Interview with Advanced CFO Solutions CFO Lee Stephenson
Advanced CFO Solutions provides outsourced CFO services to small and medium sized businesses, mostly along the Wasatch Front. Lee Stephenson is one of the CFO’s that assist clients with budgets, fund raising, accounting systems and generally manages the accounting/financial function for his clients. He has over 25 years of experience in financial management, tax planning and accounting. He has served as the CFO for over 30 companies ranging in size from start up to 650 employees. Mr. Stephenson spoke with Business Minds Reasearch & Development about his experiences in managing the CFO operations of numerous companies and what is needed for a company to be successful.
What is the history of Advanced CFO Solutions?
Advanced CFO Solutions started 18 years ago by Kent Thomas. Today, it has over 20 team members who provide various financial and accounting duties from bookkeeper to CFO. Thomas found a need to provide contracting CFO services to companies within the Salt Lake Valley which were too small, and thus didn’t have the need for a full-time person, or simply couldn’t afford a quality CFO due to financial constraints. Hence Advanced CFO Solutions was established. Advanced CFO Solutions is a leading resource for providing outsourced CFO’s to small and medium sized businesses. The company handles all financial aspects of a business, including accounting and finance on an outsourced basis to its clients. While the company assists clients with their accounting needs, it really shines when helping companies raise capital. It does this by leveraging existing resources with access to debt from banks or equity from investors. With over 15 years of experience specializing in income tax, Mr. Stephenson also finds that he is uniquely qualified to help his business clients as their CFO. He often quotes the expression: “It’s not what you make that counts, it’s what you keep.”
What are the top 3 lessons you’ve learned while consulting with companies as a CFO?
First: To be successful, a company CEO must have vision. That needs to be communicated so that the company can know where it is going and how it will get there. As a part of this, it is essential that the company know its customer and how it can provide needed products and services in the marketplace.
Second: there must be an alignment within the company. If done properly, a budget is a great tool for this. Budgets can be used to provide the road map to financial goals. But they can also be used, with the proper buy-in from employees, as a motivator. Budgeting and accountability can help create company alignment.
Third: accurate information. A CEO must have good accounting information that he or she can rely on in making decisions. This information should also include accountability to give discipline and structure to an organization. I often find that businesses may be losing money but the CEO doesn’t really know why. One solution may be to prepare an analysis of separate revenue channels to see which lines of business are successful and which ones are not. There may be more, but once this is provided, the CEO is empowered to make the correct decisions. With good data, the decision and course of action can be made easier. The CEO must have good information that will allow him to be confident in his decision-making.
How does a startup decide on whether to take on an additional partner or to take on additional debt?
There are two reasons a startup would engage with an additional partner. One, it needs capital for growth. And/or, two, it may need a strategic partner who can provide access to markets or provide help with strategy and governance. It is one thing for a startup to take additional money from a new stakeholder and another thing to have a partner with the expertise to form a strategic vision for the company. Hopefully, the startup can get both. Part of that equation is to find someone that knows the business and knows what the business needs to be successful. Of course, no one knows everything and owners should be willing to bring on an added level of experience that isn’t already available to the company.
Why do businesses fail?
Studies show that most businesses fail because of the lack of capital. Capital is not just cash flow but can include other things such as human capital and culture, etc. Businesses often don’t know how to align these capital resources to operate profitably. That is largely the role of an effective CEO. Another reason is the new entrepreneur sometimes thinks he/she can do everything when they simply can’t. They should do what they do well and get the help when it is needed.
Projections are often used to provide the roadmap to success. And while they don’t always provide the exact timing when, for example, the business may run out of cash or have other problems, they will provide the CEO with trends. When comparing budgets to actual results, the CEO can usually see where the company is succeeding and where the company needs to work. With this information, hopefully, the CEO can solve small problems before they become big problems.
The challenge of succeeding as a startup isn’t about having an innovative idea. While those are important, if that’s all it took, almost everyone who tried would be successful. Yet we know that the failure rate is over 90% after 5 years. The difficulty lies in whether you can efficiently get the new product to market.
How often do non-financial issues play into the overall success of a business?
All the time. While financial capital is the number one reason for failure in small businesses, the CEO needs to recognize and leverage other sources of non-financial capital including product, people and processes.
What are your initiatives going forward as a CFO?
The most important thing to me is to make sure that my clients receive value for my efforts. I am truly motivated to make a difference in the business. Nothing else matters.
What is the legacy you hope to leave behind?
From a business perspective, I would hope that I was a trusted advisor and that my clients would say that I was instrumental in the success of their business. For my family, I would hope they would know that all I really wanted to do was be a good example to them and provide service to others.