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 www.homza.com

your cash is flowing.  know where.^®    

Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.

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 www.homza.com
your cash is flowing.  know where.^®    

Ken Homza   

Copyright @ 2012 Homza Consulting, Inc.

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 www.homza.com 
your cash is flowing.  know where.^®    

Ken Homza   

Copyright @ 2012 Homza Consulting, Inc.

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 ken@homza.com   For more information, visit www.homza.com 

your cash is flowing.  know where.^®    

Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.                                                              

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 www.homza.com

your cash is flowing.  know where.^®    

Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.

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 www.homza.com

your cash is flowing.  know where.^®    

Ken Homza   

Copyright @ 2012 Homza Consulting, Inc.                                                              

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 www.homza.com

your cash is flowing.  know where.^®    

Ken Homza   
Copyright @ 2012 Homza Consulting, Inc.