Monday, December 31, 2012

Synthesis (December 2012)

The Random House College Dictionary defines synthesis as a “process of reasoning in which the conclusion is reached directly from given propositions and established or assumed principles.”   When communicating (whether in business or your personal life) it is critically important to communicate the complete picture presenting both sides of any argument along with the perspective and conclusions that are drawn from the facts at hand.  Too often, people communicate disjointed facts and snippets of information without taking the time to bring true meaning and value to the words they are putting “on paper” (of course, on paper intended to cover electronic communications as well).    

Too often, readers end up shaking their heads and wondering what the sender was trying to tell them.  Frequently, this generates a quick email reply and before you know it, there are dozens of emails flying back and forth in an effort to get a point across.   The time wasted trying to make sure that all parties understand each other can be enormous especially when compared to the amount of time proper communication would have taken in the first place.   

Worse, is when the “sound bite” sized communication is completely misunderstood and left unquestioned.  The writer has one thing in mind, the reader something quite different but the communication was so limited that the interpretation is literally left to the imagination.   

Often miscommunication is unintentional, but there are also times when it is truly the case that the sender is simply not relaying all the information they have at hand.  The sender may be trying to paint a version of the truth to portray him or herself in the best possible light; and at times is intentionally misleading.  We all make honest mistakes and miscommunicate from time to time, but to intentionally leave out facts and mislead is unforgivable. 

We have all seen people act based upon misinformation.  I am in the midst of cleaning up one such mess right now.  In this case, there are at least five parties (myself included) to be blamed (not that establishing blame at this point does much good). 

When you are on the receiving end of communications, step back and consider whether or not it appears you are getting all of the relevant information.   Are there facts that you wish you had that might change the overall conclusion?  

Also, “consider the source”.  If you read with a critical eye, you will begin to learn who communicates to you in a “fair and balanced” approach versus those that are “leading the witness” with a slanted view of the facts driven at trying to reach a spurious conclusion.   

When you are the sender, make sure that you take the extra time to communicate properly.  Sometimes, it is as easy as an introductory sentence or two in an email about the spreadsheet or word document that is attached.  Too often, people simply say, “See attached” without a word as to what they wanted the reader to take away from the attachment.  Proper synthesis of information will make for better communications, quicker and more appropriate action, and ultimately a more profitable company. 

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to     For more information, visit

your cash is flowing.  know where.®    

Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.

Friday, November 30, 2012

Action (November 2012)

I am always amazed at the lack of action I see in companies that are in the midst of crisis.    Problems abound and people generally know what they are but everyone seems to tolerate them for some reason or another.    In cases such as these, I ask a lot of questions but then finding myself telling people what to do.  My preference is not to give orders but rather to help people learn how to make better decisions.  Ultimately, I want to leave each of my clients better than I found them.   I want their processes to be better and more efficient.   Revenues and profits should be up and the staff should have skills they didn’t have before I arrived on the scene.   That being said, sometimes I have to make staff development a longer term goal in order to be effective immediately.

I always get surprised looks when I tell people to change operating procedures, to do things they haven’t done before, to stop doing things they have done “forever”, and when I invariably restructure financial reports.  A typical question I get is whether the CEO or owner had said “yes” to my direction.  My response is always the same. “I didn’t ask.”  Too many people, sometimes even at surprisingly high levels, have the belief that they should get permission for everything that they do. 

A favorite boss of mine told me something early in my career that I will always remember. It is better to ask for forgiveness than permission.  He added, you’ll always get forgiveness but you’ll never get permission.  He had a reputation for being a bit of a cowboy in the organization.    He also had the reputation for being highly effective.   He and I shared the belief that if you wait for permission, you’ll never get anything done.  In the entire time we worked together we were only challenged once for breaking the rules.  It was a challenge that was easily overcome.  

Another question I often get is “What if we make a mistake?”  “Then we’ll fix it”, I reply.    Everyone makes mistakes but what people often don’t realize is that they are making mistakes every day by not doing things differently.   They feel that by following rules and procedures they are “being safe”.   Usually the opposite is true.  They are developing a reputation for themselves of not being effective.  Moreover, that puts them in the “part of the problem” camp as opposed to the “part of the solution” camp.  

I am not suggesting breaking rules or abandoning procedure just for the sake of doing so.  Processes and procedures do exist for a reason.  But when a company is in crisis, things need to change and change comes from taking action.  Often, a big part of the reason a company is in crisis is due to lack of action.  People wait and hope for things to get better even in the face of overwhelming evidence that something needs to change.  Sure, there will be a few mistakes along the way but if action is well thought out it’s highly unlikely that those mistakes will be any worse than the alternative.  

Look around your organization.  Think about the way things are being done and what is not being done.  Then take action.   

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to      For more information, visit
cash is flowing.  know where.®    

Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.

Wednesday, October 31, 2012

Are You Driving Busines Away? (October 2012)

I know this sounds ridiculous but October seemed to be the month where retailers were determined to drive business away.   Maybe it is just me but with third quarter economic growth just 2%, I’d think more businesses would be doing everything they could to get more customers.   Frankly, I think many businesses are trying but something is clearly getting lost in the translation between owners and the front line customer service people.   Here are a few examples. 

My wife and I were out on a Saturday evening.  It was about 5:40 PM and I called a new restaurant to ask if they had a 6:00 o’clock table.   The person on the other end of the phone said she didn’t know how crowded it would be . . . they were expecting a lot of people very soon.  She basically discouraged us from coming.  They are new and I have never seen them that busy.  Besides, this is fairly early dining on a Saturday.    It was on the way home so we just swung by . . . they were half empty!   We had a nice dinner but I still wonder what was going through her mind when she answered the phone?   

The same weekend (on Sunday) we stopped by a local garden center.  We had a coupon and were told it wasn’t good until Monday (it was in the fine print which I will admit that I rarely read).  Ordinarily, I’d just say “OK” but the person went on to tell me I wasn’t the first customer to ask and that management knew everyone would want to use the coupon that weekend and decided it was better to say “no”.  She then further proceeded to explain how they couldn’t take a $5.00 coupon a day early without reprogramming the computer system and how much work that would have been.  I shook my head, made a $2 purchase (because it was something my four year old had selected and I didn’t want to disappoint him) and left $30 worth of flowers behind.  I’m not sure why the employee felt she had to explain so much but I just couldn’t bring myself to patronize a business that intentionally made a decision which was adverse to the customer.  I bought the flowers at a different garden center on the way home.  

A local personal services company sent me an email offering a discount on a punch card.  I don’t frequent them very often (which they actually mentioned in the email – they were trying to get me in the door more frequently).  It was a nice email and a good offer so I decided that I’d stop in and buy the card the next time I was in the area.  In theory, this is great for the business.  They get cash up front and the card in my wallet is a constant reminder that I should patronize them (especially since I‘ve already paid for services).  I stopped in to buy it.   The person at the front desk said he had heard something about the email but didn’t really know the specifics of the deal.  He suggested I go home, print the email and bring it back so he could honor it.   Unbelievable.   The owner sent out an email, actually got me to stop by with cash in my pocket, and the guy at the front desk turned me away.   I’d still go there – but just haven’t been back.   Shouldn’t they have taken my money when I offered it to them?
So, what’s the point?   Make sure you understand how the people who interact with customers (or potential customers) are behaving.  Are they doing everything possible to win business or acting like the people I mentioned above.   Big companies “secret shop” their own stores.   They do this for a reason.  Are you driving business away?
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to    For more information, visit 
your cash is flowing.  know where.®    

Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.

Saturday, September 29, 2012

Thinking Beyond Tomorrow (September 2012)

Most businesses think that strategic planning is something that only Fortune 500 companies need to worry about.  The truth is that all businesses need to think about their strategic direction.  While the time devoted to the strategic planning process differs depending upon the size of the company, the thought process is the same.

Generally, strategic planning focuses on what you want to achieve and tactical planning focuses on the specific steps of how to get there.  There have been countless books written on strategic planning so I won’t spend any time on that today.   Instead, I want to emphasize the importance of the strategic planning processes to a business . . . especially if you are not doing it today.

Unless management takes time out from day to day activities to plan its future, it will likely end up doing more of the same which is almost always sub-optimal.  Specifically, management needs to give consideration to the core strengths of the organization and how those fit against market opportunities.  It is also important to consider how core strengths differ from that of the competition. If all of your competitors are equally good at something, then it isn’t much of a differentiator.  Whereas if you are clearly better at something compared to your competitors then that is an opportunity to differentiate yourself in the marketplace assuming the customer cares about that difference and is willing to act because of it.  That action may be simply choosing you over your competitor or the advantage may be so great that they are willing to pay a premium.   The exercise may also help identify gaps that need to be filled in order to make the company more successful. 

Turning the strategic planning process into goals and a roadmap will help the organization focus on what it wants to take on over the next 2-3 years.  Just as importantly, it can help the organization decide the kinds of things that it will not try to do over the same time period.   Both are important.

I have seen organizations suffer from a lack of ideas just as I have seen them suffer from too many ideas.  Some companies are so rooted in “we’ve always done it that way” that they are living in the past.  They have not changed their product, marketing, or their internal process and haven’t looked outside themselves to recognize their deficiencies.  Accordingly, they are not set up to compete in the world in which we live.  On the other hand, some businesses suffer from so many new ideas that none of them actually get fully implemented.  They start implementing a new idea and stop to go onto the next one without ever making much progress.  In both cases, a few days invested in purposefully planning the business can make a dramatic difference.  

Strategic planning is really a matter of asking oneself “what do we want this business to look like at some point in the future and what specific actions do we have to take in order to get there from where we are now?”  Do you have a plan?
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to   For more information, visit 

your cash is flowing.  know where.®    
Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.                                                              

Friday, August 31, 2012

Exit Timing (August 2012)

Companies are sold for a variety of reasons.   The driving issue can be strategic fit, capital needs, succession planning (especially in the case of family held businesses), duration (in the case of private equity firms) or others.   
Regardless of the reason, however, for businesses that have reached some level of maturity (i.e., other than high growth businesses that need capital to grow the company) the best way to maximize value is to have a company that you do not have to sell.  When a company is forced to sell, they often have few alternatives and will be lucky to find one potential buyer if they can get a deal done at all.   In these situations, the golden rule prevails (he who has the gold rules).  The seller is likely to end up with a “take it or leave it” offer and with no other choices will likely “take it”.  

On the other hand, when a company is strong there may be multiple potential buyers.   Some may see a strategic fit, some may see substantial operating synergies, while some others may be purely financial buyers seeking to acquire the company for its strong operating cash flows.   In cases such as these, a seller will likely be able to generate interest from a handful of potential buyers and create a bidding war for the company.   The result will be a much higher transaction price than what could be obtained in the absence of competition.    

So, how does one arrive in such an enviable situation that there are multiple potential buyers clamoring for the same business.   The answer is that one has to build a business that has real value.  That may be intellectual property, strong distribution, a particularly strong product line-up, real or perceived barriers to entry, or strong EBITDA and cash flow.   Most likely, the business has more than one of these characteristics.  When businesses have one or more key value propositions, they have options when it comes to exit timing.    

Too often, businesses, especially small businesses, are looking to sell at a time when they are weak.   For one reason or another (usually cash flow or lack thereof, they have to sell).  I have literally sat across the table from sellers like this and while they try to argue for higher value, an astute buyer knows that they are in control.   They will put just enough on the table to get a deal done.  Not a penny more.   

There are some who argue that the sale of a business is something that should be planned three to five years in advance.  If you are running a business that doesn’t have one of more of the value propositions mentioned above, that is certainly true.  You will need time to develop value in the business.  If, on the other hand, the business has been run from day one with an eye toward value creation, then I would argue that the business is always in shape for a transaction.    

Run your business in order to create lasting value.  That puts you in control when the time comes to sell your business (whether you initiate the sale or the opportunity of a lifetime comes your way).   A business of lasting value gives you options.  And options are always valuable. 
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to     For more information, visit
your cash is flowing.  know where.®    

Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.

Sunday, July 29, 2012

Effective Boards (July 2012)

The difference in company performance between one with an effective Board of Directors and one that is not effective can be dramatic.   In the short run, it may seem like it is easier to have a lax board but in the long run, it will be far more difficult when the company faces the music of underperforming. 

Boards that are demanding can have a dramatic impact on the performance of the company.  That said, board members need to do more than just ask questions or make superficial comments (one of my favorites was that management should try to leverage current customers by doing more business with them --- as though management hadn’t thought of trying to have a deeper relationship with current customers).   But board members who can offer more than superficial comments and ask intelligent, probing questions can add value particularly when they have a deep knowledge of the industry or marketplace.  

I recently had the experience of working with two companies at the same time but with very different boards.   Management of the company with the stronger board took action, reluctantly at first, but quickly embraced the direction the board wanted to go.   The change in profitability, literally within months, has been dramatic.   The company is in a far better spot because of the board.  There are times that despite the best efforts of the management team, they need the insights of those who can step back and “see the forest from the trees”.    Board members may have a broader perspective and can sometimes leverage knowledge of different companies and different Board interactions.  

At the same time, I am working with another company with a lax board that seems to take a “wait and see” approach.  While company results are not getting worse, they are also not getting better.  Underperformance (just like superior performance) is cumulative.  The longer a company underperforms the weaker its position both financially and otherwise.   

If you don’t have a board or if you find that your board is ineffective it is up to management to do something about it.  Add board members that are effective and who add value.  Ask those who aren’t effective to change their ways or remove them from the board.   Just as the board can demand change from management so too can management demand change from its board members.  
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to
For more information, visit

your cash is flowing.  know where.®    
Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.                                                              

Saturday, June 30, 2012

Push Back (June 2012)

It is important to strongly advocate your position.  I don’t suggest arguing just to be argumentative (we all know people who do that).   Rather, be a strong advocate for your position and beliefs.  This was brought home to me recently when a service provider sent one of my clients a bill for an extra $2,600.  While the amount is small it still serves to make an important point.   

They had proposed a fixed price but there is no doubt in my mind that they did extra work.  On the other hand, they were beginning to develop a pattern of asking for “a few more dollars”.   Still, their request wasn’t unreasonable.  Moreover, there was a relationship to protect.  I shot back a quick email pointing out that they had come to the well too many times with these types of requests, reminded them that it was a fixed bid and that I had discussed with them the possibility of moving the account early on.  That was the fair solution under this set of circumstances.   They quickly accepted that offer and the issue was resolved. 

I don’t blame them for asking.   Unforeseen things happen all the time and it requires both sides to be flexible if they want to maintain a long term relationship.  

But that is not the real point of the story.  The real question is what did they truly think about the email they received?   I think the real answer came several weeks later when they sent another email my way asking if I’d be interested in an introduction which might result in more business on my end.   Simply put, that action helped earn their respect. 

Whenever you make an introduction, you are putting your reputation on the line.  Clearly, they respected our position on this relatively small billing dispute as well as the way in which we handled it.  Otherwise, they wouldn’t be willing to risk their reputation by suggesting the referral.   There is never anything wrong with strongly advocating your position.   99% of the time, the other side is going to respect you for standing up for yourself, your client, or your company.   That’s what business is about.  

Of course, I offer one caveat.   This email is distributed to over 30,000 people across the United States and internationally.  Cultures differ.  They differ geographically and from company to company.   One has to be sensitive to this.   The style that worked for me when I worked on the East Coast doesn’t play nearly as well in the Midwest where people tend to be much less confrontational.   My first job was at Unisys where you could have a heated argument during the day and no one gave it a second thought by the time they got to the company watering hole, Reed’s Tavern (now Reed’s Restaurant & Nightclub).

Adapt your style to fit the situation (which is easier said than done for most).  If you don’t you will likely not “win” your case and you won’t be respected either.  

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to     For more information, visit
your cash is flowing.  know where.®    
Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.                                                              

Wednesday, May 30, 2012

C-Suite Skills Cont'd (May 2012)

Last month, I talked about the critical skills needed for an effective C-Suite.  In addition to a broad cross section of domain expertise and well rounded individuals, I believe every executive needs to bring Seven Critical Business Skills to the table.  

The three that led the list last month were:   1. Vision, 2. Drive, and 3. Problem Solving.  

Let me finish the list. 

  1. Prioritization.   Executives need to have the organization focused on things that matter.  There are numerous items that take up our time but being able to prioritize not only for oneself but for the organization is critical.   The organization needs to work on items that will positively impact the bottom line. 
  2. Delegation.  Whether in a large or small business, no one person can do it all.  It is important to be able to delegate and then step away and let someone else do the work.  Recognize that they might not do it exactly as you would have done it.  Ultimately, it is the result that counts and your job is to help them get across the finish line. 
  3. Decision Making.   Every day is filled with decisions . . . some big . . . some little.  For a company to thrive, executives need to be able to process information and make decisions that are both timely and well thought out.   I have seen executives who were considered decisive for the speed with which they made decisions, but their decisions lacked quality.  On the other hand, I have seen executives that labored over a decision for so long that it was excruciating.  Good decision making considers the information at hand, the time it takes to gather additional facts and is then timely.  
  4. Communication.  Last but by no means least, is the ability to communicate effectively both inside and outside of the organization.   Executives need to be able to communicate their vision, rationale for decisions, and be able to motivate and lead those around them.   They need to be able to sell their ideas both internally and externally. 
As you think about your executive team, consider whether they each have the necessary Seven Critical Business Skills.  Are members of the C-Suite well rounded and is all of the necessary domain expertise present in the C-Suite?   If anything is lacking, the company will not be living up to its full potential.   Identify any gaps and fill them . . . your future depends on it.

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to

For more information, visit
your cash is flowing.  know where.®    
Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.

Monday, April 30, 2012

Critical Skills In The C-Suite (April 2012)

I believe there are three things every C-Suite executive needs and these hold true whether one is operating in a very small or very large company. While the bar is much higher at the top of Fortune 500 organizations than in smaller companies, the same skill sets are required in order to ensure that the organization is successful. Few things in business are as important as a well functioning executive suite (although in small companies, the suite probably doesn’t consist of the spacious offices expensive furnishings and executive assistants the make up a larger company c-suite).

First, every individual on the executive team needs bring to the table a domain expertise (finance, marketing, operations, human resources, etc). One of the reasons for their presence is that they are experts in their field. Further, a broad cross section of all disciplines must be represented in the C-Suite. What business can be successful if it understands production but doesn’t have a clue about how to market its product or service?

Second, every executive needs to be well rounded. They must have a working knowledge of other key domain areas. The marketing executive must understand the finances of the business just as the finance executive needs to understand the marketing approach. If members of the executive team don’t understand and appreciate each other’s worlds then it is next to impossible for them to make the trade-offs that are inevitable in any business. Resources are finite so there is always a balancing act as dollars are traded between different priorities. Unless all of the executives have an appreciation for the other displaces, then you have a land grab for resources as opposed to decisions made with the goal of advancing the company. I’ve seen this in companies both large and small.

Finally, every executive needs to demonstrate the Seven Critical Business Skills of the C-Suite. And every executive must have every skill set. Without even one of them, they simply cannot operate an optimum level.

1. Vision. Each executive must have a view of where they want the company and their particular department to be in the future. They must have a view of the environment in which they operate and be able to conceptualize how that might change in the future. Without vision, they are simply responding to the moment and in all likelihood remaining stagnant (or falling behind).

2. Drive. They must have the motivation to get to a new and better place. C-Suite executives are never satisfied with the status quo. They are seeking to improve performance in some way every day.

3. Problem Solving. They can grasp the problem that they are facing and develop a solution. The solution must have a reasonable chance of success. I rarely continue newsletters from month to month but I am making an exception.

I’ll present the four remaining members of the Seven Critical Business Skills of the C-Suite next month. If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to

your cash is flowing. know where.®
Ken Homza Copyright @ 2012 Homza Consulting, Inc.

Saturday, March 31, 2012

Let The Numbers Be Your Guide (March 2012)

Business is based upon facts. Or at least it should be. Anecdotal evidence is fine in order to add some color commentary and improve the depth of understanding but it is no substitute for dealing with the cold hard facts.

I started my career at Burroughs Corporation (now Unisys). It was filled with hardware and software engineers from around the world. Despite the company’s troubles (or perhaps because of them) it was a great training ground. It was a fact based organization and the engineering culture extended throughout the company.

The finance team was more buttoned up than the average numbers crunchers because they ultimately reported to engineers who would call them out if their numbers were wrong by even a little bit. In turn, the finance team wouldn’t hesitate to call out an engineer. Part of my tenure with the company was in the marketing department – market research to be precise. This team knew market history and trends (perhaps to a fault); the company wasn’t known for its foresight and forward thinking on the marketing side. That said, the entire company culture focused on facts and solving problems which it did extraordinarily well.

Whenever you’re dealing with a business problem, it’s important to start with the facts. Whether it is a sales problem, marketing problem, finance problem, operations problem, or human resources problem facts are key. It is impossible to make progress and develop a solution unless one has a firm grasp on the situation . . . and that is not possible when one is dealing only with anecdotal evidence.

Too often, people site a few examples (which are pieces of the puzzle) and try to draw conclusions about the whole picture. The problem is that they might get it right, but it is more likely that they will not. Basing business decisions on a few stories or examples leads to conclusions based upon faulty assumptions.

Get the whole story. Make sure that you understand all of the facts Many probably remember the story about the three blind men walking around the elephant each feeling different parts of it and coming to different conclusions about what they were touching. It can often feel like this when trying to herd facts (often as difficult as herding cats) in order to have sufficient data to perform analysis.

Gathering good facts is 80-90% of problem solving. Last week, the president of one of my clients asked an excellent question during a meeting. The financial manager spent four hours gathering the data and assembling it in a way that made it easy to analyze. Frankly, the analysis part took me about 20 minutes (and over 20 years of experience) but that was only because we had assembled all of the data first.

Determine what facts you need to assess the situation. Gather and organize them. Solid analysis and the solution will flow from there.

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to

your cash is flowing. know where.®

Ken Homza
Copyright @ 2012 Homza Consulting, Inc.

Wednesday, February 29, 2012

The CFO Who Knew Too Much (February 2012)

I was in a meeting last year as the new/acitng/interim/fractional CFO for a company. Truthfully, I am not sure how best to describe the role. Major investors had asked me to step in and basically informed management that I was coming aboard. Management was less than pleased. Obviously, there was a reason for my injection into the company and it wasn’t to count all the money they were making. Things had been going badly for some time and there wasn’t much optimism about the future. It’s not the first time I’ve accepted such an assignment and I’m sure it won’t be the last.

Shortly after coming on board, I was in a meeting with the CEO and major investors. Much of the meeting focused on operational issues which were causing the cash burn. While I hadn’t been to the plant yet (something I always try to do immediately) I was still pretty well versed on the problems they were facing. At one point during the meeting I offered an operational improvement suggestion – I had another client dealing with a similar issue and had been at their plant days earlier. As always, part of my visit with that team included walking the plant and discussing operational issues with others on the management team as well as the rank and file.

When I offered my suggestion, the CEO responded with “That’s an obvious solution”. He was right . . . what I suggested wasn’t rocket science. Yet, he had failed to take action on something that was obvious because he didn’t grasp the economic impact of solving the problem.

His feedback after the meeting was that I “knew too much about operations”. Sometimes all you can do is shake your head. I got the company through a major milestone and then departed. To this day they struggle and they will continue to struggle until they change management.

The CFO can’t know too much. The primary role of the CFO is to understand the business and the economics of the decisions being made. These decisions need to be team based with input from all the major disciplines in the firm. For the CFO to have valid input, he needs to fully understand the implications of decisions just as much as the marketing or operational person needs to have an understanding of finance. Executives need to be well rounded and that is particularly important in the CFO role.

The CFO role is not about debits and credits. The CFO role is about adding strategic value to the firm and playing a major role in the decision making process. Money is a finite resource and how that resource is deployed determines the outcome of the firm. You need a CFO who can help you make decisions that add long term strategic value to the firm. Why settle for anything less?
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to

your cash is flowing. know where.®
Ken Homza
Copyright @ 2012 Homza Consulting, Inc.

Monday, January 30, 2012

How's the Economy? (Jan 2012)

People frequently ask me “How’s the economy?” They do this because I work with multiple companies and have insights into their performance against plan and the prior year. But the truth is that I don’t spend many cycles thinking about the overall economy.

While I believe it’s important to understand the current economic climate in which you are operating, it’s also a bit like understanding the weather forecast. You can and should prepare for it but there is nothing you can do to change it.

Most companies are built (at least in the near term) around an expectation of a certain business volume for the upcoming year. I have seen companies blow the doors off their plan in a bad economy and companies struggle when the economy is on a roll. While it’s important to understand the economic environment in which you operate I believe that the performance of most businesses is guided more by the internal operations, marketing, customer service, etc. than it is by the overall economy.

The US Economy is $14 trillion dollars annually. Even the largest businesses are only trying to get a very small share of the pie. And even if the whole pie is shrinking (a recession) the easy answer is just to steal a piece of someone else’s pie (market share). Easier said than done, for sure, but the truth is that companies are battling for market share all the time and every company needs to be doing its absolute best to attract market share regardless of the economy.

Too many companies blame the economy for a lack of business without asking themselves if they are doing everything possible to maximize business in the environment they are operating.

In some cases, a bad economy might mean hunkering down and watching costs in order to survive the economic storm but I tend to favor a more contrarian approach. If you have prepared for a rainy day, I think it is far better to spend extra resources to gather business during bad times. Slow economic environments tend to shake out the weaker players in any industry or marketplace.

This is why it is so important for businesses to have a reserve. Too many small businesses distribute nearly every available dollar to the owners during good times. This wouldn’t be that bad if the owners kept some it aside knowing that they might have to put it back into the business during slow times, but often it is tied up in illiquid investments or simply consumed. This leaves a business with little staying power when things slow down and these are the ones that don’t survive.

Understand the economy. Plan for bad times as they will certainly occur from time to time. But do everything in your power to maximize your business despite the economy. Take advantage of this fact and aggressively go after the competition. When things get better, you will be that much stronger for it.

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to

your cash is flowing. know where.®
Ken Homza
Copyright @ 2012 Homza Consulting, Inc.