October 5, 2022 • 33 mins
Why do so many small businesses fail? Meet Henry Kutarna, B.A., CDME, KHS, CEO - an experience business executive and mentor. He mentors CEO's and not-for-profit leaders in Canada and the USA.
Henry share's his experience on what businesses do wrong and the the solutions to fix it. To easliy reach Henry Kutarna look him up on Linded In: https://www.linkedin.com/in/henry-kutarna/.
Cashflow, Market for Product/Services - MVP, Team Management, Black Swan Event - one in a million exception, Misreading the Future - Dashboard, Sales Funnel and more.
If you liked today's show - please let Laura know by either contacting her at laura@fisherpodcast.com or give her a great review. Also, if you know of someone who would be an inspiring guests, let her know… even if it's you. Until then… "You better be Up to something!"
SPONSORED BY: Business E Suites in Sugar Land, TX. https://businessesuites.com/ Perfect place to grow your business. 281-862-3150
#business, #people, #dashboard, #financial statement, #fractional, #catholic, #customer, #small business, #employees, #cash, #deals, #week, #henry, #salespeople, #sales cycle.
If you liked today's show - please let Laura know by either contacting her at laura@fisherpodcast.com or give her a great review. Also, if you know of someone who would be an inspiring guests, let her know… even if it's you. Until then… "You better be Up to something!"
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Laura Fisher (00:02):
Welcome to small business insights where back
office conversations give usinsight to what's really going
on. Is it grit, or luck? Thatgives a small business owner an
advantage? Let's find out. I'myour host, Laura Fisher.
All right. Today I have aspecial guest. His name is Henry
(00:24):
Kutarna, all the way fromCanada. Live in here in Houston.
So say Hello, Henry.
Henry Katurna (00:31):
Hi, Laura. It's really a pleasure to be with you
today.
Laura Fisher (00:34):
Well, I'm really happy to have your you are an
experienced, businessmanexecutive. And we have a special
topic for today. But before weget into the topic, let me that
you've got such a long resume.
Can you shorten it for us? Letus know who you are, and why you
are a good guest for this topic?
Henry Katurna (00:55):
It's a great question. Well, I'll give you
the short version. So I am amentor to CEOs. And I'm a
consultant. And I've been acontract executive, I see a lot
of companies every year becauseI'm an investor. And I'm also a
problem solver and a fixer. So Isee two to 300 deals a year. And
I get to analyze them. And sofrom that I've heard and seen a
(01:16):
lot. And so I hope to be able tocontribute to your audience
today. But some of the lessonsI've learned over the years. Now
you also an investor, you whoalso handle a private family
investment fund.
Laura Fisher (01:28):
So you are always looking at new deals. Is that
right?
Henry Katurna (01:32):
That's right. And most of the deals we look at, we
have a base, we're real estateinvestors. So that sort of sort
of story for 30 years. But inthe past 10 years, we have been
investing in technologystartups. So we're in 22
technology deals right now. ButI still review about 150 deals a
year. And that means I look atthem to see if their investment
(01:53):
quality, see what their story issee what their technology is. So
I get to see a lot of insideinformation about companies.
Laura Fisher (01:59):
I'm curious, because we've been taught, I've
been talking a lot about what ittakes to get a loan. But how
much of that is managementexperience? Well, when you're
Henry Katurna (02:09):
You're raising the right point, it's the number
looking at that?
one contributor to the valuationof a business is the team. It's
the people, you know, yourbusiness plan can be good, your
idea can be great yourtechnology, but all that can
change overnight. Look whathappened in the last couple of
years. But what really counts isthe people are they resilient?
(02:30):
Can they solve things? Can theyreact? And that's the that's the
number one factor.
Laura Fisher (02:36):
Now, what if you got somebody that has a great
idea has it all together? Butthey don't have a team yet? How
do you get them to find theright team?
Henry Katurna (02:46):
Well, I do a couple of things I advise, first
of all, every business leadershould have a what I call it P a
B personal advisory board. Sofind two or three people,
probably three is about right,different backgrounds. Maybe a
finance person may be asalesperson may be somebody
who's expert in ops. And youknow, delivery, that sort of
(03:08):
thing. Get them to hear yourstory, create an elevator pitch,
create a one page business plan,tell the story to your PA be and
see if they buy it, that's agood way to start doesn't cost
you anything, maybe buy lunchonce in a while for them.
Laura Fisher (03:23):
And then they'll help you find resources.
Henry Katurna (03:26):
That's it. And because they have a network,
let's say you have three people,they will all have a powerful
network. So you ask them Okay,where do I find the best
marketing expertise? Or where doI find somebody that's going to
help me, you know, raisecapital, pretty soon your
network and will expand? And itwon't cause again, it's all
about, it's not going to costyou any money to do that. It'll
cost you time and effort, yes,but not really a lot of money.
(03:49):
So if you don't have your teamyet, you can be a one person
show and still do this well.
Laura Fisher (03:55):
And and you as an investor, you can see the
efforts that they're making.
Right?
Henry Katurna (04:00):
You can see it you you ask for certain
information, like theirfinancials or their business
plan or their product idea. Andyou can look at that. And if
you've seen a lot of deals, youget a sense right away pretty
quickly as to whether this willfly or not.
Laura Fisher (04:16):
Right. All right, I think there might be some
thundering go on outside. So ifyou hear that, that's what's
going on. All right. So let thatbrings us to where we are today.
So I asked Henry to come in andtalk to us about why small
businesses fail. It seems to belike one of the number one
things that is searched on theinternet. And I knew that Henry
(04:37):
had enough experience. Becauseexperience comes with years.
It's not like you're not playingaround. You're actually the CEO,
you've been there. You've beenin the trenches, and you meet so
many people. So that's why Iwanted you to kind of address
that. So, Henry, where should webegin? Why do small businesses
fail?
Henry Katurna (04:55):
I've got probably four or five lessons that I've
seen in learned over the years.
But I'll tell I'll start withnumber one. It's an obvious one.
Most people know that a businessfails when it runs out of cash.
If you don't have any cash, youcan't make payroll, you can't
pay the rent, you can't meetyour obligations, you can't pay
your bills, and then you'regoing to quickly go out of
business. But that's not that'smore like a symptom of the
(05:18):
problem. So I'll start by sayingthe first issue in business is
don't run out of cash. Ofcourse, I'm not being smart when
I say that. But the idea is tobuild in, in signals so that you
can monitor your cash, I believein a weekly dashboard, that
tells you what your cashposition is every Friday night
or every Saturday, if you canmonitor that, and start to
(05:40):
understand a whole bunch ofother detail that I could get
into, but monitoring where youare with cash, and then
understanding what yourobligation next week is, that
will keep you alive. And even ifit's even if you're getting into
trouble, what will happen isthat you'll be able to make
small course corrections, if youwait a month or two to know what
your cash position is, you canbe done. Right. And so that's,
(06:03):
that's really an important one.
Laura Fisher (06:07):
And yet, you're right, it seems obvious. But I
guess, when you're having somuch capital outlay, and you
have such great anticipation,and you think all the sales are
going to come in and they don't,you're stuck.
Henry Katurna (06:21):
That's and that leads me to another problem is
sometimes we have we have theseplans, we have these dreams,
goals, ideas, but we maybehaven't done the market
research. So another point thatI'm going to mention is really
about not paying attention towhat your customers telling you.
Or if you don't have customers,yet, you're pre revenue, what's
(06:43):
the market telling you. So Ihave a method of teaching people
to look at the marketplace toreally test if their product is
actually a good idea. I'mtelling you that I see probably
a quarter of the deals I see Iimmediately discard them,
because they're a technology insearch of a market, somebody's
built a beautiful product, butnobody wants to buy it, or they
(07:04):
don't know if anybody will buyit. So that's a second reason
that businesses fail is theydon't understand what the actual
market for the product is. So weneed to do a short, sharp test
of your product. Minimum ViableProduct. Everybody knows that
term MVP. It's true. Do that.
And you will have a sense ofwhat the markets telling you.
Laura Fisher (07:24):
So if it's something new, how do you
research it, then?
Henry Katurna (07:28):
Yeah, this is a it's a great question. So how do
you research it? Let's say I wasgoing to use the coffee example.
If you're if you want to be acoffee roaster, you know, you
you do have to search on theinternet, who the other Coffee
Roasters are, what's theirstory? What's their marketing
angle? What's the quality? Wheredo they source it? And if you
(07:49):
can do that, and then if youfind, for example, there are
hundreds and hundreds of otherCoffee Roasters around well,
signal to you is that that's acrowded space. So be careful,
right.
But if it's something unique,like, you know, I saw technology
last week, that's a way of usingegg shells, from restaurant
(08:10):
waste, to extract calcium forpharmaceuticals, that sounds so
it sounds unique andinteresting. But, you know, I'm
looking at that as a deal,possibly. And it's complicated,
because can they actuallyextract from all the garbage and
waste? It's tossed by 1000s ofrestaurants? The eggshells? How
(08:32):
do you do that? Right, you know,and so, immediately, nice idea.
Sounds great. But is thereactually a way to conduct that
business? And so you have to doa little test? Can you actually
extract egg shells from thegarbage bag? That's, you know,
the bin that's tossed out? Andthat's the simple sort of first
step after that becomes, doesyour technology actually work?
(08:54):
Do you actually, can youactually extract it? Is there a
market? Will anybody really wantto buy that? Or they will get
calcium from some other source?
Laura Fisher (09:01):
Right can be a great idea, but no one wants it?
Yeah. Alright, so you got cash,market research? What else you
got?
Henry Katurna (09:09):
Well teamwork, Team traps. You know, there's
often we talked a few minutesago about how important it is
the number one reason that youwould have a high value in your
business is the people the team.
So a lot of people are sensitiveto, and they're kind of actually
afraid to deal with the peopleissues. And that's not easy,
(09:31):
because in our society today,we're taught that we're easily
offended, right, everyone'seasily offended. And so what we
want to do is work with our teamin an honest way. We want a good
culture. But we need to have acouple of tools that I suggest
to people is have a lot offireside chats, which means
general conversations aboutwhere that person wants to go in
(09:51):
your career. And you as thebusiness owner would say, you
know, where do I want thisbusiness to go so you'd have
these general chats But theaccompanying tool with that is
what I call the microscopictruth conversation. So if you
are a business owner, and anemployee is doing something
that's maybe hurting thebusiness, or maybe it's a bad
(10:11):
habit they have, well, we're alittle bit afraid to enter into
that sphere is you have to becareful. And you have to respect
people, of course. But if youcan have a microscopic truth
conversation, zero right in andsay, you know, what you're doing
when you talk to a customer isyou're actually annoying them
about our product. And you'renot solving that. I want to tell
you that that's a problem. Andso that takes a little bit of
(10:36):
guts, because sometimes we'reafraid to do that. And so if we
have these microscopic truthconversations, we can avoid the
traps where our team becomesdysfunctional. So we have a
unified team, we're going to bepowerful, and that's going to
keep us in business.
Laura Fisher (10:54):
Well, I definitely can see how that's an issue
because most of theentrepreneurs I've met, they're,
they're Lone Ranger's. They'renot used to managing people. Am
I right?
Henry Katurna (11:05):
Absolutely. You know, there's a funny thing
about us, we are you are anentrepreneur, I'm an
entrepreneur, all of yourclients are, you know, we all
make poor employees in the firstplace. And so in a certain way,
I'm saying, Now, I know the goodspirit of good fun, we are not
good employees, because we wantto be leaders. But sometimes we
ourselves need to be paying moreattention to how an employee,
(11:29):
you know, here's our message,the transmitter and the
receiver, that analogy issometimes something that we
forget. And so we need to becareful about that. Let's put
Laura Fisher (11:38):
So all your good life plans can just fall apart
if your team's just not managed.
Well. It can. All right, what'sanother reasons why small
businesses fail?
Henry Katurna (11:50):
I would say that I've only added this one in the
last couple of years, the blackswan event, you know, whoever
expected in 2019 that we wouldface pandemic and things that we
faced around the world. And Ihave clients I have friends of
mine who were I'll just give youan example. The restaurant
business, you know, foodservices, they one of my
Laura Fisher (12:11):
Now hang on, what is Black Swan? I just want to
make sure okay, I may not be theonly one.
Like a pandemic?
Henry Katurna (12:15):
A black swan event is how many What color are
Nobody predictedthat, right? There's a lot of
swans? They're white. They'rewhite. They're beautiful. But
people that say there wasplanning and so on, but let's
there are one in a million.
Okay, is a black swan. Allright. And so the black swan
event is that one in a millionleave that aside. But you know,
so a black swan event is thatthing that nobody could ever
even imagine what happened andlike a pandemic,
(12:45):
weird thing that happens toeverybody. And so, in, in my
world, I have two clients that Ilost one I lost immediately they
shut down within six weeks, theycouldn't make it, because their
customers all stayed away. Andof course, cuz I'm in the
restaurant business, you're inthe restaurant business. Now
another one had good cash flow,they were monitoring your cash,
(13:07):
they had a good team, and did abunch of things. They responded
quickly, they made a smallcourse correction quickly. And
they lasted a year and a half.
But they still went down thingsout of their control. Yeah, it
is really had nothing to do withtheir type of operation, or how
they did it just customersstayed away. And of course,
nevermind stayed away. Customersare mandated to stay away in
(13:29):
some countries. And so you cansee that problem. So that's,
that that's a real problem.
Laura Fisher (13:37):
Yeah. All right, what else you got for us?
Henry Katurna (13:39):
Well, I've got the misreading of signals. If
you are in a business, and youdon't have a dashboard, on a
regular basis of key indicatorsfor your business, and I'm not
just talking to accountingratios, and things like that,
but for your special business,if you create a dashboard that
(14:02):
you get, and you see things thatare happening, for example, in
sales, there's this thing we doin our society and in our
business principles. We tracksales on a quarterly basis or an
annual basis according to ourfiscal year. But there's a thing
called 12 month trailingaverages, for example. And so
(14:23):
it's a little known fact, Butmany people in business know
this one, you can remove theeffects of seasonality by just
tracking your stuff on the 12months preceding Nevermind the
quarter or the fiscal year. Sothat's an example of a signal.
So I recommend to people tobuild a dashboard with probably
five or six key signals that arethat are important in your
(14:45):
business. So let's say you're ina business that is not getting
paid, you know immediately bycredit card, your invoice. You
have accounts receivable andyou're waiting. Well, how are we
doing on speeding up thoseaccounts receivable where are we
if you haven't dashboard thatshows you every week, where you
are, whether you're 100, behind,you'll get a sense of your cash
(15:06):
position. And if you're behind,in your checking every week, you
can make a small one degreecourse correction, you can offer
a quick discount for 72 hours12% in 72 hours pay me, and
you'll get a bunch of cash forit. But if you wait six, eight
weeks, before you even realizethat's happening to you, you'll
have hundreds of you know,1000s, maybe hundreds of 1000s
(15:28):
of dollars. So this signal thingis an important reason if we
don't know what to monitor inour business, we can miss all
that. And it's too late by thetime we find out.
Laura Fisher (15:39):
All right, we're gonna take a quick break, and we
come back, I want to get to knowa little bit more about that
dashboard. And what other tipsyou have for us. So we'll be
right back.
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(16:12):
to small business insights.
Laura Fisher (16:13):
All right, we're back with Henry Katana, and he
is going to continue to talkabout the dashboard and all the
key indicators. So I know forme, honestly, the quickest thing
for me to look at is myfinancial reports. But that's
not enough. So tell me what doeswhat do you mean by a dashboard?
(16:34):
Is it some? Is it a literaldashboard? That I have created
programmed? Or is it just somereports that you're saying I
need to pull regularly look atit. So give us a little bit more
details on what you what youthink would be best for any
business owner?
Henry Katurna (16:49):
Sure, Laura. So you know, we all get our
financial statement. That'sright. The trouble with a
financial statement good as itis, is that it requires us to
interpret it. And if we are toobusy, we get the financial
statement, what usually happens,it sits on the desk or it sits
in the computer. And we don'tget to look at it maybe for a
couple of weeks or a month orsomething like that. So I
(17:12):
suggest to people that they do adashboard. And a dashboard could
be like you said a minute ago,just an actual report that you
get that shows you some of thecamera, give you some examples.
But you can get a report thatshows you that or you can get
quite fancy and there are somesoftware programs that will
actually show you on a colorcoded basis. Red light for
(17:32):
danger, yellow for caution,green light, good. And you can
have five or six indicators on aliteral physical, you know,
color coded dashboard that popsup, you can look at your
business every week and say,it's all green,
Laura Fisher (17:47):
Are those software packages right outside the box
you can buy, or there's specialprogramming.
Henry Katurna (17:54):
There are some QuickBooks Online people tell me
actually has something likethis, and I haven't seen it. But
the other way you can do it isyou can have from your financial
statements, you can get Excelspreadsheets that actually are
color coded. So your bookkeepercan set this up for you or any
or your you know, your nephew oryour niece, if you're not
(18:14):
particularly software inclined,you know,
Laura Fisher (18:17):
I know for me I have, I have something like
that. But it does take an effortto get it together. So we have
QuickBooks Online. And then wehave our management software
programs that we keep all thecustomer data, all the
transactions, occupancy, youknow, all that good stuff. So we
have those things. But it is amanual process. But we do put it
(18:39):
in one spreadsheet so we can seeit all. But that's that's what
you're talking about.
Henry Katurna (18:44):
It's what I'm talking about. And you're you
know, you're probably 99% of theway to getting what you need. If
you were the whole point is tohave it pre interpreted for you
so that you the busy businessowner, you don't have to grab
that financial statement andthen sit there for two hours
combing through it and trying tofigure it out. Any good
bookkeeper can actually set upthese indicators so that by the
(19:05):
time it lands on your desk, youcan actually see it and you can
you can tell right away thehealth of your business. And so
I've got a few examples for you,you know, we talked about cash
at the beginning. So absolutely,you have to have as one of your
dashboard indicators is whereare we on cash? How much cash do
we actually have? And that wouldmean you know, money in the bank
(19:25):
minus checks written, let's sayso that you've got actually net
cash. And you could do that inany number of ways. You might
have collections. So you mighthave cash in the you know,
coming in 10 days, 20 days, 30days. Another way to look at it
is your sales funnel. Again,many companies don't you know,
(19:48):
they know that they havesalespeople, or one salesperson
out there making calls. Butwhere are we on that in the
sales funnel? How many salescalls or just cold calls? How
many are actually warm leadswhere you've had the demo, let's
say, how many have just about orjust about ready or have made
the purchase decision? And evenif it's a purchase decision
(20:08):
made, when did we collect onthat? And so if we have, as one
of our indicators, the state ofthe sales funnel, that shows the
color coded the cold, the warm,the demoed, and then the
purchase decision, we can.
Laura Fisher (20:24):
And it also gives your salesperson some
accountability exact right. AndI just had to hey, I'm doing
good. That's
Henry Katurna (20:29):
right. Yeah. Seen a lot of people. Yeah, a lot of
interest out there. That's whatthat's the common thing. And and
we love our salespeople, don'twe, they're fantastic. Gotta
have been there, they sometimesmeasure their performance that
week by the level of activity,not the level of result. So we
the business owner, of course,we have to gently remind our
great salespeople that, youknow, we need the results here.
(20:51):
So I always tell people havethat in your dashboard, and also
figure out a way to have, youknow, shorten the sales cycle.
What's the sales cycle? Well,it's that from the moment the
customer has heard of yourproduct to the moment they make
the buying decision? Well,that's the sales cycle, well,
why can't we shut that cantighten it up, cut off 20% of it
(21:12):
and make it shorter? By I don'tknow speeding up the process,
Laura Fisher (21:16):
And making sure you have intentional follow up.
I mean, exactly. Things likethat.
Henry Katurna (21:21):
Yeah intentional follow up with like, immediate
follow up and not waste any timeand that sort of thing. So
that's, that's an example ofsomething that would go into
your sales funnel. Another thingis, if you're in a business that
makes things, let's say, youknow, you're making a certain
sauce, or you know, a home basedbusiness that say even What's
(21:41):
your production, you know, whereare your inputs? Where are the
in the, in the transportationcycle? The supply chain? Where,
how many products have you made?
What's your error rate? Whichreminds me of yet another one,
if you're in a service business,where customer satisfaction,
let's say you have software andcustomer satisfaction is
(22:01):
important, you should betracking? The state of the
calls? What what's thepercentage of negative calls,
which the percentage of returnson our product? What's the
percentage of the error rate inour production, when we send out
material? Is it 100% Correct andproperly built, let's say, or is
there a certain error rate, ifwe track those things, we'll be
able to speak moreintelligently, quickly about the
(22:24):
state of our business.
Laura Fisher (22:28):
And you can pivot I mean, that's the beautiful
thing about being a smallbusiness, you can take that
feedback and do something aboutit quickly,
Henry Katurna (22:36):
You can move fast, and you can you don't have
to go to your you know, youdon't necessarily even have a
board, you just make a quickdecision to fix that. And, and
also, you can set the standardclearly for your employees, if
you know, if we making a let'ssay, we're a cabinet maker, or
we're making some kind of aproduct, it's easy to see
quality. And it's easy to testquality. But if you show that in
(22:58):
your dashboard, if you measurethese things, so the problem
with the whole dashboard is thatit has to be measured. And so
that means you have to have aprocess or some way to collect
the information, put it into acentral place, and then pump it
into your weekly dashboard withthe color coding.
Laura Fisher (23:14):
And it can't be all about money, because you
just talked about quality. Andthat's not going to show up and
your finance and your customerssatisfaction, your reviews,
things like that.
Henry Katurna (23:26):
Yeah, you've said an important thing, or the, the
financial statement is reallyonly one part of it all, if you
have a customer base that is,you know, I'm not saying
customers are fickle, but let'sjust say that they have
competitors, they can easilymove to well, you have to be on
top of that. And you have tokeep them happy constantly right
away. And so, you know, how dowe measure that? Well, we have
(23:48):
to have metrics, and we have tohave measures of customer
satisfaction. And if we, forexample are measuring error
rate, you won't see that in yourfinancial statements either. But
if you fix your error rate, andyou don't have to do redos of
something,
Laura Fisher (24:02):
Or you keep a customer, instead of having to
go get new one,
Henry Katurna (24:06):
That's right, keeping a customer is an easier
thing than getting a new one,because your cost of
acquisition, that whole salescycle we talked about, that's,
you know, you eliminate that andso these are the important
things that I think go into agood dashboard. Some people
need, you know, if you havelet's say you're a retail store
and you have turns of inventory,you know, got stuff on the
(24:28):
shelves and you've got to movethat well then you're going to
start looking at standardfinancial statement information
like turns and, and so on. Andif you have a business, let's
say that has collections I'm Ithink there's actually it seems
like a few businesses only thathave you where you invoice and
collect later. But there's aconcept called Days Sales,
(24:52):
Outstanding DSO and people knowthis and days payables
outstanding. DPO Well, those aremeasures of that you can measure
how many days sales outstandingthat you haven't been paid for
yet or there. If you track thatonce a week. That's a beautiful
indicator for a business likethat you will know right away,
(25:12):
whether you're falling behind inthose collections or are staying
ahead. And that's not accountsreceivable. Notice that's a
different thing than accountsreceivable, which has its own
metrics. But DSO and DPO arepretty cool indicators that I
think people like to use thesedays,
Laura Fisher (25:28):
What I'm getting is, for the small business,
usually they're they don't havea lot of staff. So that really
takes a lot of organization. Iknow, we do a lot of that admin
stuff after hours.
Henry Katurna (25:41):
This is what I was about to say, Saturday
night, instead of I don't knowgoing to the movies or
something. You're sitting therewith your QuickBooks, and you're
looking at the thing. So youknow what I also suggest to
people, you probably know this,because you're operating a
business here that you see a lotof people coming through and you
have a lot of clients andtenants, I guess you could say,
(26:03):
fractional services, I reallyurge the Small Business player
to have a fractional CFO, afractional CMO, Marketing
Officer at fractional, you know,
Laura Fisher (26:15):
Where do you find this? Because I've thought about
that? Because I could use afractional probably an HR
person. Yeah. Now, yeah. Wheredo you find that?
Henry Katurna (26:23):
Yeah. Well, I actually have not had in the
last 10 years. I have whenever Ineed one, I find one. So I, what
can I say? Where do you findthem? I think you'll find them
online. But I think the searchterm has to be fractional, and I
think your network finds itbecause an accounting firm, for
example, you know, full timecrew of accountants, CPAs,
(26:44):
whatever. They're going to knowsomebody who's semi retired, or
maybe a student or some, youknow, a woman at home, man
working side gig. And they'redoing these things on a
fractional basis. So they havethe professional qualifications,
but they're fractional. So Ithink you can find them but
might take a little bit ofsearching. But that's an answer,
(27:04):
isn't it for some small businessbecause we can't afford to pay a
full time CFO, but boy, if wecan get one for three hours a
week at a reasonable cost.
Right. Pretty cool.
Laura Fisher (27:15):
That'd be good.
All right, you have any othertips before we wrap it up?
Henry Katurna (27:19):
Well, I was going to mention one other thing about
people
Laura Fisher (27:24):
And you can tell you from Canada.
Henry Katurna (27:26):
Yes. About You can tell that's the famous
codeword and that is we have alist of words for Americans that
we what are they? Well, there'sHow do you pronounce SLUGHSL?
Oh, you it's it's like a S l?
Oh, yeah. It's like a pond on afarm.
Laura Fisher (27:45):
I don't even say that word.
Henry Katurna (27:47):
It's called slew.
But I know a lot of Americanswho call it a slough. And so
we'll have some fun with that.
Laura Fisher (27:53):
I'm Not a Farm Girl. I guess I wouldn't know.
That's it. You're
Henry Katurna (27:56):
You're a city girl. You don't know that. No,
no, that's fun. So one otherthing that I would leave is,
I've seen this phenomenon. It'scalled the Abilene Paradox. So
people can search it and you'llfind the stories about it. But
the whole point of the AbileneParadox is people in your
business who speak up too late.
This is a problem. People areafraid to tell the boss
(28:18):
sometimes what's going on. SoI've enjoyed watching this
Abilene Paradox thing. And thestory goes that it was a family
sitting in Kansas, you know, ona hot summer afternoon, on the
deck drinking iced tea andsomebody says, Let's go to
Abilene for ice cream. And oneperson goes, no, it's hot. It's
like 95 degrees, who wants todrive on that dusty road all the
(28:41):
way to Abilene just to get icecream. So the story goes that
the conversations continue. Andeventually they're all in the
car driving to Abilene to getice cream. Flash forward. To the
end of the day. They're sittingon the deck, the sun is setting
and somebody says, you know, Ireally didn't want to go to
Abilene and someone else's.
Well, I didn't either. But Ithought you did. Really soon the
(29:03):
compounded effect is that theynone of them really want to go
to Abilene. But they all didbecause they thought the other
one did it. So speaking up toolate. If you're in a business,
and you have employees who seethings that you can't see,
because you're busy, and you'reyou can't have eyes everywhere,
encourage people to speak upsooner about what they see.
(29:24):
That's an important earlysignal. So that's what I would
close with that would besomething I would add.
Laura Fisher (29:29):
That's good in practice, but it's hard for
someone to believe the bossreally means that, right? is so
how do you how do you reallycommunicate that?
Henry Katurna (29:39):
Yeah this is a great problem. So the the way to
do it is by consistency as theboss, your word is your bond. So
keep your promises behaveconsistently. Don't I guess
don't react either don'toverreact, you know, have that
steadiness and, you know, gohome later and vent but try Do
(30:00):
to show by your example that youactually care what your
employees say. And that you carewhat they're telling you about
the customer, if you can do onan even keeled basis, I think
you're well on the way,
Laura Fisher (30:12):
that's a good advice, I'm thinking that a lot
of it comes down to listening,you know, to the market research
to the customer, managingpeople, that takes a lot of
listening. So, and that issomething that I think step for
an entrepreneur to do. Andthey're so used to, like we
(30:33):
said, be the driver, be theleader, and take, take a step
back and kind of review andreflect.
Henry Katurna (30:40):
Right? Yeah, you know, it's another kind of a
whole phenomenon about us, asentrepreneurs is, we are people
of action, and we want to get itdone. And sometimes we move a
little too quickly to tellsomebody how to do it. And so
there's the old saying that, youknow, you could tell a person
what their job is, but don'ttell them how to do it. Now,
(31:01):
sometimes you have to, Iunderstand that. But if we could
adopt a practice of being reallyclear with our employees, what
exactly do we want them to do?
And then to what standard, youknow, what, what, how quickly
how fast with what, you know,speed with what error, whatever,
we if we can do that, and thenleave it to them to do it. We're
actually empowering them. Iknow, that's a code word that
(31:23):
everybody has heard about. Butit's actually true. If we do it
that way. If we are doing acommand and control system where
we only issue orders all thetime and do the thinking for our
employees, they're going to betrained to expect that and then
you don't have a team. And thenyou don't have a team. It's you.
And and some you know, I don'twant to say servants, but you
know, right, it's you and somepeople that are trained that
they're not expected to thinkand that you don't want to know,
(31:45):
you don't even want to hear whatthey have to say about things.
So if
Laura Fisher (31:50):
you had to wrap it up, why do small businesses
fail? Do you have like a, Terra?
Henry Katurna (31:55):
Well? That's a good question, too. I think the
reason small businesses fail isbecause they don't see what's
coming. And so because we canusually react, the entrepreneur
is smart enough to react. But ifyou don't see it coming, and you
don't have mechanisms built in,like dashboards and monitoring
this, that and the other thing,if you don't see it coming,
(32:16):
you're gonna fail. If you see itcoming, you can at least make a
course correction. So I wouldsay that, once you're back, make
sure you can see what's comingover the horizon that you if you
do that, you're going to I thinkbe successful in business and
you'll you'll have trouble youwill always have challenges, but
you'll be able to respond andreact and move to the right
direction.
Laura Fisher (32:35):
That sounds so good. And so true. All right.
Well, Henry, I'm so glad youcame by and for my listeners,
yes, it stormed during theentire interview. And but we are
we're not out in the you know,outdoor area, which we didn't.
So thank you so much for comingby. And can I have you come by
(32:57):
again sometime when we get alittle bit more in the weeds of
some other
Henry Katurna (33:01):
companies that come in thanks for inviting me
and you know, all the best toyou and your business.
Laura Fisher (33:04):
Thank you so much.
And until next time, you betterbe up to something. Thanks for
joining us this week on SmallBusiness Insights, make sure you
visit our website at Fisherpodcast.com where you can follow
the podcast on iTunes or yourfavorite podcast platform so
you'll never miss a show. If youenjoyed and found value in
today's episode, we'd appreciatea rating and review on iTunes or
(33:26):
simply share it with a friendthat would help us out to make
sure you tune in next week forour next episode. Until then,
you better be up to something
Welcome to small business insights where back
office conversations give usinsight to what's really going
on. Is it grit, or luck? Thatgives a small business owner an
advantage? Let's find out. I'myour host, Laura Fisher.
All right. Today I have aspecial guest. His name is Henry
(00:24):
Kutarna, all the way fromCanada. Live in here in Houston.
So say Hello, Henry.
Henry Katurna (00:31):
Hi, Laura. It's really a pleasure to be with you
today.
Laura Fisher (00:34):
Well, I'm really happy to have your you are an
experienced, businessmanexecutive. And we have a special
topic for today. But before weget into the topic, let me that
you've got such a long resume.
Can you shorten it for us? Letus know who you are, and why you
are a good guest for this topic?
Henry Katurna (00:55):
It's a great question. Well, I'll give you
the short version. So I am amentor to CEOs. And I'm a
consultant. And I've been acontract executive, I see a lot
of companies every year becauseI'm an investor. And I'm also a
problem solver and a fixer. So Isee two to 300 deals a year. And
I get to analyze them. And sofrom that I've heard and seen a
(01:16):
lot. And so I hope to be able tocontribute to your audience
today. But some of the lessonsI've learned over the years. Now
you also an investor, you whoalso handle a private family
investment fund.
Laura Fisher (01:28):
So you are always looking at new deals. Is that
right?
Henry Katurna (01:32):
That's right. And most of the deals we look at, we
have a base, we're real estateinvestors. So that sort of sort
of story for 30 years. But inthe past 10 years, we have been
investing in technologystartups. So we're in 22
technology deals right now. ButI still review about 150 deals a
year. And that means I look atthem to see if their investment
(01:53):
quality, see what their story issee what their technology is. So
I get to see a lot of insideinformation about companies.
Laura Fisher (01:59):
I'm curious, because we've been taught, I've
been talking a lot about what ittakes to get a loan. But how
much of that is managementexperience? Well, when you're
Henry Katurna (02:09):
You're raising the right point, it's the number
looking at that?
one contributor to the valuationof a business is the team. It's
the people, you know, yourbusiness plan can be good, your
idea can be great yourtechnology, but all that can
change overnight. Look whathappened in the last couple of
years. But what really counts isthe people are they resilient?
(02:30):
Can they solve things? Can theyreact? And that's the that's the
number one factor.
Laura Fisher (02:36):
Now, what if you got somebody that has a great
idea has it all together? Butthey don't have a team yet? How
do you get them to find theright team?
Henry Katurna (02:46):
Well, I do a couple of things I advise, first
of all, every business leadershould have a what I call it P a
B personal advisory board. Sofind two or three people,
probably three is about right,different backgrounds. Maybe a
finance person may be asalesperson may be somebody
who's expert in ops. And youknow, delivery, that sort of
(03:08):
thing. Get them to hear yourstory, create an elevator pitch,
create a one page business plan,tell the story to your PA be and
see if they buy it, that's agood way to start doesn't cost
you anything, maybe buy lunchonce in a while for them.
Laura Fisher (03:23):
And then they'll help you find resources.
Henry Katurna (03:26):
That's it. And because they have a network,
let's say you have three people,they will all have a powerful
network. So you ask them Okay,where do I find the best
marketing expertise? Or where doI find somebody that's going to
help me, you know, raisecapital, pretty soon your
network and will expand? And itwon't cause again, it's all
about, it's not going to costyou any money to do that. It'll
cost you time and effort, yes,but not really a lot of money.
(03:49):
So if you don't have your teamyet, you can be a one person
show and still do this well.
Laura Fisher (03:55):
And and you as an investor, you can see the
efforts that they're making.
Right?
Henry Katurna (04:00):
You can see it you you ask for certain
information, like theirfinancials or their business
plan or their product idea. Andyou can look at that. And if
you've seen a lot of deals, youget a sense right away pretty
quickly as to whether this willfly or not.
Laura Fisher (04:16):
Right. All right, I think there might be some
thundering go on outside. So ifyou hear that, that's what's
going on. All right. So let thatbrings us to where we are today.
So I asked Henry to come in andtalk to us about why small
businesses fail. It seems to belike one of the number one
things that is searched on theinternet. And I knew that Henry
(04:37):
had enough experience. Becauseexperience comes with years.
It's not like you're not playingaround. You're actually the CEO,
you've been there. You've beenin the trenches, and you meet so
many people. So that's why Iwanted you to kind of address
that. So, Henry, where should webegin? Why do small businesses
fail?
Henry Katurna (04:55):
I've got probably four or five lessons that I've
seen in learned over the years.
But I'll tell I'll start withnumber one. It's an obvious one.
Most people know that a businessfails when it runs out of cash.
If you don't have any cash, youcan't make payroll, you can't
pay the rent, you can't meetyour obligations, you can't pay
your bills, and then you'regoing to quickly go out of
business. But that's not that'smore like a symptom of the
(05:18):
problem. So I'll start by sayingthe first issue in business is
don't run out of cash. Ofcourse, I'm not being smart when
I say that. But the idea is tobuild in, in signals so that you
can monitor your cash, I believein a weekly dashboard, that
tells you what your cashposition is every Friday night
or every Saturday, if you canmonitor that, and start to
(05:40):
understand a whole bunch ofother detail that I could get
into, but monitoring where youare with cash, and then
understanding what yourobligation next week is, that
will keep you alive. And even ifit's even if you're getting into
trouble, what will happen isthat you'll be able to make
small course corrections, if youwait a month or two to know what
your cash position is, you canbe done. Right. And so that's,
(06:03):
that's really an important one.
Laura Fisher (06:07):
And yet, you're right, it seems obvious. But I
guess, when you're having somuch capital outlay, and you
have such great anticipation,and you think all the sales are
going to come in and they don't,you're stuck.
Henry Katurna (06:21):
That's and that leads me to another problem is
sometimes we have we have theseplans, we have these dreams,
goals, ideas, but we maybehaven't done the market
research. So another point thatI'm going to mention is really
about not paying attention towhat your customers telling you.
Or if you don't have customers,yet, you're pre revenue, what's
(06:43):
the market telling you. So Ihave a method of teaching people
to look at the marketplace toreally test if their product is
actually a good idea. I'mtelling you that I see probably
a quarter of the deals I see Iimmediately discard them,
because they're a technology insearch of a market, somebody's
built a beautiful product, butnobody wants to buy it, or they
(07:04):
don't know if anybody will buyit. So that's a second reason
that businesses fail is theydon't understand what the actual
market for the product is. So weneed to do a short, sharp test
of your product. Minimum ViableProduct. Everybody knows that
term MVP. It's true. Do that.
And you will have a sense ofwhat the markets telling you.
Laura Fisher (07:24):
So if it's something new, how do you
research it, then?
Henry Katurna (07:28):
Yeah, this is a it's a great question. So how do
you research it? Let's say I wasgoing to use the coffee example.
If you're if you want to be acoffee roaster, you know, you
you do have to search on theinternet, who the other Coffee
Roasters are, what's theirstory? What's their marketing
angle? What's the quality? Wheredo they source it? And if you
(07:49):
can do that, and then if youfind, for example, there are
hundreds and hundreds of otherCoffee Roasters around well,
signal to you is that that's acrowded space. So be careful,
right.
But if it's something unique,like, you know, I saw technology
last week, that's a way of usingegg shells, from restaurant
(08:10):
waste, to extract calcium forpharmaceuticals, that sounds so
it sounds unique andinteresting. But, you know, I'm
looking at that as a deal,possibly. And it's complicated,
because can they actuallyextract from all the garbage and
waste? It's tossed by 1000s ofrestaurants? The eggshells? How
(08:32):
do you do that? Right, you know,and so, immediately, nice idea.
Sounds great. But is thereactually a way to conduct that
business? And so you have to doa little test? Can you actually
extract egg shells from thegarbage bag? That's, you know,
the bin that's tossed out? Andthat's the simple sort of first
step after that becomes, doesyour technology actually work?
(08:54):
Do you actually, can youactually extract it? Is there a
market? Will anybody really wantto buy that? Or they will get
calcium from some other source?
Laura Fisher (09:01):
Right can be a great idea, but no one wants it?
Yeah. Alright, so you got cash,market research? What else you
got?
Henry Katurna (09:09):
Well teamwork, Team traps. You know, there's
often we talked a few minutesago about how important it is
the number one reason that youwould have a high value in your
business is the people the team.
So a lot of people are sensitiveto, and they're kind of actually
afraid to deal with the peopleissues. And that's not easy,
(09:31):
because in our society today,we're taught that we're easily
offended, right, everyone'seasily offended. And so what we
want to do is work with our teamin an honest way. We want a good
culture. But we need to have acouple of tools that I suggest
to people is have a lot offireside chats, which means
general conversations aboutwhere that person wants to go in
(09:51):
your career. And you as thebusiness owner would say, you
know, where do I want thisbusiness to go so you'd have
these general chats But theaccompanying tool with that is
what I call the microscopictruth conversation. So if you
are a business owner, and anemployee is doing something
that's maybe hurting thebusiness, or maybe it's a bad
(10:11):
habit they have, well, we're alittle bit afraid to enter into
that sphere is you have to becareful. And you have to respect
people, of course. But if youcan have a microscopic truth
conversation, zero right in andsay, you know, what you're doing
when you talk to a customer isyou're actually annoying them
about our product. And you'renot solving that. I want to tell
you that that's a problem. Andso that takes a little bit of
(10:36):
guts, because sometimes we'reafraid to do that. And so if we
have these microscopic truthconversations, we can avoid the
traps where our team becomesdysfunctional. So we have a
unified team, we're going to bepowerful, and that's going to
keep us in business.
Laura Fisher (10:54):
Well, I definitely can see how that's an issue
because most of theentrepreneurs I've met, they're,
they're Lone Ranger's. They'renot used to managing people. Am
I right?
Henry Katurna (11:05):
Absolutely. You know, there's a funny thing
about us, we are you are anentrepreneur, I'm an
entrepreneur, all of yourclients are, you know, we all
make poor employees in the firstplace. And so in a certain way,
I'm saying, Now, I know the goodspirit of good fun, we are not
good employees, because we wantto be leaders. But sometimes we
ourselves need to be paying moreattention to how an employee,
(11:29):
you know, here's our message,the transmitter and the
receiver, that analogy issometimes something that we
forget. And so we need to becareful about that. Let's put
Laura Fisher (11:38):
So all your good life plans can just fall apart
if your team's just not managed.
Well. It can. All right, what'sanother reasons why small
businesses fail?
Henry Katurna (11:50):
I would say that I've only added this one in the
last couple of years, the blackswan event, you know, whoever
expected in 2019 that we wouldface pandemic and things that we
faced around the world. And Ihave clients I have friends of
mine who were I'll just give youan example. The restaurant
business, you know, foodservices, they one of my
Laura Fisher (12:11):
Now hang on, what is Black Swan? I just want to
make sure okay, I may not be theonly one.
Like a pandemic?
Henry Katurna (12:15):
A black swan event is how many What color are
Nobody predictedthat, right? There's a lot of
swans? They're white. They'rewhite. They're beautiful. But
people that say there wasplanning and so on, but let's
there are one in a million.
Okay, is a black swan. Allright. And so the black swan
event is that one in a millionleave that aside. But you know,
so a black swan event is thatthing that nobody could ever
even imagine what happened andlike a pandemic,
(12:45):
weird thing that happens toeverybody. And so, in, in my
world, I have two clients that Ilost one I lost immediately they
shut down within six weeks, theycouldn't make it, because their
customers all stayed away. Andof course, cuz I'm in the
restaurant business, you're inthe restaurant business. Now
another one had good cash flow,they were monitoring your cash,
(13:07):
they had a good team, and did abunch of things. They responded
quickly, they made a smallcourse correction quickly. And
they lasted a year and a half.
But they still went down thingsout of their control. Yeah, it
is really had nothing to do withtheir type of operation, or how
they did it just customersstayed away. And of course,
nevermind stayed away. Customersare mandated to stay away in
(13:29):
some countries. And so you cansee that problem. So that's,
that that's a real problem.
Laura Fisher (13:37):
Yeah. All right, what else you got for us?
Henry Katurna (13:39):
Well, I've got the misreading of signals. If
you are in a business, and youdon't have a dashboard, on a
regular basis of key indicatorsfor your business, and I'm not
just talking to accountingratios, and things like that,
but for your special business,if you create a dashboard that
(14:02):
you get, and you see things thatare happening, for example, in
sales, there's this thing we doin our society and in our
business principles. We tracksales on a quarterly basis or an
annual basis according to ourfiscal year. But there's a thing
called 12 month trailingaverages, for example. And so
(14:23):
it's a little known fact, Butmany people in business know
this one, you can remove theeffects of seasonality by just
tracking your stuff on the 12months preceding Nevermind the
quarter or the fiscal year. Sothat's an example of a signal.
So I recommend to people tobuild a dashboard with probably
five or six key signals that arethat are important in your
(14:45):
business. So let's say you're ina business that is not getting
paid, you know immediately bycredit card, your invoice. You
have accounts receivable andyou're waiting. Well, how are we
doing on speeding up thoseaccounts receivable where are we
if you haven't dashboard thatshows you every week, where you
are, whether you're 100, behind,you'll get a sense of your cash
(15:06):
position. And if you're behind,in your checking every week, you
can make a small one degreecourse correction, you can offer
a quick discount for 72 hours12% in 72 hours pay me, and
you'll get a bunch of cash forit. But if you wait six, eight
weeks, before you even realizethat's happening to you, you'll
have hundreds of you know,1000s, maybe hundreds of 1000s
(15:28):
of dollars. So this signal thingis an important reason if we
don't know what to monitor inour business, we can miss all
that. And it's too late by thetime we find out.
Laura Fisher (15:39):
All right, we're gonna take a quick break, and we
come back, I want to get to knowa little bit more about that
dashboard. And what other tipsyou have for us. So we'll be
right back.
Sponsor (15:48):
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Thank you for listening to smallbusiness insights. Today's show
is sponsored by business, esuites, virtual office services,
ready to start your new businessbut can use your residential
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mail and Virtual Office packagestoday. We know what
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(16:12):
to small business insights.
Laura Fisher (16:13):
All right, we're back with Henry Katana, and he
is going to continue to talkabout the dashboard and all the
key indicators. So I know forme, honestly, the quickest thing
for me to look at is myfinancial reports. But that's
not enough. So tell me what doeswhat do you mean by a dashboard?
(16:34):
Is it some? Is it a literaldashboard? That I have created
programmed? Or is it just somereports that you're saying I
need to pull regularly look atit. So give us a little bit more
details on what you what youthink would be best for any
business owner?
Henry Katurna (16:49):
Sure, Laura. So you know, we all get our
financial statement. That'sright. The trouble with a
financial statement good as itis, is that it requires us to
interpret it. And if we are toobusy, we get the financial
statement, what usually happens,it sits on the desk or it sits
in the computer. And we don'tget to look at it maybe for a
couple of weeks or a month orsomething like that. So I
(17:12):
suggest to people that they do adashboard. And a dashboard could
be like you said a minute ago,just an actual report that you
get that shows you some of thecamera, give you some examples.
But you can get a report thatshows you that or you can get
quite fancy and there are somesoftware programs that will
actually show you on a colorcoded basis. Red light for
(17:32):
danger, yellow for caution,green light, good. And you can
have five or six indicators on aliteral physical, you know,
color coded dashboard that popsup, you can look at your
business every week and say,it's all green,
Laura Fisher (17:47):
Are those software packages right outside the box
you can buy, or there's specialprogramming.
Henry Katurna (17:54):
There are some QuickBooks Online people tell me
actually has something likethis, and I haven't seen it. But
the other way you can do it isyou can have from your financial
statements, you can get Excelspreadsheets that actually are
color coded. So your bookkeepercan set this up for you or any
or your you know, your nephew oryour niece, if you're not
(18:14):
particularly software inclined,you know,
Laura Fisher (18:17):
I know for me I have, I have something like
that. But it does take an effortto get it together. So we have
QuickBooks Online. And then wehave our management software
programs that we keep all thecustomer data, all the
transactions, occupancy, youknow, all that good stuff. So we
have those things. But it is amanual process. But we do put it
(18:39):
in one spreadsheet so we can seeit all. But that's that's what
you're talking about.
Henry Katurna (18:44):
It's what I'm talking about. And you're you
know, you're probably 99% of theway to getting what you need. If
you were the whole point is tohave it pre interpreted for you
so that you the busy businessowner, you don't have to grab
that financial statement andthen sit there for two hours
combing through it and trying tofigure it out. Any good
bookkeeper can actually set upthese indicators so that by the
(19:05):
time it lands on your desk, youcan actually see it and you can
you can tell right away thehealth of your business. And so
I've got a few examples for you,you know, we talked about cash
at the beginning. So absolutely,you have to have as one of your
dashboard indicators is whereare we on cash? How much cash do
we actually have? And that wouldmean you know, money in the bank
(19:25):
minus checks written, let's sayso that you've got actually net
cash. And you could do that inany number of ways. You might
have collections. So you mighthave cash in the you know,
coming in 10 days, 20 days, 30days. Another way to look at it
is your sales funnel. Again,many companies don't you know,
(19:48):
they know that they havesalespeople, or one salesperson
out there making calls. Butwhere are we on that in the
sales funnel? How many salescalls or just cold calls? How
many are actually warm leadswhere you've had the demo, let's
say, how many have just about orjust about ready or have made
the purchase decision? And evenif it's a purchase decision
(20:08):
made, when did we collect onthat? And so if we have, as one
of our indicators, the state ofthe sales funnel, that shows the
color coded the cold, the warm,the demoed, and then the
purchase decision, we can.
Laura Fisher (20:24):
And it also gives your salesperson some
accountability exact right. AndI just had to hey, I'm doing
good. That's
Henry Katurna (20:29):
right. Yeah. Seen a lot of people. Yeah, a lot of
interest out there. That's whatthat's the common thing. And and
we love our salespeople, don'twe, they're fantastic. Gotta
have been there, they sometimesmeasure their performance that
week by the level of activity,not the level of result. So we
the business owner, of course,we have to gently remind our
great salespeople that, youknow, we need the results here.
(20:51):
So I always tell people havethat in your dashboard, and also
figure out a way to have, youknow, shorten the sales cycle.
What's the sales cycle? Well,it's that from the moment the
customer has heard of yourproduct to the moment they make
the buying decision? Well,that's the sales cycle, well,
why can't we shut that cantighten it up, cut off 20% of it
(21:12):
and make it shorter? By I don'tknow speeding up the process,
Laura Fisher (21:16):
And making sure you have intentional follow up.
I mean, exactly. Things likethat.
Henry Katurna (21:21):
Yeah intentional follow up with like, immediate
follow up and not waste any timeand that sort of thing. So
that's, that's an example ofsomething that would go into
your sales funnel. Another thingis, if you're in a business that
makes things, let's say, youknow, you're making a certain
sauce, or you know, a home basedbusiness that say even What's
(21:41):
your production, you know, whereare your inputs? Where are the
in the, in the transportationcycle? The supply chain? Where,
how many products have you made?
What's your error rate? Whichreminds me of yet another one,
if you're in a service business,where customer satisfaction,
let's say you have software andcustomer satisfaction is
(22:01):
important, you should betracking? The state of the
calls? What what's thepercentage of negative calls,
which the percentage of returnson our product? What's the
percentage of the error rate inour production, when we send out
material? Is it 100% Correct andproperly built, let's say, or is
there a certain error rate, ifwe track those things, we'll be
able to speak moreintelligently, quickly about the
(22:24):
state of our business.
Laura Fisher (22:28):
And you can pivot I mean, that's the beautiful
thing about being a smallbusiness, you can take that
feedback and do something aboutit quickly,
Henry Katurna (22:36):
You can move fast, and you can you don't have
to go to your you know, youdon't necessarily even have a
board, you just make a quickdecision to fix that. And, and
also, you can set the standardclearly for your employees, if
you know, if we making a let'ssay, we're a cabinet maker, or
we're making some kind of aproduct, it's easy to see
quality. And it's easy to testquality. But if you show that in
(22:58):
your dashboard, if you measurethese things, so the problem
with the whole dashboard is thatit has to be measured. And so
that means you have to have aprocess or some way to collect
the information, put it into acentral place, and then pump it
into your weekly dashboard withthe color coding.
Laura Fisher (23:14):
And it can't be all about money, because you
just talked about quality. Andthat's not going to show up and
your finance and your customerssatisfaction, your reviews,
things like that.
Henry Katurna (23:26):
Yeah, you've said an important thing, or the, the
financial statement is reallyonly one part of it all, if you
have a customer base that is,you know, I'm not saying
customers are fickle, but let'sjust say that they have
competitors, they can easilymove to well, you have to be on
top of that. And you have tokeep them happy constantly right
away. And so, you know, how dowe measure that? Well, we have
(23:48):
to have metrics, and we have tohave measures of customer
satisfaction. And if we, forexample are measuring error
rate, you won't see that in yourfinancial statements either. But
if you fix your error rate, andyou don't have to do redos of
something,
Laura Fisher (24:02):
Or you keep a customer, instead of having to
go get new one,
Henry Katurna (24:06):
That's right, keeping a customer is an easier
thing than getting a new one,because your cost of
acquisition, that whole salescycle we talked about, that's,
you know, you eliminate that andso these are the important
things that I think go into agood dashboard. Some people
need, you know, if you havelet's say you're a retail store
and you have turns of inventory,you know, got stuff on the
(24:28):
shelves and you've got to movethat well then you're going to
start looking at standardfinancial statement information
like turns and, and so on. Andif you have a business, let's
say that has collections I'm Ithink there's actually it seems
like a few businesses only thathave you where you invoice and
collect later. But there's aconcept called Days Sales,
(24:52):
Outstanding DSO and people knowthis and days payables
outstanding. DPO Well, those aremeasures of that you can measure
how many days sales outstandingthat you haven't been paid for
yet or there. If you track thatonce a week. That's a beautiful
indicator for a business likethat you will know right away,
(25:12):
whether you're falling behind inthose collections or are staying
ahead. And that's not accountsreceivable. Notice that's a
different thing than accountsreceivable, which has its own
metrics. But DSO and DPO arepretty cool indicators that I
think people like to use thesedays,
Laura Fisher (25:28):
What I'm getting is, for the small business,
usually they're they don't havea lot of staff. So that really
takes a lot of organization. Iknow, we do a lot of that admin
stuff after hours.
Henry Katurna (25:41):
This is what I was about to say, Saturday
night, instead of I don't knowgoing to the movies or
something. You're sitting therewith your QuickBooks, and you're
looking at the thing. So youknow what I also suggest to
people, you probably know this,because you're operating a
business here that you see a lotof people coming through and you
have a lot of clients andtenants, I guess you could say,
(26:03):
fractional services, I reallyurge the Small Business player
to have a fractional CFO, afractional CMO, Marketing
Officer at fractional, you know,
Laura Fisher (26:15):
Where do you find this? Because I've thought about
that? Because I could use afractional probably an HR
person. Yeah. Now, yeah. Wheredo you find that?
Henry Katurna (26:23):
Yeah. Well, I actually have not had in the
last 10 years. I have whenever Ineed one, I find one. So I, what
can I say? Where do you findthem? I think you'll find them
online. But I think the searchterm has to be fractional, and I
think your network finds itbecause an accounting firm, for
example, you know, full timecrew of accountants, CPAs,
(26:44):
whatever. They're going to knowsomebody who's semi retired, or
maybe a student or some, youknow, a woman at home, man
working side gig. And they'redoing these things on a
fractional basis. So they havethe professional qualifications,
but they're fractional. So Ithink you can find them but
might take a little bit ofsearching. But that's an answer,
(27:04):
isn't it for some small businessbecause we can't afford to pay a
full time CFO, but boy, if wecan get one for three hours a
week at a reasonable cost.
Right. Pretty cool.
Laura Fisher (27:15):
That'd be good.
All right, you have any othertips before we wrap it up?
Henry Katurna (27:19):
Well, I was going to mention one other thing about
people
Laura Fisher (27:24):
And you can tell you from Canada.
Henry Katurna (27:26):
Yes. About You can tell that's the famous
codeword and that is we have alist of words for Americans that
we what are they? Well, there'sHow do you pronounce SLUGHSL?
Oh, you it's it's like a S l?
Oh, yeah. It's like a pond on afarm.
Laura Fisher (27:45):
I don't even say that word.
Henry Katurna (27:47):
It's called slew.
But I know a lot of Americanswho call it a slough. And so
we'll have some fun with that.
Laura Fisher (27:53):
I'm Not a Farm Girl. I guess I wouldn't know.
That's it. You're
Henry Katurna (27:56):
You're a city girl. You don't know that. No,
no, that's fun. So one otherthing that I would leave is,
I've seen this phenomenon. It'scalled the Abilene Paradox. So
people can search it and you'llfind the stories about it. But
the whole point of the AbileneParadox is people in your
business who speak up too late.
This is a problem. People areafraid to tell the boss
(28:18):
sometimes what's going on. SoI've enjoyed watching this
Abilene Paradox thing. And thestory goes that it was a family
sitting in Kansas, you know, ona hot summer afternoon, on the
deck drinking iced tea andsomebody says, Let's go to
Abilene for ice cream. And oneperson goes, no, it's hot. It's
like 95 degrees, who wants todrive on that dusty road all the
(28:41):
way to Abilene just to get icecream. So the story goes that
the conversations continue. Andeventually they're all in the
car driving to Abilene to getice cream. Flash forward. To the
end of the day. They're sittingon the deck, the sun is setting
and somebody says, you know, Ireally didn't want to go to
Abilene and someone else's.
Well, I didn't either. But Ithought you did. Really soon the
(29:03):
compounded effect is that theynone of them really want to go
to Abilene. But they all didbecause they thought the other
one did it. So speaking up toolate. If you're in a business,
and you have employees who seethings that you can't see,
because you're busy, and you'reyou can't have eyes everywhere,
encourage people to speak upsooner about what they see.
(29:24):
That's an important earlysignal. So that's what I would
close with that would besomething I would add.
Laura Fisher (29:29):
That's good in practice, but it's hard for
someone to believe the bossreally means that, right? is so
how do you how do you reallycommunicate that?
Henry Katurna (29:39):
Yeah this is a great problem. So the the way to
do it is by consistency as theboss, your word is your bond. So
keep your promises behaveconsistently. Don't I guess
don't react either don'toverreact, you know, have that
steadiness and, you know, gohome later and vent but try Do
(30:00):
to show by your example that youactually care what your
employees say. And that you carewhat they're telling you about
the customer, if you can do onan even keeled basis, I think
you're well on the way,
Laura Fisher (30:12):
that's a good advice, I'm thinking that a lot
of it comes down to listening,you know, to the market research
to the customer, managingpeople, that takes a lot of
listening. So, and that issomething that I think step for
an entrepreneur to do. Andthey're so used to, like we
(30:33):
said, be the driver, be theleader, and take, take a step
back and kind of review andreflect.
Henry Katurna (30:40):
Right? Yeah, you know, it's another kind of a
whole phenomenon about us, asentrepreneurs is, we are people
of action, and we want to get itdone. And sometimes we move a
little too quickly to tellsomebody how to do it. And so
there's the old saying that, youknow, you could tell a person
what their job is, but don'ttell them how to do it. Now,
(31:01):
sometimes you have to, Iunderstand that. But if we could
adopt a practice of being reallyclear with our employees, what
exactly do we want them to do?
And then to what standard, youknow, what, what, how quickly
how fast with what, you know,speed with what error, whatever,
we if we can do that, and thenleave it to them to do it. We're
actually empowering them. Iknow, that's a code word that
(31:23):
everybody has heard about. Butit's actually true. If we do it
that way. If we are doing acommand and control system where
we only issue orders all thetime and do the thinking for our
employees, they're going to betrained to expect that and then
you don't have a team. And thenyou don't have a team. It's you.
And and some you know, I don'twant to say servants, but you
know, right, it's you and somepeople that are trained that
they're not expected to thinkand that you don't want to know,
(31:45):
you don't even want to hear whatthey have to say about things.
So if
Laura Fisher (31:50):
you had to wrap it up, why do small businesses
fail? Do you have like a, Terra?
Henry Katurna (31:55):
Well? That's a good question, too. I think the
reason small businesses fail isbecause they don't see what's
coming. And so because we canusually react, the entrepreneur
is smart enough to react. But ifyou don't see it coming, and you
don't have mechanisms built in,like dashboards and monitoring
this, that and the other thing,if you don't see it coming,
(32:16):
you're gonna fail. If you see itcoming, you can at least make a
course correction. So I wouldsay that, once you're back, make
sure you can see what's comingover the horizon that you if you
do that, you're going to I thinkbe successful in business and
you'll you'll have trouble youwill always have challenges, but
you'll be able to respond andreact and move to the right
direction.
Laura Fisher (32:35):
That sounds so good. And so true. All right.
Well, Henry, I'm so glad youcame by and for my listeners,
yes, it stormed during theentire interview. And but we are
we're not out in the you know,outdoor area, which we didn't.
So thank you so much for comingby. And can I have you come by
(32:57):
again sometime when we get alittle bit more in the weeds of
some other
Henry Katurna (33:01):
companies that come in thanks for inviting me
and you know, all the best toyou and your business.
Laura Fisher (33:04):
Thank you so much.
And until next time, you betterbe up to something. Thanks for
joining us this week on SmallBusiness Insights, make sure you
visit our website at Fisherpodcast.com where you can follow
the podcast on iTunes or yourfavorite podcast platform so
you'll never miss a show. If youenjoyed and found value in
today's episode, we'd appreciatea rating and review on iTunes or
(33:26):
simply share it with a friendthat would help us out to make
sure you tune in next week forour next episode. Until then,
you better be up to something
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