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. 

4. 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. 
5. 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. 
6. 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.  
7. 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 www.homza.com

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

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.

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.

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.

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.

Juggling Cash (December 2011)

There is no surer symptom of an unhealthy business than one that is forced to juggle cash. Quite simply, this means they are running so tight on cash every day that they are making conscious decisions as to who does and does not get paid based upon daily cash receipts. This process is incredibly time consuming, prone to error, stressful for those working the process and adds absolutely no long term value to the business. That said, I see businesses who have allowed themselves to get into this position on a regular basis. For perspective, a healthy business pays approved invoices within terms because it has the resources to do so. The process is simple and quick.

The problem stems from a business that is undercapitalized due to either a lack of equity capital put into the business, too much money pulled out when times were good leaving little reserve capacity, or a history of sustained losses that have eroded the equity capital base and pushed up borrowing. Frequently, the company is now at its debt limits and is forced to “juggle cash” in order to make payroll and keep key vendors happy. This is otherwise known as robbing Peter to pay Paul or in more recent times, using Visa to pay MasterCard.

This process is incredibly expensive and takes a toll on the organization’s psyche. I have seen very capable controllers spend almost all of their time on this process while being forced to ignore cost savings opportunities and efficiency initiatives that would help in the longer term. They are moving cash between various accounts and entities, trying to collect from customer a few days sooner and stringing out vendors as long as possible. Costs mount in terms of late fees, credit card charges, interest, penalties and the like but these pale in comparison to the real cost which is staff time.

Vendors become less responsive and when they are healthy enough significantly tighten terms and even fire the company (refusing to do business with someone who is slow pay). Unhealthy vendors will continue to work with you “hoping” that things will turn around as they feel they need to keep recording revenue even when payments are late. Usually, this weakens their financial position, too. At times, you can have a vendor help you through this period but that requires transparency and honoring commitments when you make them. I’ve worked in businesses healthy enough to help a struggling customer and it can be a win-win. I have also fired customers who were high touch, slow pay and generally unprofitable. Frankly, it’s a great feeling to take that step.

If you find yourself juggling cash, I would encourage you to step back and try to understand the root causes. Look at your recent profitability and capitalization. But both of those must be honest assessments.

Looking at profitability requires a solid balance sheet review. Is your inventory correctly valued? Are all of your receivables collectable or is there a proper reserve for collection issues. Are all of your liabilities recorded? Does depreciation allow for capital replacement? Have you ignored maintenance issues so long that there is a “ticking time bomb” out there waiting to go off?

Your banker will welcome a conversation on your capital structure and the appropriate amount of leverage for a company of your size, life cycle, and industry.

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.

Simplify (November 2011)

At one of my clients a number of items that we have been trying to simplify for some time have recently come together. The difference on the administrative side is amazing. We operate with very light staff levels yet we had someone clamoring for “more work”. How often do you hear that?

By simply changing our expense reporting, a task that used to take a full day is now being done in a few hours. What is the value of freeing six hours of time? Some might argue that it is zero because you can’t reduce a full time employee’s salary by six hours and put that money in the bank. Others might take the hourly rate for that employee plus employment taxes, fringe benefits, etc. and multiply by six and argue that is the value. I would look at it completely differently. Those six hours are extremely valuable because it is like rolling a log down a hill. Once you get it going there is a certain momentum that builds. We used (invested, if you will) those six hours in other process improvements.

Next we tackled our invoicing processes and with the help of others in the company, made big improvements. Monthly customer invoicing which used to get completed over several weeks is now 95% complete on the first work day of the month with some minor follow up needed to complete the process. Not only did we reduce the hours used to produce invoices, but because they are sent to customers sooner, we get paid sooner thereby accelerating company cash flow!

Those improvements along with others released enough hours that we were able to spend a few days resolving a customer issue. We used an administrative resource for a project that would have otherwise been completed by services delivery staff that were already over committed. While they couldn’t find a couple of days to fix the customer issue due to other priorities, they were thrilled to find a couple of hours to provide oversight and direction. The result was that we resolved an issue which was causing a delay in payments. The customer was delighted since the root cause was an error on their part and it was actually their responsibility to fix the issue. While they knew they should have fixed it, they just didn’t have the knowledge and time to get it done. They appreciated that we “stepped up” and did more than our fair share. They cut checks for the back payments within days of the matter being resolved. The amount of those checks was at least 20 times the hourly rate calculation mentioned above.

But, of course, it gets better. The hours that we were applying to that on-going problem were now available to deploy elsewhere. I personally moved two monthly tasks off my plate to someone else in the organization now that they weren’t as busy. While the tasks are necessary, the processes were well established and they no longer required someone at my level to complete them. I had been doing them only because there wasn’t time elsewhere in the organization. Anyone who knows me well knows that I hate doing anything routine more than a couple of times in order to perfect the process. This freed my time to work on more strategic issues with the CEO.

Whenever you have the opportunity to simplify a process or remove complexity in your organization, I recommend doing so. Not only will you capture the benefits you were anticipating but you are likely to find hidden benefits as well. The results just might surprise you.

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.