Debt, Profit & Exit: Fractional CFO Advice for Law Firm Owners (Ep. 180)

Written By Adedayo Adekunle

For many law firm owners, financial management starts with a simple question: How much money did we make?

But as a firm grows, that question is no longer enough.

On this episode of the Lawyer Millionaire Podcast, Darren Wurz speaks with fractional CFO Ryan Kimler about a more strategic approach to financial management which is one that focuses not only on what happened yesterday, but on what is likely to happen next.

Ryan explains that while traditional accounting often focuses on historical financial information such as profit and loss statements, balance sheets, and taxes, a CFO takes a forward-looking approach. The goal is to use forecasting, data analysis, trends, and strategic planning to help business owners anticipate what's coming and make better decisions.

Why Forecasting Matters

One of the most important themes in the conversation is forecasting.

Business owners need to know whether they will have enough cash to meet future obligations not simply whether the business was profitable last month.

Forecasting helps answer questions such as:

  • Will we have enough cash to cover payroll?

  • Can we afford to hire another employee?

  • When should we increase spending on marketing?

  • Are we heading toward a cash-flow problem?

  • How much money should we keep in reserve?

The benefit of forecasting is that it gives owners time and options. Instead of discovering a financial problem when it is already urgent, you can identify it months ahead and make adjustments.

Profitability Is More Important Than Revenue Growth

Another important lesson from the episode is that bigger doesn't always mean better.

It's easy for business owners to become focused on increasing revenue. But if expenses grow just as quickly or faster then revenue growth may not translate into meaningful wealth.

Ryan discusses the importance of building a healthy profit margin before pursuing aggressive growth. The goal is to create a business that generates enough profit to reward the owner for the risk and effort involved in building it.

In other words, the objective shouldn't simply be:

"How can I make more money?"

It should be:

"How can I build a business that consistently produces healthy profits?"

Know Your Numbers and Your KPIs

Financial statements provide important information, but owners also need to identify the numbers that drive the business.

For law firms, this can include financial metrics such as:

  • Profit margin

  • Labor costs as a percentage of revenue

  • Marketing costs as a percentage of revenue

  • Cash flow

It can also include operational metrics, such as cases opened and closed each month.

These numbers provide a clearer picture of what is actually happening inside the firm.

The key is to look at trends and percentages, rather than simply focusing on whether revenue increased in a particular month.

When Should You Consider a CFO?

Ryan explains that a CFO becomes particularly valuable as a business becomes more complex. He suggests that when a company approaches roughly the $1 million revenue mark, there may be enough financial activity and complexity to benefit from fractional CFO support.

A fractional CFO doesn't necessarily mean hiring a full-time executive. Instead, business owners can bring in financial expertise on a part-time basis to help with forecasting, strategic decisions, financial problems, and planning for what's ahead.

Don't Wait Until You're Overwhelmed to Hire

Hiring is another area where financial forecasting can make a significant difference.

Many business owners wait until they're completely overwhelmed before hiring. But by that point, the business may already be suffering from capacity constraints.

A better approach is to look ahead.

If your numbers indicate that demand is increasing and your existing team will soon be unable to handle the workload, forecasting gives you the opportunity to begin recruiting and training before the problem becomes critical.

Your Business Shouldn't Be Your Entire Retirement Plan

Building a successful law firm can create significant wealth, but relying entirely on the eventual sale of the firm creates risk.

Business owners should also think about building personal wealth outside the business.

The goal is to avoid reaching retirement with nearly all of your financial security tied to the value of one company.

A successful business can be an important part of a wealth-building strategy but it shouldn't necessarily be the entire strategy.

Build a Business That Gives You Options

Ultimately, the conversation between Darren and Ryan is about much more than accounting.

It's about financial leadership.

Successful business owners need to understand where they've been, but they also need to know where they're going. That means using financial data to make better decisions about growth, hiring, spending, profitability, debt, and long-term wealth.

The most valuable question isn't simply:

"How much revenue did we generate?"

It's:

"Is this business becoming more profitable, more valuable, and more capable of creating the life I want?"

For law firm owners, the path to financial freedom isn't necessarily about building the biggest firm possible. It's about building a profitable, predictable, valuable business that creates wealth both inside and outside the firm.

Key takeaway: Stop managing your business by looking only in the rearview mirror. Use forecasting and financial intelligence to understand what's ahead and make decisions today that create a stronger business tomorrow.

Resources:


Connect with Darren Wurz:

Connect with Ryan Kimler:

About Ryan Kimler:

Ryan Kimler helps business owners take control of their finances and accelerate their profits. He works directly with business and law firm owners to gain a deep understanding of their operations, assess their financial health, analyze current profitability, and identify the obstacles hindering growth. With this insight, he develops tailored, data-driven strategies that transform financial challenges into opportunities. By implementing clear, actionable financial solutions, Ryan helps businesses accelerate profits, improve cash flow, and achieve long-term financial success.

With years of experience as the Director of Finance for a $100 million company, Ryan understands what drives business success. He has worked with more than 200 law firms, helping them scale their operations and significantly boost their profits. His expertise in financial analysis and strategic planning gives business owners the clarity they need to make informed, profit-driven decisions. Whether it’s through part-time CFO services or financial coaching, Ryan equips his clients with actionable steps that move their business forward.

As an international best-selling author, nationwide CLE speaker, podcast host, and Certified CFO with the CFO Project, Ryan will leverage all of these experiences as part of our Profit Accelerator System designed to help businesses reach 25% net profit margins in just 90 days.

When he’s not working with business owners, Ryan enjoys spending time outdoors with his family. He’s a husband, a stepfather to two children, and the proud parent of two Great Danes. Whether speaking at industry events or hiking a scenic trail, Ryan is always focused on the same goal—helping business owners like you Accelerate Your Profits!

Adedayo Adekunle
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