Chomsky. It's not a book you would expect someone who's like in business to really like, be talking about, but I read it when I was in college and I think it informs a lot of my strategy around business now.

A lot of those type of books where I think it's, I think we're, I think you're doing a disservice by only thinking about profit over people. I'll just leave it at that, like the people. Okay. Underneath are significant to the profit that you're making.

[00:40:09] Eric: I'm gonna check it out. Alright, one KPI you check every day or week before coffee?

[00:40:16] Maney: I think maybe I'm just scarred. I think I'm always looking at cashflow. I wouldn't say it's like really like a KPI and like a way of you can, look at it in that single, but I'm always looking at kind of overall cash flow of business of all of my accounts and businesses to determine.

What I have capacity for. I think all of the growth is really reliant on, you might not be super profitable right now, but if you've got the right cash flow and you've got the right idea and thing under, concept underneath, if you've got the cash, then the cash will help you get to that place.

[00:40:50] Eric: Awesome. Okay. Complete this sentence. A founder under pressure should always.

[00:40:59] Maney: A founder under pressure should always, that's an interesting question. There's a lot of different things that are popping in with, it's one thing that I think is gonna stick out the most, I think you need to be, I was gonna initially say patient, but it's not patient. It's mindful. I think if you are mindful and you're.

Decision making and understanding what is causing the pressure, what is causing the pain. Understanding that and being mindful of it will help you make a better decision of how to handle it. If you have the wrong perspective and you have the, if you think something is causing you the pain and pressure, but it's actually something else, as an example.

You will look like you're making a rash decision whether you're patients or not. And if you're mindful, you could even make a quick decision and it would be the right decisions. So I think being mindful and aware you really need to know your business. You really need to always know what's going on.

[00:42:00] Eric: Awesome. Love it. Maney. This was great. Really appreciate you joining us today. Till next time. Absolutely. Thank you so much. I had a great time talking with you. Hopefully it was helpful. It was. It was great. Thanks, money. Take care. That's it for today's episode of Growth Under Pressure. I'm Eric Josovitz from AdaptCFO, and I hope these insights help you tackle your biggest scaling challenges.

If you want to help other founders find the show, give us a quick follow or a share. Thanks for listening, and I hope to catch you next time.

‍