In an insightful interview with CanadianSME Small Business Magazine, Rob Hong, Co-Founder and CEO of Sapling Financial Consultants, shares the key strategies behind building a successful financial consulting firm. Since founding Sapling Financial in 2015, Rob has leveraged his unique background in theology and finance to drive the company’s impressive growth, including its expansion into the U.S. market. In this conversation, Rob discusses the importance of financial modelling for early-stage businesses, key practices to prevent common financial challenges, and how Sapling continues to stay ahead in the rapidly evolving financial consulting landscape. With a focus on strategic decision-making, Rob provides valuable insights for entrepreneurs looking to enhance their financial foundation and navigate business growth.
Rob Hong is co-founder and CEO of Sapling Financial Consultants. Rob’s analytical prowess and strategic thinking have been instrumental in steering the company’s remarkable growth.
Since launching Sapling Financial Consultants in 2015, Rob has been the driving force behind the company’s strategic direction. Under his leadership, the company has achieved impressive milestones, including entering the competitive U.S. market in 2019, with U.S. revenues surpassing those in Canada for the first time in 2021, and expanding the company’s serviceportfolio with the addition of data analyticsand quality of earnings offerings.
Rob’s academic journeyspans diverse domains, from a Bachelor of Arts at the University of Toronto to a Master of Theological Studies, refining his ability for nuanced discourse. Complementing this foundation, he attained the esteemed Chartered Financial Analyst (CFA) designation and completed a Master of Finance from Queen’s School of Business, merging theological insights with advanced financial acumen.
His tenure at Artemis Investment Management, a $2 billion investment firm, fostered his expertise in financial modelling, where he researched over 100 publicly traded companies and oversaw $150 million in client assets, culminating in his role as associate portfolio manager.
Transitioning to KPMG LLP’s strategy & operations group, Rob leveraged his modelling skills, diving deeper into database analytics and contributing significantly to high-profile projects. Seeking a change from constant travel, he joined Bell Canada Finance and was pivotal in crafting financial models that shaped Wholesale’s telecom reseller pricing strategies.
What inspired you to start Sapling Financial Consultants, and how did your diverse academic and professional background shape the company’s direction?
Honestly, I fell in love with financial modelling. I entered the business world with a somewhat unusual background — degrees in theology and Spanish. While studying theology, I wanted to build a coherent vision of the world but realized I needed to make a living, which led me to the financial services industry.
I discovered I could create a fully integrated vision of a single company through financial modelling. The realization inspired me to quit my job and start a business focused on financial modelling, later expanding into related areas.
My diverse academic background means I’m accustomed to not being an “expert” in any field. The demands of being a business owner — acting as a sales rep, technical expert, HR professional, lawyer (uncredentialed), CFO and motivational speaker — force me to continually become at least a minor expert in many disciplines to succeed.
As a financial consultant, what do you believe are the top three financial practices early-stage businesses should prioritize to set a strong foundation?
Early-stage businesses need a strong foundation across multiple disciplines. Here are my top 3:
- Businesses should analyze their “unit economics.” This involves gathering all costing and pricing information, making relevant allocations and examining the margin for each unit sold. Leading-edge businesses can track unit economics in real-time using dynamic dashboards in Excel or Power BI.
- A solid “bottom-up” financial model is essential. This model should connect inputs to unit economics, such as units sold, price per unit and costs. It should be calibrated with base case assumptions and outline full financial statements. This model is crucial for building credibility with investors, planning for growth and understanding cash flows. It also allows for variance analysis to identify areas for improvement, like whether missed income goals stemmed from low sales or pricing issues.
- It’s critical to maintain up-to-date bookkeeping and accounting, ideally on a monthly basis. Having accurate financial information is key to managing budgets and understanding runway and cash constraints.
Entering the U.S. market is a major milestone for any Canadian business. Could you share the strategic steps you took to expand into this market successfully and the lessons learned along the way?
We didn’t enter the U.S. market with a detailed business plan; instead, we took a risk-conscious approach. We sponsored a conference in Virginia and secured numerous meetings with qualified buyers and even closed some work within a month or two, a quick turnaround in our industry. This success revealed a significant market opportunity. We improved our processes for securing attendee lists, cleaning them up to target the right people, booking meetings in advance and maximizing our sponsorship dollars through exposure and networking sessions.
We’ve consistently adopted a risk-conscious approach. The US market is very competitive – where Canadians tend to work with the same service provider for years, Americans are quick to hire you, but also quick to fire you. We’ve learned to mitigate these risks through hiring and training the right people and ensuring we have as much face time as possible with our clients.
From your experience, how can investing in finance at the early stage of a business lifecycle prevent common challenges like cash flow issues or inaccurate forecasting?
Understanding your business’s financials through modelling and unit economics analysis will help lay a solid foundation for the business. Scaling has its own challenges, even if you’re profitable. Generally, expenses are incurred in real-time, while income has a lag. Having up-to-date accounting will help you better understand ongoing fixed charges to enter as assumptions in your financial model, as well as upcoming cheques that could be a drain on cash. This allows you to have a handle on upcoming cash obligations, and do what may be required to ensure you can meet them – factoring invoices, pleading with customers to pay sooner, negotiating better payment terms with vendors, securing a line of credit, raising more equity, etc. And by having established “unit economics” through modelling and dashboarding, you’ll be able to display to potential lenders and equity investors how your business makes money, and how much more money it can make if they write you a big cheque.
Looking ahead, what are your long-term goals for Sapling Financial Consultants, and what new trends or services do you anticipate shaping the financial consulting industry?
Our main long-term goals are to continue doing what we’re doing, but at a greater scale – in more places, with more clients and with companies of more varied sizes.
A major trend in the financial consulting industry is technological change. In our business intelligence practice, we’ve seen Excel losing ground to more effective alternatives like Power BI and Tableau. At Sapling, we made this transition in our service offering years ago, Excel continues to hang on for many, but companies using it for this type of work are operating with one hand tied behind their back. Tools like Power BI or its predecessors have been around for many decades, but a combination of institutional inertia and user unfriendliness kept them on the sidelines for a long time. That is changing as the tools become more user-friendly and as business education catches up with the times.
With our other two major services – financial modelling/FP&A and due diligence – Excel continues to reign supreme. While there are competitive products available, none have made a significant impact. Excel has continued to increase its capabilities, pushing out the timeline that a change to a new tool is critical. So there is a question of when, but there is also a question of if, modelling and due diligence will be disrupted technologically. At Sapling, we continue to keep a careful eye on changes and will make sure our offering is always at the forefront.
