What are your accounts receivable worth? Almost every business has Accounts Receivable (AR) that are older than they would like. Managing them can be a difficult process. To start, management has to be honest with themselves about the value of their AR.
Too often, management allows old AR to sit on the books and ignores the problem. Often, they don’t want to take the write-down and absorb the loss into their financial statements. Obviously, it will lower current earnings as well as negatively affect their debt/equity ratio and they are concerned about the impact this might have when they show their financial statements to the bank. I’ve got news for companies that take this approach. The bank is making those adjustments in any event. They always wipe out old AR assuming they are uncollectable. Not only is management getting dinged for the old AR but at the same time they are also taking a subtle knock from their banker for not recognizing this on their own and taking an allowance for doubtful accounts.
At one of my clients we had two customers each with substantial AR balances (about $50,000). We treated them in the same way and the result with each is likely gong to end up being the exact opposite. In both cases, the balance built up over some time even though there were payments being made (sometimes lower than the monthly service and some months missed with a promise to make good “soon”). At some point, however, both customers got a “shut off notice”.
With the first customer, they made a substantial payment upon receiving the notice and made payments each month which covered current services and some amount against the past due. It took some time but today they only owe about $700 and that is all within terms. Ultimately, this scenario worked out well for all parties. We got paid in full and have a very loyal customer because we helped them work through a challenging time in their business.
The second customer story isn’t nearly as good. It starts out the same, but by the time we sent our “shut off notice” the IRS was taking action. As a general rule, the IRS is the 3,000 pound gorilla in the room and almost always wins. Now we’re part of a creditor group and there is no telling how much of the remaining balance we’ll recover from the dollars (if any) left after the IRS debt is settled. Ultimately, the customer is out of business. Had we moved sooner, our exposure would have likely been smaller and the customer probably would have failed sooner.
Recently, I had lunch with a great business attorney. Her advice was that every company should have a defined process taking a certain action at 30 days past due, 60, 90 and eventually turning the account over to an attorney or collection agency. Good advice.
All that being said, the message is that every business should realistically review its accounts receivable on a regular basis. No one is well served by leaving doubtful AR on the books and “hoping” they will some day turn good. I’ve never regretted calling a customer early about an outstanding balance . . . but there are certainly times that I’ve regretted waiting “just a little bit longer”. What are your accounts receivable really worth?
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 @ 2011 Homza Consulting, Inc.
Sunday, July 31, 2011
Thursday, June 30, 2011
Fun vs. Hard Work (June 2011)
Last month, I wrote about the importance of staying motivated. The other morning, I was training with a group military cadets and someone mentioned the word “fun”. More specifically, they had said that the morning workout wasn‘t much fun. For the record, few among us consider our morning workout fun. If you push yourself, it’s hard work. But the fun part is in the results.
The same goes with most business problems. Sure, there are days when business is fun, but most of the time it is just plain hard work. The fun part comes in seeing the results. Years ago I was working on an acquisition and the bookkeeper at the target company asked if I ever smiled at work and what made me happy? She had the accounting package open on her desktop and I pointed to all the negative numbers in red ink. I told her that I’m happy when red ink turns black. That’s when you know you have made an impact. It’s hard to smile when you’re awash in red ink.
I see businesses all the time that try to avoid the “hard work” part of running a business. They avoid the difficult decisions that incrementally improve a business. And make no mistake, most business improvement is incremental. It comes from doing countless small things better each day with an eye toward long term improvement. In almost all cases, people are looking for a silver bullet. They are looking for that one easy thing that will change their business from losing money to profitability overnight. That silver bullet almost never exists.
Left unattended, small problems get worse. Management avoids dealing with the lazy employee because it is easier to “let it slide”. . that employee infects another and now the company has two bad employees. They avoid dealing with a slow paying customer hoping that the situation will resolve itself . . . then payments stop altogether and the account is a total write-off. They don’t invest in better technology hoping to get by with what they have . . . then there is a system crash and the company is down for a day, or two, or more. They settle for inadequate financial reporting since it has gotten them this far . . . then the bank gets tired of it all and refuses to renew their line of credit. Problems don’t go away if left unattended. They get worse.
On the flip side, fixing one problem actually has the opposite effect. Getting rid of the lazy employee motivates others. Clamping down on a slow paying customer forces them to pay you (although they probably start slow paying someone else). Upgrading technology allows people to complete work sooner with less frustration. Better financial reporting allows for a higher level dialogue with the bank and true insight into business performance.
As problems are resolved, it is almost always the case that more opportunities to improve the business present themselves. Day by day, little by little, the business is transformed from a poor performing organization to one that is getting results.
As you head out on this July 4th weekend, try to have some fun so you’ll be ready for the hard work of improving the business when you get back to the office next week.
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 @ 2011 Homza Consulting, Inc.
The same goes with most business problems. Sure, there are days when business is fun, but most of the time it is just plain hard work. The fun part comes in seeing the results. Years ago I was working on an acquisition and the bookkeeper at the target company asked if I ever smiled at work and what made me happy? She had the accounting package open on her desktop and I pointed to all the negative numbers in red ink. I told her that I’m happy when red ink turns black. That’s when you know you have made an impact. It’s hard to smile when you’re awash in red ink.
I see businesses all the time that try to avoid the “hard work” part of running a business. They avoid the difficult decisions that incrementally improve a business. And make no mistake, most business improvement is incremental. It comes from doing countless small things better each day with an eye toward long term improvement. In almost all cases, people are looking for a silver bullet. They are looking for that one easy thing that will change their business from losing money to profitability overnight. That silver bullet almost never exists.
Left unattended, small problems get worse. Management avoids dealing with the lazy employee because it is easier to “let it slide”. . that employee infects another and now the company has two bad employees. They avoid dealing with a slow paying customer hoping that the situation will resolve itself . . . then payments stop altogether and the account is a total write-off. They don’t invest in better technology hoping to get by with what they have . . . then there is a system crash and the company is down for a day, or two, or more. They settle for inadequate financial reporting since it has gotten them this far . . . then the bank gets tired of it all and refuses to renew their line of credit. Problems don’t go away if left unattended. They get worse.
On the flip side, fixing one problem actually has the opposite effect. Getting rid of the lazy employee motivates others. Clamping down on a slow paying customer forces them to pay you (although they probably start slow paying someone else). Upgrading technology allows people to complete work sooner with less frustration. Better financial reporting allows for a higher level dialogue with the bank and true insight into business performance.
As problems are resolved, it is almost always the case that more opportunities to improve the business present themselves. Day by day, little by little, the business is transformed from a poor performing organization to one that is getting results.
As you head out on this July 4th weekend, try to have some fun so you’ll be ready for the hard work of improving the business when you get back to the office next week.
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 @ 2011 Homza Consulting, Inc.
Monday, May 30, 2011
Stay Motivated (May 2011)
Motivating yourself and those in your company is one of the most important things that a leader can do. Unfortunately, staying motivated can be difficult and losing ones motivation is all too easy. Day to day problems can sap ones motivation and can distract one from longer term issues of greater importance.
There was recently a “Get Motivated” seminar in St. Louis. It was a day filled with some exceptional public speakers. Colin Powell, Laura Bush, and George Foreman among others. While I didn’t attend this year, I have attended in the past. The problem with this or any one day motivational event is how it plays out in the days and weeks after the event. Getting motivated is one thing . . . staying motivated is quite another.
It is a rare few who don’t struggle with motivation from time to time. But it is Memorial Day weekend and in St. Louis it looks like it might quit raining long enough that I can stop building my ark. That fact alone is helping my motivation level.
It important to have sources of motivation that one can tap from time to time. I have twice had the opportunity to visit the United States Military Academy at West Point to run as a civilian behind the teams participating in the Sandhurst Military Skills competition. Both times were exceptional experiences. There are few places on earth as motivated as our nation’s military academies. As spring turns to summer I have the opportunity to work out three mornings a week in the company of nearly two dozen highly motivated men and women who are training with the St. Louis Military Officer Support Foundation. Each of these young men and women are either presently in one of the academies, will be entering in the fall, or are recent graduates already serving our country and home on leave. It is an exceptional group to be among. It’s hard not to give your best when you are surrounded by others who are.
My point is simple, whatever your source of motivation it’s important to find a way to maintain your motivational levels and replenish them as needed.
As you head back to the office after the brief Memorial Day break, ask yourself if you are working with a motivated group of people? Are you leading by example and providing the motivational spark needed for yourself and those around you? What sources of motivation can you find that will bring a lasting effect?
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 @ 2011 Homza Consulting, Inc.
There was recently a “Get Motivated” seminar in St. Louis. It was a day filled with some exceptional public speakers. Colin Powell, Laura Bush, and George Foreman among others. While I didn’t attend this year, I have attended in the past. The problem with this or any one day motivational event is how it plays out in the days and weeks after the event. Getting motivated is one thing . . . staying motivated is quite another.
It is a rare few who don’t struggle with motivation from time to time. But it is Memorial Day weekend and in St. Louis it looks like it might quit raining long enough that I can stop building my ark. That fact alone is helping my motivation level.
It important to have sources of motivation that one can tap from time to time. I have twice had the opportunity to visit the United States Military Academy at West Point to run as a civilian behind the teams participating in the Sandhurst Military Skills competition. Both times were exceptional experiences. There are few places on earth as motivated as our nation’s military academies. As spring turns to summer I have the opportunity to work out three mornings a week in the company of nearly two dozen highly motivated men and women who are training with the St. Louis Military Officer Support Foundation. Each of these young men and women are either presently in one of the academies, will be entering in the fall, or are recent graduates already serving our country and home on leave. It is an exceptional group to be among. It’s hard not to give your best when you are surrounded by others who are.
My point is simple, whatever your source of motivation it’s important to find a way to maintain your motivational levels and replenish them as needed.
As you head back to the office after the brief Memorial Day break, ask yourself if you are working with a motivated group of people? Are you leading by example and providing the motivational spark needed for yourself and those around you? What sources of motivation can you find that will bring a lasting effect?
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 @ 2011 Homza Consulting, Inc.
Saturday, April 30, 2011
The Differentiator (April 2011)
Because of my fractional role, I have the opportunity to work with more management teams than most. I have consistently found that the one differentiator in the performance of a company is the quality and cohesiveness of the management team. The use of the word “team” is not by chance. While I could have used the term “members of management”, just having a number of senior managers around won’t get the job done. Management is a team sport made up of various disciplines (operations, sales, marketing, finance, research, development, human resources, etc). Without a well assembled team the operation won’t run smoothly and the performance and therefore profitability of the organization won’t be maximized.
I have seen cohesive, committed management teams that are underfunded, understaffed, facing daunting challenges not of their own making get the job done despite the odds being stacked against them. On the flip side, I have seen “members of management” with the wind at their back stumble and fail due to lack of communication, coordination and commitment. Groups like this can make trivial tasks difficult. The bottom line is that I’ll bet on the good management team any day of the week and view this as the single most important factor of success to any company.
When looking at a business problem, whether you are on the outside looking in or are in the middle of the issue, take a moment to step back and observe how the management team is behaving.
Are they communicating with each other? Does everyone know “real time” what is going on? Is there communication both amongst themselves and with outsiders as appropriate? It is amazing how much good a little communication can do to avoid making bad problems worse. In business, people hate surprises. Why? Because a surprise is almost never good -- it is much more likely to be bad news. Good news gets leaked early and the reality is usually not quite as good as the early indicators would suggest. Bad news tends to seemingly come out of the blue due to a lack of communication. Rarely should it have truly been a surprise.
Is the management team coordinating? Do they have a well thought out plan? Is everyone making sure that all of the bases are covered? In a day where we rely on email, text and cell phone communication, there is still no substitute for people sitting around the table, looking each other in the eye and being absolutely certain that there is a common understanding of the problem, a complete discussion of potential solutions, and a coordinated plan of attack that will bring about a solution.
Most importantly, is the team committed? I am writing this at 6:30 AM on a Saturday morning. One of my companies is a day behind achieving an operational milestone. I am absolutely certain that the management team is having their morning coffee, thinking about solutions to the problem and heading to the plant if they are not already there. Their weekend will begin when the problem is solved. These guys are a cohesive team and truly committed.
Do you have a “management team” or just “members of management”?
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
The archive of these monthly newsletters is posted at www.fractionalcfo.blogspot.com
your cash is flowing. know where.®
Ken Homza
Copyright @ 2011 Homza Consulting, Inc.
I have seen cohesive, committed management teams that are underfunded, understaffed, facing daunting challenges not of their own making get the job done despite the odds being stacked against them. On the flip side, I have seen “members of management” with the wind at their back stumble and fail due to lack of communication, coordination and commitment. Groups like this can make trivial tasks difficult. The bottom line is that I’ll bet on the good management team any day of the week and view this as the single most important factor of success to any company.
When looking at a business problem, whether you are on the outside looking in or are in the middle of the issue, take a moment to step back and observe how the management team is behaving.
Are they communicating with each other? Does everyone know “real time” what is going on? Is there communication both amongst themselves and with outsiders as appropriate? It is amazing how much good a little communication can do to avoid making bad problems worse. In business, people hate surprises. Why? Because a surprise is almost never good -- it is much more likely to be bad news. Good news gets leaked early and the reality is usually not quite as good as the early indicators would suggest. Bad news tends to seemingly come out of the blue due to a lack of communication. Rarely should it have truly been a surprise.
Is the management team coordinating? Do they have a well thought out plan? Is everyone making sure that all of the bases are covered? In a day where we rely on email, text and cell phone communication, there is still no substitute for people sitting around the table, looking each other in the eye and being absolutely certain that there is a common understanding of the problem, a complete discussion of potential solutions, and a coordinated plan of attack that will bring about a solution.
Most importantly, is the team committed? I am writing this at 6:30 AM on a Saturday morning. One of my companies is a day behind achieving an operational milestone. I am absolutely certain that the management team is having their morning coffee, thinking about solutions to the problem and heading to the plant if they are not already there. Their weekend will begin when the problem is solved. These guys are a cohesive team and truly committed.
Do you have a “management team” or just “members of management”?
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
The archive of these monthly newsletters is posted at www.fractionalcfo.blogspot.com
your cash is flowing. know where.®
Ken Homza
Copyright @ 2011 Homza Consulting, Inc.
Thursday, March 31, 2011
Practical Spreadsheet Advice (March 2011)
Last month, I wrote about the pitfalls of being overly trusting of spreadsheets. As a follow-up, I felt compelled to offer some practical advice. Below are my top ten - it could easily be many more.
1. Know the answer before you start. That might sound impossible but it’s important to have a hypothesis before you start to build a spreadsheet. It gives one a chance to formulate a mental model before the spreadsheet model and to constantly ask which is right.
2. Use “check digits”. It’s amazing how many times spreadsheets don’t foot. Balance sheets may not balance and the sum of twelve months may not equal the annual total. Double check the math with a formula that adds all of the months and all of the years to be sure they balance. I always have a few rows and columns that should equal zero; it’s easy to spot if they don’t.
3. Calculate two ways. I often throw in an extra formula to calculate an answer in slightly different manner. There is often more than one way to get to the same answer and taking this extra step will ensure that your logic is sound.
4. Develop all three financial statements. There is a reason accounting relies on an income statement, balance sheet, and statement of cash flows. They all tie together. It’s easy to cheat and stop at EBITDA and I’ll admit to doing it myself from time to time, but each statement presents different information and allows for a greater chance of seeing a result that is illogical.
5. Color code. I often hi-light various rows and columns to draw my eye back to them. Sometimes my spreadsheets look like a rainbow but this is easily eliminated later.
6. Sumif. This is one of my favorite functions. It can eliminate formulas with long strings of adding individual cells which are prone to either missing a cell or capturing it twice.
7. Keep it simple. It’s easy to create exceedingly complex formulas but I’d much prefer a simple formula that yields a result of $10,500 than a complex one that yields the result of $10,479.52. For forecasting purposes one is no more accurate than the other and the simpler formula is easier to audit, trace back, edit and for others to understand.
8. 100 months! Almost all simple formulas are only valid within a relevant range. It takes seconds to run a spreadsheet out for 100 months or more. The model will start to break down logically and you can use these insights to determine if there are things you should be thinking about over a shorter, relevant horizon.
9. Set it aside. Whenever possible, set it aside for a few days or longer. I’m a firm believer that things need to percolate in the sub-conscious for a while.
10. Ask a trusted colleague who understands the business to review the results. Sometimes a fresh set of eyes will spot something that should have been obvious.
Does all of this guarantee that you won’t have an error in a cell? I wish that I could say that it did. Typos happen. Ultimately, however, the goal is neither perfection nor precision. It is accuracy of the significant digits and the soundness of business decisions made from the data.
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 @ 2011 Homza Consulting, Inc.
1. Know the answer before you start. That might sound impossible but it’s important to have a hypothesis before you start to build a spreadsheet. It gives one a chance to formulate a mental model before the spreadsheet model and to constantly ask which is right.
2. Use “check digits”. It’s amazing how many times spreadsheets don’t foot. Balance sheets may not balance and the sum of twelve months may not equal the annual total. Double check the math with a formula that adds all of the months and all of the years to be sure they balance. I always have a few rows and columns that should equal zero; it’s easy to spot if they don’t.
3. Calculate two ways. I often throw in an extra formula to calculate an answer in slightly different manner. There is often more than one way to get to the same answer and taking this extra step will ensure that your logic is sound.
4. Develop all three financial statements. There is a reason accounting relies on an income statement, balance sheet, and statement of cash flows. They all tie together. It’s easy to cheat and stop at EBITDA and I’ll admit to doing it myself from time to time, but each statement presents different information and allows for a greater chance of seeing a result that is illogical.
5. Color code. I often hi-light various rows and columns to draw my eye back to them. Sometimes my spreadsheets look like a rainbow but this is easily eliminated later.
6. Sumif. This is one of my favorite functions. It can eliminate formulas with long strings of adding individual cells which are prone to either missing a cell or capturing it twice.
7. Keep it simple. It’s easy to create exceedingly complex formulas but I’d much prefer a simple formula that yields a result of $10,500 than a complex one that yields the result of $10,479.52. For forecasting purposes one is no more accurate than the other and the simpler formula is easier to audit, trace back, edit and for others to understand.
8. 100 months! Almost all simple formulas are only valid within a relevant range. It takes seconds to run a spreadsheet out for 100 months or more. The model will start to break down logically and you can use these insights to determine if there are things you should be thinking about over a shorter, relevant horizon.
9. Set it aside. Whenever possible, set it aside for a few days or longer. I’m a firm believer that things need to percolate in the sub-conscious for a while.
10. Ask a trusted colleague who understands the business to review the results. Sometimes a fresh set of eyes will spot something that should have been obvious.
Does all of this guarantee that you won’t have an error in a cell? I wish that I could say that it did. Typos happen. Ultimately, however, the goal is neither perfection nor precision. It is accuracy of the significant digits and the soundness of business decisions made from the data.
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 @ 2011 Homza Consulting, Inc.
Sunday, February 27, 2011
Ticonderoga No. 2 (February 2011)
Long before there was Visi-Calc, Multiplan, Lotus 1-2-3, and Microsoft Excel there was Ticonderoga No. 2. In some ways it is still the most powerful tool in existence for financial analysis. Why? Because it is the only one that absolutely ensures that the human brain is fully engaged in the financial analysis process. While spreadsheets have their power to perform calculations quickly and over multiple periods, they work without any “gut check” for reasonableness. While the calculations themselves are always “accurate”, programming errors are easy and all too common in today’s complex spreadsheets with thousands of calculations.
One can quickly “copy and paste” formulas over multiple periods without checking to see if the results yield a logical answer. It is easy to move one cell too far to the left, right, up or down and capture data that was not supposed to be part of the calculation. Or fail to capture a cell and leave data out of a calculation.
Whenever I get a spreadsheet from someone else I begin by looking for the most common errors and trying to understand how it was built. Ultimately, I’m trying to understand the thought process of the person who built the spreadsheet and their underlying understanding of the business. Do they understand the business and have they translated it into numbers?
At times, I am stumped by a spreadsheet. It seems to generate an answer that just isn’t what logic and good business judgment would dictate. When this happens, I pull out a blank sheet of paper and a pencil with an eraser. I work in nice round numbers – usually even millions – and see if I can get close to the answer that the spreadsheet generates. It might take minutes, or it might take hours, but I almost always find a formula error at the root of the problem or an assumption carried to the extreme.
Recently, I found a spreadsheet that added $5 million dollars of cash to a business by increasing accounts payable substantially every month . . . forever. The assumption that AP increased for a few months and even for an extended period was not unreasonable, but a lack of thought allowed the amount to grow to a ridiculous number for the size of the business.
Another time, I was sent a spreadsheet with a dizzying amount of detail on cost projections. As all projection models do, it showed nice profits three to five years out. There was one little problem, however, the total expense line failed to capture one of four sub-totals leaving out millions of dollars of cost. When this was fixed, the model showed on-going losses.
Why does this happen? In the interest of increasing accuracy, spreadsheets authors include a mind numbing amount of detail and complex calculations that are often useless. As assumptions become more complex, the person building the spreadsheet becomes lost in the detail and fails to see the big picture and mistakes happen. But they trust the spreadsheet which means they are ultimately trusting that every key stroke they made was perfect. That’s a scary thought.
The next time you’re building or reviewing a spreadsheet, make sure your brain is fully engaged in thinking about the bigger picture. Step away from the keyboard and think about what the answer should be. Test the spreadsheet with a piece of paper and a Ticonderoga No. 2!
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 @ 2011 Homza Consulting, Inc.
One can quickly “copy and paste” formulas over multiple periods without checking to see if the results yield a logical answer. It is easy to move one cell too far to the left, right, up or down and capture data that was not supposed to be part of the calculation. Or fail to capture a cell and leave data out of a calculation.
Whenever I get a spreadsheet from someone else I begin by looking for the most common errors and trying to understand how it was built. Ultimately, I’m trying to understand the thought process of the person who built the spreadsheet and their underlying understanding of the business. Do they understand the business and have they translated it into numbers?
At times, I am stumped by a spreadsheet. It seems to generate an answer that just isn’t what logic and good business judgment would dictate. When this happens, I pull out a blank sheet of paper and a pencil with an eraser. I work in nice round numbers – usually even millions – and see if I can get close to the answer that the spreadsheet generates. It might take minutes, or it might take hours, but I almost always find a formula error at the root of the problem or an assumption carried to the extreme.
Recently, I found a spreadsheet that added $5 million dollars of cash to a business by increasing accounts payable substantially every month . . . forever. The assumption that AP increased for a few months and even for an extended period was not unreasonable, but a lack of thought allowed the amount to grow to a ridiculous number for the size of the business.
Another time, I was sent a spreadsheet with a dizzying amount of detail on cost projections. As all projection models do, it showed nice profits three to five years out. There was one little problem, however, the total expense line failed to capture one of four sub-totals leaving out millions of dollars of cost. When this was fixed, the model showed on-going losses.
Why does this happen? In the interest of increasing accuracy, spreadsheets authors include a mind numbing amount of detail and complex calculations that are often useless. As assumptions become more complex, the person building the spreadsheet becomes lost in the detail and fails to see the big picture and mistakes happen. But they trust the spreadsheet which means they are ultimately trusting that every key stroke they made was perfect. That’s a scary thought.
The next time you’re building or reviewing a spreadsheet, make sure your brain is fully engaged in thinking about the bigger picture. Step away from the keyboard and think about what the answer should be. Test the spreadsheet with a piece of paper and a Ticonderoga No. 2!
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 @ 2011 Homza Consulting, Inc.
Monday, January 31, 2011
What's Your Right To Exist? (January 2011)
I believe every business must earn its “right to exist” in the marketplace – and, yes, I said, earn. No business has an inalienable right to exist. Rather, in a competitive marketplace, that right has to be earned day in and day out.
Every business must ask itself how it earns this right. More importantly, it should also ask its customers. What specific niche does it serve in the marketplace? What does it do better than any of its competitors? Does it compete solely on price (a valid strategy)? Ultimately, why do customers choose to spend their dollars with the company?
Another way of asking this question: What is the core competency of the business? What does it do better than anyone else?
Sometimes, a business is surrounded by competitors but delivers excellent service (they are among the best of the best). There may be room for many or few in the particular market but delivering outstanding service at a fair (not necessarily low) price is a proven strategy. Sometimes a business delivers such good service that they are able to dominate the marketplace.
Other times, price leadership may be the strategy. There is usually room for competitors that offer a good product or service (perhaps not the very best) but at a great price. Customers who are price sensitive or to whom “good enough” is satisfactory will frequent this business.
Another unique position in the marketplace might stem from geography. I frequent a drive through car wash and although they offer excellent service, they occupy a unique geographic advantage. Customers would only be willing to travel a certain distance to a competitor regardless of the price or service advantages they might offer.
When answering questions about market positions, right to exist and why competitors frequent a business, one should think broadly about the marketplace. Thinking broadly opens up a world of possibilities. Think about the differences between shopping at Nordstrom’s and Wal-Mart, for example. The differences are striking but both have a place in the market. Of course, you can make an argument that these two retailers are not competitors – clearly they are targeting very different segments of the marketplace. But at some level, they do compete – you can buy a pair of socks at both!
When a business asks itself tough, probing questions about its position in the marketplace, it can use the answers in the strategic planning process to help determine how it can and should profitably grow. Ultimately, this is the most important question business must answer and it is the primary responsibility of leadership.
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 @ 2011 Homza Consulting, Inc.
Every business must ask itself how it earns this right. More importantly, it should also ask its customers. What specific niche does it serve in the marketplace? What does it do better than any of its competitors? Does it compete solely on price (a valid strategy)? Ultimately, why do customers choose to spend their dollars with the company?
Another way of asking this question: What is the core competency of the business? What does it do better than anyone else?
Sometimes, a business is surrounded by competitors but delivers excellent service (they are among the best of the best). There may be room for many or few in the particular market but delivering outstanding service at a fair (not necessarily low) price is a proven strategy. Sometimes a business delivers such good service that they are able to dominate the marketplace.
Other times, price leadership may be the strategy. There is usually room for competitors that offer a good product or service (perhaps not the very best) but at a great price. Customers who are price sensitive or to whom “good enough” is satisfactory will frequent this business.
Another unique position in the marketplace might stem from geography. I frequent a drive through car wash and although they offer excellent service, they occupy a unique geographic advantage. Customers would only be willing to travel a certain distance to a competitor regardless of the price or service advantages they might offer.
When answering questions about market positions, right to exist and why competitors frequent a business, one should think broadly about the marketplace. Thinking broadly opens up a world of possibilities. Think about the differences between shopping at Nordstrom’s and Wal-Mart, for example. The differences are striking but both have a place in the market. Of course, you can make an argument that these two retailers are not competitors – clearly they are targeting very different segments of the marketplace. But at some level, they do compete – you can buy a pair of socks at both!
When a business asks itself tough, probing questions about its position in the marketplace, it can use the answers in the strategic planning process to help determine how it can and should profitably grow. Ultimately, this is the most important question business must answer and it is the primary responsibility of leadership.
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 @ 2011 Homza Consulting, Inc.
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