Practice Success Podcast

Adam Lean: Accounting with Impact, How to Become Indispensable

• Canopy • Season 3 • Episode 15

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In this episode, KC Brothers interviews Adam Lean, who shares his unique journey from being an accountant to starting his own CFO advisory practice. Adam discusses the importance of cash flow for business success and how many business owners lack the financial knowledge to navigate their companies effectively. He emphasizes the need for accountants to transition from traditional bookkeeping roles to advisory services that truly help clients achieve their definitions of success. The conversation also touches on overcoming imposter syndrome in the accounting industry and the value of building strong client relationships through effective communication.

Takeaways

  • Adam Lean transitioned from accounting to entrepreneurship.
  • Many business owners lack financial knowledge.
  • Cash flow is crucial for business success.
  • Accountants need to offer advisory services.
  • Imposter syndrome affects accountants in advisory roles.
  • CFO advisory services can significantly impact clients.
  • Accountants can charge more for advisory services.
  • Understanding clients' definitions of success is key.
  • Effective communication is essential in accounting.
  • Building trust with clients leads to long-term relationships.



KC Brothers (00:05)
Hi, welcome to another episode of Canopy Practice Success. I'm here with Adam Lean and I am your host, KC Brothers. Adam, so nice to meet you and have you on the podcast.

Adam Lean (00:15)
I'm really excited to be here. Thank you for having me, KC.

KC Brothers (00:18)
Yes, you are a unique individual with a background unlike anybody that we've had on the podcast. Why don't you go ahead and elaborate on that for our listeners?

Adam Lean (00:27)
Yeah, I used to be an accountant. I graduated college with an accounting degree and I thought, well, I might as well become an accountant. I became an accountant and realized I hated 99 % of the job. I was not a big fan of doing accounting, meaning recording the past. Like I wanted to help the business that I was working for grow, but they didn't really care what I thought. They just wanted me to do

the financials and just make sure that the pass was recorded correctly. I started my own business on the side and that business grew a lot. And within a couple of years, I was able to leave my day job as an accountant. This business on the side had nothing to do with accounting. It was an e-commerce store. I really enjoyed working in a business, helping it grow.

KC Brothers (01:05)
Okay.

Adam Lean (01:11)
And then I started meeting other business owners who had their own business. And after talking to them, it sort of dawned on me that I was taking for granted the fact that I understood the numbers in my business. If sales were down or profit or cashflow was down, I knew why. These people were flying blind. They had no idea why. And I sort of was thinking one day, I was like, you know, it's because they didn't have an accounting background.

And then I thought, well, that's pretty typical of every business owner. most business owners started a business because they were an expert at the crap of their business, not an expert at numbers. These are people that are good at their crap. But a business lives and dies on one thing, which is cashflow. Cashflow is a financial

KC Brothers (01:45)
Yes.

Adam Lean (01:56)
concept is a number. business owners need somebody in their lives to help them have a successful business. successful business meaning somebody that can help them generate positive cash flow on regular basis. I started asking these business owners that I knew, was like, would you like my help understanding your numbers and telling you what to do to grow cash flow? They all said yes. mean, who would say no to that, right?

I ended up selling my e-commerce store and launched a what's now known as a CFO

just started asking people, would you like some help? You know, like I said, and then they all said, yes. Within a year and a half, I got to 17 clients and they loved it. just me. Yeah. And looking back, the reason why they hired me,

KC Brothers (02:34)
And this is just you, you haven't hired any other talent at that point, okay?

Adam Lean (02:41)
is because, and remember, I didn't even use the word CFO. The reason why they hired me is because I spoke like a human, not an accountant. And huge difference. Most accountants, know accountants are listening to this and audience that we train are accountants and bookkeepers. So I speak to a lot of accountants. Accountants can't help themselves sometimes and they like to speak in terms of

ratio analysis and forecast and taxes and balance sheets and accounts and all this stuff that the 99 % of business owners couldn't care less about. We have to speak if we're going to try to sell a business owner on a high ticket service like a CFO advisory service, we have to sell them on what they value.

KC Brothers (03:09)
Yeah.

Yeah.

Adam Lean (03:30)
They don't value having clean books. They don't. They don't value their tax return being done on time. They don't value making sure that the books are organized and clear. Yeah, they want it if you ask them, but on the larger list of things they have going on, that's not at the top of their list. They're not lying awake at night thinking, I can't wait till my books are closed next month. They're not. They're worried about how to make sure their business is successful and doesn't fail.

KC Brothers (03:32)
Yeah.

Adam Lean (03:57)
I approached these people initially, I approached it from that standpoint. Would you like my help understanding what's going on in our business and telling you what to do to have a successful business? That's why they all said yes.

KC Brothers (04:08)
I love that you put it so simply because again, these are people, any small business owner is someone who is passionate about a craft, whatever that craft is, like you emphasize. In the first year of a small business, 20 to 24 % fail. In the first five years,

40 to 50 % fail. In the first 10 years, 60 to 70%.

what are their dreams? What do they tell you?

Adam Lean (04:34)
Yeah, almost every single business owner has an idea of what they want for their business, their definition of success. Every business owner on earth has their own version of success, but the point is they all want a successful business.

KC Brothers (04:41)
Yeah.

Right, but success doesn't look like dying in the first year, five years, or maybe even 10 years. I'm sure all of them want to be in existence for even more than 10 years, or else they wouldn't have taken the leap, they wouldn't have risked it.

Adam Lean (04:52)
correct. Most

That's right.

Correct. Most businesses fail like you mentioned. Why do they fail? Well, it's because they ran out of cash flow. mean, think about it. any failed business would still be here today if they were able to generate positive cash flow from their business. So every business on earth though wants a successful business. One that, like you said, doesn't fail and is growing and accomplishes their version of success. So we tell the people that we train, you have to help your client accomplish

two definitions of success. Their version of success and our version of success. Meaning our version of success is them generating positive cash from their business and their definitions of success. For example, I had a client, a long time client that owned a, he was a doctor, he owned a doctor's practice. Specifically, they performed colonoscopies. his definition of success wasn't money.

He had money. It was being published in the New England Journal of Medicine for a new invention of how he performed colonoscopies. I don't really understand it, but he had this new way of doing it, which would detect polyps at like a higher rate, which means he could detect colon cancer at a higher rate than other doctors. He needed time to develop this and to do all the research and all the things needed to be published.

but he was running his practice. So he wanted his definition of success to be published. And so he needed time and money to replace himself as the practice administrator and he needed money to do research and development and all this. That was his definition of success. when I pitched him my CFO service, I said, well, I understood, learned that hip, that was his definition of success. I connected the dots that my service will help them get there.

And it would help him accomplish my definition of success, which I told him, which is you generating positive cash flow. The beauty of it is that cash flow literally solves any problem that a business owner is facing. Any. There's not one problem on earth that a business owner is facing that cash, more cash, wouldn't solve. Like if they don't have good talent, cash flow would solve that. If they don't have a product market fit, which is a lot of why businesses fail, cash would solve that.

think about it, Microsoft, when they have a bad product launch and the product flops, they have sufficient capital. They could raise money from investors. They could do so many things to cover that. But if a small business owner has a bad quarter, a bad product launch, or something just goes wrong, or the owner who is usually the chief salesperson, somebody that owns a hair salon.

If they get sick for six months, I mean, what happens? Well, if they had cash flow, they could make sure their business doesn't skip a beat. They can hire people. So we've got to help our clients hit both definitions of success. And we've got to be able to communicate that in a way that makes sense to the business owner.

KC Brothers (07:34)
I love that so much. One, because I hear constantly how much accountants love helping their clients and helping them succeed. But to your point, I don't know to what extent every accountant understands that there are two perspectives, two definitions of success. And being able to sit down and have the time with the client to unpack that and how

Adam Lean (07:44)
Totally.

KC Brothers (08:00)
listened to that client feels through that conversation and the loyalty, the vulnerability, the trust that happens as you dive into that conversation and show them how you can support them in their definition of success because they can't do that without cash flow. And it is so easy for them as entrepreneurs, as idea people, as passionate people who want to again focus on their craft. It is so easy for them.

to not think about the impact of thinking on their business, working on their business instead of just in their business. And I think they want to lean on their accountants for this and they may not even know how to ask for that with an accountant. And so you work with accounting professionals and firms to learn how to

Adam Lean (08:38)
They do.

KC Brothers (08:51)
incorporate this skill so they can offer this as a service.

Adam Lean (08:54)
Yeah, that is exactly what we do. We show people that own their own accounting firm or bookkeeping firm or employed accountants how to start their own firm offering advisory services. We show them how to get clients and how to help their clients because you're right, business owners want the financial profession on their life to help them. That's who they would usually turn to first. But in our experience, when most business owners ask their accountant,

KC Brothers (09:13)
Mm-hmm.

Adam Lean (09:19)
The accountant either gives surface level advice because they do want to be don't really know how to help

KC Brothers (09:24)
maybe that's where a lot of jargon comes up too, where it falls on deaf ears probably too, of like, I'm not an accountant. Accountant, stop speaking, accountant speak to me. Speak, speak business speak. Like, yeah.

Adam Lean (09:26)
Yes.

Right.

Right, that's right.

Yeah.

So, either the accountant will give surface level advice which in many cases could be bad advice. Like cutting expenses could be bad advice. If that's not the number one problem with their business. Or either the accountant gives surface level slash bad advice or the accountant just doesn't help at all because they don't have time to help because they're getting paid to do something other than giving advice. They're getting paid to do taxes or whatnot.

And so, who does the business owner have to turn to? There's not that many people for the business owner to get real true help with improving the financial situation of their business. So, what we're saying to accountants is, you could still offer tax and bookkeeping all day long, but if you offer advisory services, A, you'll get paid way more to help a client have a better future than just recording the past.

And B, you'll have a more positive impact on their lives. Just think about it. The average accountant.

KC Brothers (10:33)
Yes.

Adam Lean (10:35)
can still do their job perfectly well and their client still goes out of business. You could be the accountant for a business that next year goes out of business and you did your job well. The taxes were clean, they were accurate, they were timely, they were all the things, but the business goes out of business. But you're like, I did my job. Who cares? The client still went out of business.

the client would rather you spend your time helping them have a better future to make sure they don't go out of business. So what we found is that accountants will take the role that we train, will take the role of a CFO advisor and then delegate the taxes and bookkeeping to somebody on their team so that you can still be the one-stop shop for your clients. But now you have the capacity to provide advice and you're making way more from advisory services to boot.

KC Brothers (11:04)
Okay.

Yes, so I do feel like there's a lot of imposter syndrome in the industry regarding this of like, how do I make that leap? I want to call it like taxes, bookkeeping. It's all foundational for getting to the advisory piece because it's the data.

Adam Lean (11:30)
Totally.

KC Brothers (11:41)
It's the understanding, but how do you make that leap? it a matter of how you're looking at that data, getting out of the grind and looking more aggregately at the data for just one client? Is it niching down and getting to be an expert in an industry so that you can track data across colonoscopy specialists? What is it that kind of helps tip the scale so that...

Adam Lean (11:57)
Yeah.

KC Brothers (12:04)
It's easier for accounting firms and accountants to make that jump over the imposter syndrome chasm.

Adam Lean (12:13)
Yeah, imposter syndrome is very real. But imposter syndrome is usually because the accountant is perceiving CFO services in a specific way. Usually when an accountant thinks, need to be a CFO, they're thinking, I need to be the General Motors level CFO tomorrow. We're not saying that at all. We're not suggesting at all that you become

KC Brothers (12:33)
Okay. Yeah.

Adam Lean (12:37)
the CFO for a Fortune 500 company where you need years of experience to navigate complex transactional things. But we are suggesting that the average accountant and bookkeeper and tax professional is definitely or will be definitely qualified to be the CFO for Paul's Heating and Air Business in Boise, Idaho. You are qualified to do that. And so you don't have to have Impostor Center. So the term CFO

KC Brothers (12:58)
Heck yeah. Yeah.

Adam Lean (13:05)
And this is actually why we don't like leading with the word CFO because when most people think CFO, business owners think of it as like an expensive accountant. And then when an accountant thinks CFO, they think it's like several rings higher in the corporate hierarchy and they're not qualified to be the CFO. We are suggesting though that you be the CFO advisor to a small business. A CFO advisor is two words, CFO and advisor.

We're suggesting you take the most important part of a CFO, which is helping a business become financially successful and the most important part of an advisor, like a business coach, which is somebody that can help a business owner take action and combine those into one product tie service. Product ties, meaning you sell it like a product, like toothpaste. When somebody goes into the store and they see toothpaste sitting on the shelf, they know exactly what it is.

why they would buy it, what they'll get from it, and how much it costs. That's exactly how we need to present a CFO advisory service. A business owner should know from you why they'll buy it, what they'll get from it, what it is, and how much it will cost. And once they understand those things, they will want your service. And then you just deliver a very simple productized, systematized CFO service.

KC Brothers (14:14)
Yes.

Adam Lean (14:20)
in a way that the way we teach it takes about four hours per month per client. And the average person in our program charges $2,000 a month. So you're spending four hours a month per client to earn $2,000. Your effective hourly rate is about $500 an hour. Whereas the average accountant's effective hourly rate hovers in between $35 and $75 an hour.

KC Brothers (14:45)
That's it? That is new data to me. But that hits so hard for me because I hear all the time pricing strategy conversations and being burnt out and all, my goodness. That is so low for the skillset and the potential of the accountant I love. Yes.

Adam Lean (14:56)
Right. Yeah.

I agree. Accountants have so much value to give.

Why are we undercharging ourselves? And I know the answer, that's a rhetorical question. The answer is because there's a ton of competition. The average business owner doesn't know the difference between a good account and a bad one. So one accountant can't charge way more than another one. Just like if I was driving down the street and there's two gas stations next to each other.

once 50 cents higher per gallon, I'm not going to go to that gas station, even though some petroleum expert will say that was so much better for your car. I don't care. You know what I mean? I don't care. And that's how the average business owner feels about accounting and bookkeeping. Unfortunately, I'm saying that unfortunately, they should care, but they just don't. They care about about making sure they have a successful business and they think of accounting and bookkeeping as a necessary evil. It just has to get done.

KC Brothers (15:34)
Yeah. Yeah.

Yeah.

Adam Lean (15:50)
Somebody just do it. I don't really care who I don't want to think about it. It just has to get done. I have more important things on my plate like making sure that my customers get service and my employees show up and the bills get paid.

KC Brothers (15:55)
Okay, so.

something that came to mind as you were saying that is, okay, if it's hard to differentiate one accounting firm from another, and maybe the only thing to differentiate them is pricing, then you go to the cheaper one. We are in an interesting situation in the industry where though there is competition, there almost isn't enough to, there's plenty of work to be had.

So though someone might leave you for another accountant, But as you were saying all these things about, okay, you could do your job and the business could still go out of business. And then combine that with this lack of...

most accounting firms finding clear differentiation and ensuring that they're communicating their value in the market to their customers. I'm probably preaching to the choir to you. tell me to stop or be like, KC you've hit the nail on the head. But my brain as a marketer went right to, well, start digging into your metrics as a business of, Hey,

Over my, my track record shows that 90 % of my businesses make it past the first five years or whatever, right? Especially when you say like, Hey, 40 to 50 % fail. under my care, only 10 % fail or, know, maybe there's a better metric in that regard, but it's like, we are helping you fulfill your dream as an entrepreneur.

I don't know that I see accountants, say that so explicitly with data to back it up.

Adam Lean (17:31)
I think accountants measure results in a different way than business owners think about results. Business owners when they think of results, they think of what they view as results. So every two business owners could have two very different definitions of success, like we talked about earlier. An accountant,

KC Brothers (17:38)
Okay.

Adam Lean (17:50)
We have to understand what those are and then speak their language. And unfortunately, a lot of accountants, their value proposition is, I could do your taxes better, faster and cheaper, or I could do your books better, faster and cheaper.

KC Brothers (18:03)
But you can only do that so long and then your margins are so thin and then and then you yeah.

Adam Lean (18:06)
Exactly. Well, that's what I gonna say. If you're working

50 hours a week, then if in order for you to make more money, you either have to work more hours, which if you're already working 50 hours a week, there's not many more hours you could work or you could hire more people on your team, which means you have to take some of that 50 hours to devote to employee management and client servicing, if you're working 50 hours a week,

and you're offering just bookkeeping or tax services, then your hourly rate is finite. Let's say it's $80 an hour.

Well, if you're gonna work 50 hours a week, why would you sell your hourly rate at $80 when you could offer a higher value service at 300, 400, $500 an hour? And if you're still working 50 hours a week, you're making that much more money or you can work 20 hours a and make even more money, or more money than you would be if you were just offering a low value service. you have to realize that the average...

The average accounting firm is no different than a manufacturing plant. A manufacturing plant has machines producing the thing that they're producing. Accounting firms have machines called people. And if your throughput is producing something that's...

that you can't charge more than $80 per hour, why wouldn't you want to use those same people to produce something that's worth way more than $80 an

KC Brothers (19:28)
Yeah, I think too of the, feel like there's also a morale issue in the industry. And you think about the morale boost you get from offering that kind of advice and seeing that kind of an impact on someone's dreams and what that will do for everybody involved in servicing that client.

Adam Lean (19:41)
Totally.

you're helping business owners not only have a business that's healthier and that will likely stay in business for a long time, but you are having an impact to their peace of mind, which is almost priceless because you think about the average business owner,

KC Brothers (19:54)
Yeah.

Yes.

Adam Lean (20:03)
They have to worry about all the other things involved in business, sales and marketing and accounting and finance and legal and all the insurance, all those things. They are insecure. They're overwhelmed. You know, what happens if I can't make it? I don't want go back and get a job, a job that I left to start this.

And all of a sudden, somebody like us comes along and says, would you like my help to ensure that you A, never fail and B, have a growing and successful business? They'll pay attention to what you have to say. Especially if you charge $2,000, our average member charges $2,000 a month, which is 24,000 a year. Think of a $4 million construction company. $24,000 a year is

KC Brothers (20:32)
Yes.

Adam Lean (20:42)
peanuts. Peanuts. So why would we want to offer that to everybody?

KC Brothers (20:46)
I love how passionate you're getting about this. But I love that you said offering peace of mind, because again, offering like closing the books or like, okay, did your tax return doesn't provide peace of mind. They don't see.

Adam Lean (20:48)
Yeah.

No

KC Brothers (21:00)
Again, those are things that yes, are essential parts of running a business, but they are means to an end. And are you taking the means that you have access to and elevating that to the end that they're wanting, whether they know they want it or not, or they know how to ask for it or not, they know they want it. And you are the best person to deliver.

Adam Lean (21:25)
Yes, and a lot of accountants who think they're already offering advisory services are usually not. They're usually offering a, I'm going to review your tax returns or your financials and call that an advisory service. That's not an advisory service. An advisory service is where the client knows exactly what they need to work on and they actually work on it. So that in 30 days or 15 days or two months that the client will have take accomplished. Because remember, our clients

KC Brothers (21:33)
Yeah.

Adam Lean (21:50)
are not our employees, are not in our control. They don't have to take our advice or not. I've talked to several accountants who are like, well, I know what my client's problem is. They just won't listen to me. They won't do it. I'm like, well, that's your fault. What kind of coach are you if you are the athlete that your training is not taking your advice? You're pretty bad coach. You may know all the answers, but if you can't get a client whom you have no control over to take action.

you'll fail. So, it's not enough to just understand numbers. You have to understand how to get a client to take action.

KC Brothers (22:19)
Well, and that's the connecting of the two definitions of success. and, it's the, speaking their language. It's not using the jargon. that's what you do at the CFO project. you work with firms to learn how to understand, a package and offering and the things that they need to know.

Adam Lean (22:22)
Bingo. Yeah.

KC Brothers (22:39)
to incorporate this into their service offering and then you will always advise them that they do this first for them.

Adam Lean (22:46)
Yeah, you

should do it for your own firm first to make sure that your firm is growing and will never fail. And then, I mean, we actually advise you to do that. And then you start doing it with other firms. So, you're right. We show you how to offer a CFO service but then we show you how to actually get clients. And then once you get clients, we show you how to service them. to provide a service that they like.

KC Brothers (22:49)
Yes. Yes.

Yes.

Yes.

Adam Lean (23:10)
that they look forward to your meeting and they'll be happy to pay you $2,000 a month. And then if they like your service, they're gonna stay a client. Like my very first client is still with me to this day.

KC Brothers (23:19)
Yes.

I love it. is so... how satisfying is that?

Adam Lean (23:24)
very first.

Yeah, I mean, she says that this is the one meeting she looks forward to every month because think about it, business owners just want to know, am I okay? Am I okay?

KC Brothers (23:34)
Yeah. Yeah. Yeah. Well,

and I think of even our CEO at Canopy, I remember one time, I think in a company wide setting, he shared something about how stressful it is to be like, if we get this wrong, or if my strategy or this or that gets us wrong.

all of you are on my shoulders and your jobs and your employment and your families. he's like, I both love and hate our summer parties or things where I see your families because it's so fun to see you. But then I'm just reminded of all of these people who are depending on employment through my leadership.

But even just the way you deliver financials and the things that I'm seeing in the market around even tools that help you deliver reporting and metrics. And again, it's like, but are these the right metrics? Is this the right conversation? Are you able to talk to the business and show them the things they are now able to do, the research they're able to do so that they can get closer to being mentioned in that journal?

whatever it is that they may be wanting to accomplish that first definition of success is and then leaning in to how you tell the story with your financial data to reinforce that vision.

Adam Lean (24:43)
Totally.

That's right.

then we translate it in a language that our clients understand.

KC Brothers (24:54)
last thing, Adam, you have your own podcast called the CFO project podcast, I'm sure there are lots of golden nuggets every episode. I know client advisory services has been a hot topic

And it really is the key to unlocking the growth of firms. And so please take a look at the CFO project.com. Connect with Adam on LinkedIn and take listen to his podcast. Thank you so much, Adam.

Adam Lean (25:18)
Thank you, this was