Homza: Fractional CFO

Friday, January 31, 2014

Are You Using The Right Tools? (January 2014)

Like many others, I worked construction jobs during my high-school and college days. I remember one particular job remodeling a bar when the boss asked me to knock a hole in a solid concrete wall for an electrical outlet. He handed me a hammer and chisel (and a small hammer at that). I’d been doing this kind of work long enough to know those weren’t the best tools for the job and had worked around the boss long enough to know it was no use arguing with him about it. Fortunately, another contractor I also worked for arrived as I was starting to work. I asked him if I could borrow his electric demolition hammer and a few minutes later the job was done. The boss had a surprised look on his face when I asked: “What’s next?”

Obviously, I no longer work construction, but the underlying lesson remains valuable to this day. Are you using the right tools for the job? I can’t count the number of times that I have started to work with clients and find that their financial reporting is lacking, they have multiple unanswered questions about their business, and people are busy compiling data but have very little useful information. At the same time, I find they are versions behind important software upgrades, are using outdated versions of Excel, and their computers are painfully slow (one recently suggested I use a laptop at their office which is the same model as one I retired years ago . . . no, thanks). Equally frustrating, people don’t know how to use the tools that they do have (they haven’t been to a training course to enhance their skills in years).

People cannot be at their most productive if they don’t’ have the right tools and aren’t properly trained. A true craftsman would never set out to work without making sure his saw was sharp and he had the right hammer for the job. Why should professionals in your office attempt to do their job with anything less? You might as well ask them to perform with one hand tied behind their back while hopping on one leg.

I once experienced this exact situation with a new client that was two major releases behind in software upgrades to their ERP (Enterprise Resource Planning) system. There were upgrades available at no cost except for the time and energy it takes to put them in place. They literally had the tools at their disposal but were choosing not to use them. We moved ahead with the first major release upgrade (a necessary step) and plan to follow with the second shortly thereafter.

Whatever job you are doing, ask yourself if you are using the right tools for the job? Consider whether you have upgraded your software releases lately and take the time and energy to explore what new capabilities are available to you. Think about how some simple software changes or upgrades can improve work flow changes to streamline processes and produce a better result at the same time.

In addition to having the right tools, make sure your people know how to use them. Too often, companies avoid spending on a $1,000 training course and then spend $10,000 paying that same employee to get the job done in an inefficient manner over the next twelve months.

Finally, eliminate any “that’s the way we’ve always done it” attitudes from your company. Continually search for new and better ways to do things and challenge whether or not current processes are the best approach (particularly in light of new and ever changing software tools).

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 @ 2014 Homza Consulting, Inc.

Tuesday, December 31, 2013

What's Driving You? (December 2013)

Last month, I asked “What Are You Driving?” which was targeted at the change and results for which you are responsible rather than the car that gets you to work and back. Today, I’d ask a different but related question: “What’s Driving You?” Why do you get up and go to work in the morning?

For all of us, this answer is different, but unless it involves something that you are passionate about, then it’s unlikely you are going to get the maximum result. Money may provide some short term spark, but money alone is never a sufficient driver to lead to extraordinary results. Over time, people grow accustomed to a certain level of income and the dollars that may have provided motivation at one point become an expectation.

For most, the passion that drives comes from making a difference and feeling that our efforts have favorably impacted others or are appreciated. As you think about your company, department, or even your own individual performance, ask yourself what is driving force? What is causing you to wake up every morning and try to make a difference? If you’ve lost sight of it, I’d encourage you to find a way to reconnect with the passion that may have fueled you at one point in time.

I was once on a due diligence trip to a steel fabricator. The business was a mess. Operations were disorganized, bids didn’t seem to bear any relationship to costs, accounting was in poor shape – I could go on and on. But the key finding was that the founder started as an artist working in steel. At some point, he did some small fabrication work to pay the bills in order to support his artistic passion. Over time, the fabrication work had taken over and was consuming 100% of his time and had extinguished the fire that driven the entrepreneur and artist. Instead of doing something that he was passionate about he found that owning a business was preventing him from doing what he loved. And because he had no passion for the business, he wasn’t doing it very well; so it wasn’t even meeting the minimum standard that he had set for it – to pay his bills and provide a livelihood.

He would have been better off being an employee in steel fabrication company . . . at least then he would have had a “9 to 5” job and could have used his weekends and evenings to pursue his artistic endeavors. But as any business owner can attest, running a business is rarely a “9 to 5” endeavor.

The purpose of a business is to support the dreams of the business owner, whatever they may be, not to quench them. Think about this as you go about your day . . . what is the passion that fuels your performance?

As we wrap up another year, I’d like to thank all of you who read this monthly newsletter and especially those who take a moment to drop me a note and share your own thoughts about the topic of the month. Wishing you a happy, healthy and productive 2014!

Monday, November 25, 2013

What Are You Driving? (November 2013)

Clearly, that’s a question that can be taken more than one way. If the headline brought to mind the vehicle that gets you to work, around town, and on family vacations, that’s a reasonable way to think about the question. But I actually meant it quite differently.

Rather, what is the agenda that you are pushing forward every day? What key difference are you trying to make in your job, be it at the executive level or elsewhere in the organization? Do you start your day with a mission that you are trying to advance or are you just trying to complete tasks that, while necessary, serve no larger purpose? Do you have a vision for your company or your department that provides a framework upon which you decide which items are worthy of your time and which are not?

People (and therefore companies) who approach their roles with a vision of what they are trying to accomplish have a framework for making decisions. That is not to say that the vision won’t change (in fact, it should be reviewed when facts come to light which would suggest it is not the best approach). Nor is it to say you won’t have days just keeping the train on the tracks (we all have days like that despite our best efforts to be forward thinking).

But having a vision allows you to not only set your own course but it provides a vehicle to communicate how others should approach their roles as well. Not only do you have a vision and framework for approaching your work but that vision can be shared with those around you. When those around you are making decisions, they can then apply that same framework and determine to what extent their actions are consistent with the longer term goals. If they find that they are operating in a manner that they believe to be inconsistent with that vision, they can raise their hand and have a discussion about those actions and determine if there is something different they could be doing that is more consistent with the longer term direction.

Unless you are trying to drive something and invoke change, then your destiny will ultimately be controlled by people and circumstances around you rather than by yourself. That is almost always less than ideal.

If you find yourself or your company in this situation, then it is time for a change. Take the initiative and stake out a vision. Putting that first stake in the ground doesn’t have to be a long, drawn out process but it does require some focused energy and thinking. I recently sketched out a 2014 vision for the finance and accounting group of one of my clients. After having solicited input from some key constituents, I spent an hour with the team and a blank sheet of paper on an easel. By the end of that hour, we had thoughts around eight key initiatives that we could use to transform the department and positively impact the business over the coming year.

Are we finished? No. We will have to decide upon specific actions and work over the next year in order to make significant progress. But we have charted a course and are on our way.

Thursday, October 31, 2013

Doing Things "Righter" (October 2013)

Last month I wrote about Strategy vs. Execution and one of my readers wrote back and defined the terms as “Doing the Right Things” (strategy) vs. “Doing Things Right” (execution). I have never heard it expressed quite so simply before. I almost always find that simpler is better as simple provides clarity. Therefore, that saying has stuck with me and will for a very long time.

While I enjoy working on strategic issues I find that most companies devote much of their time and energy to day-to-day execution. Things that should work like a well-oiled machine often don’t. And the cumulative effect of not “doing things right” shows up on the income statement.

But what exactly does “right” mean when it comes to a particular work process or outcome? In many instances, right is not simply the opposite of wrong but rather is somewhere on the continuum of just OK to truly excellent or exceptional.

There are times when “good enough” actually is all that is needed and going beyond the minimum standard doesn’t add any value. But in most instances, performance is measured on a continuum of outcomes and constantly striving to do better is critical. In these instances, it is not just about doing things right, it is about doing things “righter” than you did them yesterday.

It is important to always seek to improve business processes. While a process that was put in place years ago may be working, that doesn’t mean it is at optimal efficiency. Customers change, products and services change, new competitors spring up while old ones fade away, and technology has dramatically changed the way we all live and work. That means that business processes need to change as well.

This isn’t limited to your core manufacturing or service processes (although those are critical) but also includes your HR practices, accounting procedures, customer service interactions, and everything else you do in your organization. Think about it, even janitorial staffs have had to change their processes to deal with recycling as opposed to throwing everything in the trash.

In a world where change is the ever present constant, it’s more important than ever to ask if your business processes are not just keeping pace with the times but helping your company outperform its competitors.

Are you doing things “righter” today than you did them yesterday?

Sunday, September 29, 2013

Strategy vs. Execution (September 2013)

The other evening I was at a dinner party and the subject of strategy vs. execution came up. I’ve played lead roles on both strategy and implementation teams so I have experience in both areas (still it was a Saturday evening and I tried to steer the conversation back to favorite vacation spots).

In my opinion, however, the question of asking whether strategy or implementation is more important is analogous to asking what’s more important in a car, the engine or the transmission. Neither is more important than the other because unless you have both, you’re not going anywhere. The same is true of strategy and execution. You can have a brilliant strategy but if you don’t execute, it’s meaningless. Similarly, you can be great at execution but unless you have a strategy that is in tune with the marketplace and your competitive position you will find yourself perfectly executing a strategy that doesn’t move the business forward in any meaningful way.

Early in my career, I was part of a company that was well known for strategy development but fell short on implementation. The company never achieved its potential and lost significant momentum and market share as a result. It had leading products and great ideas about how to position them in the marketplace as well as future needs but was always a step behind when it came to implementation. In short, something was “lost in translation”.

On the other end of the spectrum, I have worked with teams who are excellent at implementation but never take a moment to step back and ask if they are doing the right things. They would benefit tremendously from taking the time to step away from day to day implementation and think strategically about how to grow their business.

A business is a system and the only way to maximize the efficiency of that system is to make sure that the system is operating effectively as a whole. Over emphasis of one component to the detriment of others does not accomplish this goal. Rather, every area of the business needs attention. If a business does not regularly think about its long term strategic vision and where it is trying to go over the next three to five years relative to its external operating environment then it is leaving its future to chance and is likely to fall short of its competitors.

On the other hand, if the business has a brilliant strategy but cannot effectively execute on that strategy by doing literally thousands of things well every single day, then the vision is unlikely to turn into reality. Rather the company will be finding itself revisiting and updating the strategy but never making progress toward its goals.

Obviously, any discussion about strategy could take up far more space than I devote to it here and countless books have been written on the subject. And the same is true of implementation and operations. But excellence in both strategy and execution is necessary to achieve optimal performance and stand out from the crowd regardless of industry.

Think about your company. Are you both thinking strategically as well as striving for excellence in the implementation of that strategy?

your cash is flowing. know where.^®Ken Homza
Copyright @ 2013 Homza Consulting, Inc.

Friday, August 30, 2013

(Little) Buying Influencers (August 2013)

Last month I wrote about customer loyalty and posed the question of whether businesses understood why customers stay with them. But what influences buyers in the first place?

As a former finance leader at LensCrafters I was one of the key proponents of attracting kids into the buying cycle for their first pair of glasses. Fortunately, not many children need glasses but getting them into the cycle early can create an enormous value chain. If you develop a buying habit early, it can be tough to break – particularly if the business provides a great product or service.

Businesses, particularly retail, need to realize that kids can be tremendous influencers. Now, they are clearly not making major buying decisions but they can be influential enough to push decisions that are on the margin. Large companies spend huge amounts marketing to kids but even products and services not marketed to children can be influenced by them. Here are a few examples (all from a five year old).

More than once I’ve gone to the car wash with the “rainbow colored soap” because my little guy thinks it’s fun to watch the colors run together. I can’t help wondering if the soap manufacturer thought of this or if it is just accidental.

I bought a dishwasher at a Sears Appliance retail store in part because it was easy to shop with a child. Yes, they have good selection, pricing and service, but they also have a small table, chairs, crayons and coloring book to keep the little ones entertained so that you actually have time to make a buying decision.

My new favorite place for a burger is Five Star, in part because they serve great burgers and in part because they have a good children’s menu.

Many businesses don’t have the opportunity (or the desire) to have children help influence the buying decision. But the broader point of this message is for businesses to stand back and understand the key motivations for customers to come to them in the first place. What brings them in the door and what keeps them coming back? What makes a customer loyal to such a great extent that they don’t even consider other options? What makes a customer choose one business over another in their initial buying decision? Particularly for this last question, the answer can help formulate a long term buying cycle of substantial value.

Businesses that understand customer motivations can do a better job of attracting (and retaining) customers. This translates into top line growth and ultimately into enhanced shareholder value.

As you think about your business, ask yourself the following: What were the key influencers that motivated customers to try your business the first time and what is the strategy to leverage the same motivations to attract new customers?

your cash is flowing. know where.^®
Ken Homza

Wednesday, July 31, 2013

Loyalty vs. Inertia (July 2013)

Are your customers loyal or are they returning due to habit or the inertia of not wanting to invest the energy to find an alternative? For some businesses, it is easy for customers to change. For others, it takes a bit of work so customers continue to patronize a business even after the quality of the product or service has declined.

I recently had a customer service representative for an insurance company thank me for my loyalty to which I responded: “Don’t confuse loyalty with inertia.” They were taken aback by my response but I had been disappointed with my agent’s service for some time and it has only been my busy schedule and limited agent interaction that kept me from making a change. Fortunately (for me) and unfortunately (for my prior agent) that question alone was the spark I needed to look for a new agent.

The straw that broke the camel’s back literally came the next day when I was trying to get a loaner car and was carrying an expired insurance card. At 4:30 in the afternoon no one answered my insurance agent’s phone. Typical, but even had someone answered their employee turnover is so high that the person answering is almost always too new to help. I solved the insurance card problem without their assistance. It was now after 5:00 and I returned a call from a new agent hoping to get my business. He had time to see me before he left for the day. I went straight to his office and made the switch. While I was there, he showed me the app they have so that I can always have my current insurance card on my phone . . . apparently, I’m not the only one who forgets to put the new card in their wallet.

This story is one of the reasons I am a fan of tools that are aimed at better understanding the customer experience. For a business to improve customer service, they have to understand their service levels from the perspective of the customer. A business should actively solicit customer feedback . . . and it doesn’t have to be a formal survey. A visit from the company owner or president is likely to turn up some interesting insights.

Further, it’s important to seek out problems in order to find areas to meaningfully improve. Some of your most frustrated customers won’t bother to spend the time to respond to a survey. I have literally scribbled “your service is terrible” across surveys and given my phone number to see if anyone would call me. I have never gotten a call. The business wasted a great opportunity to get candid feedback.

The goal of these tools isn’t to validate that things are OK. Too often, customer surveys are considered a waste of money because no one really digs in and understands unique experiences that are driving the numbers. Customer experiences can’t be understood statistically without the person interpreting them having actually experienced what the customer encounters. It’s also important to keep in mind that the buying process is more emotional than analytical. The goal is to hear from the most outspoken customers and consider the validity of their feedback, learn from it, and improve the customer experience.

Are your customers true fans or are they returning out of habit or just haven’t yet taken the time to actively seek an alternative? Unless they are true fans, it only takes a chance encounter with a better vendor or one event that loses a customer forever.

If your customers can’t honestly say that they would recommend your business to a friend then they are at risk. What keeps your customers coming back . . . is it loyalty or inertia?