Know Your Numbers

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The numbers always tell the story, yet more often than not entrepreneurial founders and small business owners … … often fail to be on top of their numbers, the numbers they need to know to grow their businesses, whether staying on top of cash flow, pricing their products and services correctly, or knowing when to pivot.


I’m Melinda Wittstock and today on Wings of Inspired Business we meet an inspiring entrepreneur who has made it her mission to get more women in the C-suite by helping them build their own companies.

Kathy Svetina is a Fractional CFO for women-owned small businesses. After 14 years of senior-level financial planning and analysis for Fortune 500 companies and learning how these companies use financial information to drive their companies forward, Kathy started NewCastle Finance because she wanted to offer that same powerful financial insight to women-owned businesses.

Kathy is going to be here in a minute, and first…

Kathy Svetina grew up surrounded by entrepreneurs and learned to love the energy of business owners. She also saw, firsthand, how finances can be a stumbling block for a business – with problems ranging from shortsighted cost-cutting approaches that end up hurting the business, to cash flow challenges, fraud, and incorrect pricing.

Now, she helps business owners as a “financial puzzle solver” to get clear on their numbers and their financial strategy so they feel confident to make good decisions that will result in a thriving business.

Today we will learn about her journey and her mission to help women-owned small businesses get the straightforward, jargon-free financial guidance they need to succeed.

Let’s put on our wings with the inspiring Kathy Svetina.

Kathy Svetina:                  All right.

Melinda Wittstock:         Kathy, welcome to Wings.

Kathy Svetina:                  Hi, Melinda. Thank you so much for having me.

Melinda Wittstock:         Well, I’m excited to talk to you because you work with a lot of women-owned businesses. Once they get past that all important million dollar revenue mark, what does a business need right at that point from a CFO?

Kathy Svetina:                  Yeah, I read about the one million mark. There’s nothing magical about that number, but what I’ve noticed is that that time is when the business gets a little bit too big for the needs that they had before so it gets a little bit more complex. So a lot of the businesses before that just had an accountant, or a bookkeeper in their financial sphere, but they get to a point where it’s just a little bit too complex to do everything by themselves, and just have the accountant do their books. So they really need someone to help them pave the way, and the financial strategy that they didn’t have before, and to look at it more from what they can be doing. Are they growing healthy? Are they being sustainable for the long-term? And that’s the mark of when they really are starting to look at that more from a broader perspective.

Melinda Wittstock:         You know that only 3% of women-owned businesses get to a million dollars. Perhaps they need some of this a little bit earlier on.

One of the mistakes that so many entrepreneurs make is just not really looking at their numbers day-to-day. By the time they come to you at a million dollars of revenue or more, are most of them guilty of that, do they really understand? Are they letting their numbers tell the story of the business?

Kathy Svetina:                  They would like to, but they don’t know how to. That’s the problem. By the time they get to me, they understand the importance of it. They understand I’m looking at their numbers, but they come to me and they say, “Well, I have all these reports. My bookkeeper, my accountant gives me all these.” They give me an income statement. They give me especially the balance sheet, which people get really confused about. What does it mean? What do I look at? And most importantly, it’s like, “How do I use this information to drive the business forward?” And that’s really confusing to people, especially, if they have no accounting or finance background is like, “What do I really need to look at so that it’s not just a report sitting on my desk, and it’s not just white noise that I have here? I have here the data, but I don’t know what to do with it.” Right?

Melinda Wittstock:         What are the common mistakes around that time? What are the things that when you first start working with these companies that you find yourself cleaning up first, most urgently?

Kathy Svetina:                  The most urgent thing that I usually see is that they are working in the business, but not on the business so they haven’t really taken a step back and say, “Where do I really want to be in three, five, even 10 years from now? I’ve gotten to this point. I was really focused on getting the sales up. I was really focused on getting to that one million mark, but what do I do now? I have to start getting more people into my business. It’s getting more complex. I need this expertise. What type of expertise do I need?”

Especially, for example, what I see a lot of times is their contracts get bigger. Their contracts get more complex so they might not have had a business lawyer in their business before drawing up these contracts. It puts them into a financial risk if they don’t have a lawyer taking a look at those contracts. That’s where I come in, and I actually go through a list of things that we should be looking at. The first thing I ask is, for example, “How are your contracts? Did you have a business lawyer looking at that?” And we look at it holistically so that they are much more prepared for that next step level where they want to go. Again, it’s like, “Where do you want to be in three, five years from now? Let’s look at that first.”

Melinda Wittstock:         Mm-hmm (affirmative). And so you’re also looking at how profitable revenue is and how revenue can become more profitable? Because again, so many entrepreneurs think about top line revenue, but they don’t really think about margin growth.

Kathy Svetina:                  Yes, yes, for sure, and I see this all the time. A million dollar business could mean so many things, right? It could be a million dollar in revenue. It could be a million dollar in profit, but there’s a huge difference between both of them. What people don’t understand is the more money you make, the more you’re going to have to be spending to be able to support that because you’re going to need employees. You’re going to need structure. Your expenses are going to grow as well.

Sometimes, if you’re not careful, and if you’re not really tracking your numbers and knowing what’s really happening in the business, you can be a million dollar business in revenue, but the amount of money that you’re going to get on your bottom line, and your profit, it can be a lot less for someone who’s making $500,000. So really being careful about that.

Melinda Wittstock:         Absolutely. You see all these people go online on Facebook and sort of find out how I made a million dollars. Then you look a little closer and they’ve probably spent $999,000 to turn that. Also, people confusing maybe accidentally on purpose their run rate with their actuals.

Kathy Svetina:                  Yeah, yeah. And it bothers me, too, especially, if you’re in the online world, you see a lot, oh, I have a million dollar launch, or six, seven figure launch, but what does that really mean? How much did you really spend on ads? How much did you spend on Facebook ads? That all adds up and it gets expensive really fast.

Melinda Wittstock:         The other thing that’s really tense for a lot of companies is cash flow, right, and managing cash flow, especially, in a growth stage. If you’re a company that’s scaling and suddenly you find yourself in the happy and simultaneously unhappy place at the same time where you’re scrambling to meet demand. Companies that are succeeding can sometimes run out of cash. So how do you help people through navigating really how to be on top of their cash flow?

Kathy Svetina:                  There’s so many pieces that go into the cash flow. The first one is, actually, and I always take a step back. What I like to do is track the sale from the very beginning when you first go and contact the customer, or the client that you’re with. I usually go and start, “How does your sale process look like if it starts with the contract and your payment terms?” If you have payment terms, they’re net 60, or net 45. Sometimes I actually see, especially, with the companies that are doing business with a lot of large corporations, their nets can be, I mean.

Melinda Wittstock:         Oh gosh, some of the big media companies, right? You do deals with advertisers, maybe pay you 120 days later. Yeah?

Kathy Svetina:                  Yeah, it is awful. It is absolutely awful. 120 days for a small business that could be a huge cash flow problem. So usually what I do is that’s the first thing I take a look at, how does that look like? You can have a lot of tools that you can deal with that. For example, if you’re at a net 90, net 120, the thing that you can do to manage that, well, there’s a couple of things. One thing is you can actually offer them a discount. So you could say, if we are negotiating on nets from net 120 to let’s say net 90, or net 45, something that’s more healthy for you from your cash flow perspective, you can give them a discount and say, I will give you 10%, or 5% off of the invoice if you pay it earlier. So you can use those things.

There’s also invoice factoring, for example. This is what is called accounts receivable. So basically what your clients or customers owe you, you can actually use that to get a loan from a factoring company. There’s all sorts of like terms around that. And you have to be careful with the interest rate that you’re going to be paying for it, but, I mean, there are ways to manage it, but the problem with it is that if you don’t negotiate that that can really hurt you longer in the long-term.

And the other thing is how are you getting money from your customers? Are they sending you checks through the mail? I mean, simple things like that actually really can affect your cash flow because if you’re waiting for a check in the mail for the next five, 10 days, versus getting an actual ACH on your bank accounts, or even if it’s a smaller bill they can be paying you directly through the credit card that really affects your cash overall.

Melinda Wittstock:         Absolutely right. And just even understanding going back a minute to understanding your sale. How long does it take you from the time of first touch through to actually getting the money in your bank account can you shorten that?

Kathy Svetina:                  Yeah, you’re right.

Melinda Wittstock:         What can you learn from that sales process to make that faster? What are the patterns? I think more and more businesses, if they’re not really data-driven, they’re not going to be in a competitive position because you’ve got to be right on top of it.

Kathy Svetina:                  Yeah, you do. I mean, there’s all sorts of tools that you could be using. It has actually gotten a lot easier these days because there’s all the software that we have available to track this. And you don’t really have to do anything in Excel anymore, either. I mean, just using the right tools, the right system when you’re actually feeding that data and getting the useful information out of it, that’s something that businesses should be taking a look at too.

Melinda Wittstock:         Exactly like a Zoho, or Salesforce, if you can afford it. We’re using Zoho, which is incredibly helpful because we can see the patterns in how the sales are coming in, how long it takes, all of that, right? Kind of instantly, and being able to really hook that up, hook everything up to QuickBooks. All these things are all hooked up for us now. So you can really just see in an instant exactly what’s going on. The numbers do always tell the story. I think one of the things that’s tricky for founders though, too, and growing companies up to a million and then beyond a million is that I’ve learned in all my businesses that if you wait too late to hire, you can be in a really difficult position, too.

So I’ve sort of switched my feeling about hiring. It’s less of an expense, and more of an investment, and what is the return I’m getting from each of those people? So if I’m paying someone $100,000 a year, how much are they actually bringing into the business? And how can that be measured? And really hiring before I think I need those people. I know I need them. If my projections are right in terms of where I want the business to be by a certain time, well, what does it take, and who needs to be doing what to what end to be able to even hit those numbers and tie things back?

Kathy Svetina:                  Yeah. And that’s a good point. And that’s when you’re starting to be proactive versus just reactive in your business, really thinking ahead.

Melinda Wittstock:         You have to.

Kathy Svetina:                  Yeah, you do. Where am I going to be not just three months from now, but a year from now? And at that point where your business is going to be in 12 months, what type of rules do you really need? Because as much as we would all love for the right employee to magically appear at our doorstep.

Melinda Wittstock:         Sadly, they don’t. Not if really want to hire A players. I was just having this conversation with someone yesterday. Well, actually, sorry, I’m just going to say this again. I was having this conversation with our team yesterday about putting them all on notice that we’re in permanent hiring. We’re just always hiring. Do you know what I mean? Because you’re always looking because when you find that really perfect person, you don’t want to be hiring from a place of desperation, right? Just putting someone in there to do something you want to really make sure it’s the right talent, an A player who’s aligned, who’s really, really into it, and is in the perfect seat. All that takes time.

Kathy Svetina:                  Exactly. Yeah. And especially when you’re a small business too, you really need to look at not just the right fit in terms of skills, but also in terms of culture, in terms of the mission. And, I mean, sometimes you might be looking for a unicorn and that takes time.

Melinda Wittstock:         Yeah. It does take time for sure. And those unicorns make all the difference to your business because at the end of the day, it’s the people. And so talk to me a little bit about fractional CFO-ing, right? So this means that a fraction of your time is spent with, and your company’s time is spent. So it’s like a CFO in a box in a way, right? So you can’t necessarily afford to have a full-time CFO in your company, but you need CFO services. So how does it work for your clients?

Kathy Svetina:                  Yeah, exactly like you said. So, essentially for small businesses they don’t have the resources to pay for a full-time CFO. I mean, those can get really expensive. Frankly, they don’t need it. They really don’t, but they do need the expertise of someone to walk them through the financial strategy, and the big overall pictures of their business and they need guidance in there. So instead of paying for someone on a full-time basis, like I said, it’s too expensive you don’t need, you get someone for a fraction of the time. And that’s what the fractional CFO does.

I mean, for me personally, the way how I work, I usually start them with the financial health check. So it’s basically an assessment of their needs to figure out what they need. And I have this phrase that I like to say that cookie cutter approaches should be just left for cookies. I have to really take a look at the business to see what they need so that I don’t just give them something that might not serve them. So really taking a look at the business.

And then we go into monthly support, or if they don’t need that yet, if they just have a project, we go into a project type work. So that’s basically how I work, and majority of the fractional CFOs work the same way, but we all start with an assessment of figuring out what the business really need and really understanding the business from the ground up because it’s not just about like we said, it’s not just about the financials, it’s everything together, sales, marketing, everything really feeds into the finances. So you really need to understand the business from a 10,000 foot view to really be able to help them.

Melinda Wittstock:         Exactly because you have all the tax issues, compliance issues, right? Making sure you’ve got the right payroll company, the right deal. Often the little things really add up. Sometimes folks have a lot of vendors, you buy something and you’re sort of using it, and it was working for a little while, but then suddenly you realize as we have, we suddenly had like, oh, God, a zillion of these different tools and all these different integrations. And then we can figure out that actually cheaper we could just put it all into Zoho, just things like that where you’re wasting money and you don’t even know it.

Kathy Svetina:                  Yeah, exactly. And they’re little things too. It could also be that if you’re not negotiating where you should be negotiating, especially, if you have certain inventory, or if you are shipping the product are those shipping charges that you’re paying, could you be negotiating that with your vendor? I mean, there are all sorts of things that you can be looking at from your financial perspective to make it better and that you have more resources to use.

Melinda Wittstock:         How about how a founder, a CEO calibrates say owns, obviously, a majority stake in the company usually at that million dollar plus range, right? And has perhaps taken investment money, and has to calibrate between generating their own wealth as a founder, as an owner, and also what’s good for the company. How do you help particularly women navigate? Because I find that women tend to not pay themselves, or pay themselves last, or put themselves behind everybody else because they’re growing their business. And there’s a lot of pressure to do that, but at the same time, you’ve got to be generating your own wealth.

Kathy Svetina:                  Yeah, you do. You really do. And one thing that I’ve always advocated for is you have to pay yourself salary. There’s no ifs and buts about it, especially, when you’re at a million dollar point. If you’re not paying yourself salary, I mean, the question is why? And why do you think you should become last from all your other employees that you have? So the salary is the first thing. And then if you’re taking dividends out of the business, that’s a different story giving yourself a bonus, but the salary is that particular baseline that a business owner should really be getting at because, also, it gives you an incentive to even grow the business more because if everything the way you do and you’re growing the business and you’re not giving yourself that reward, and everything goes back into the business, go back into the business, where is really the reward for you for all the hard work that you’re doing, right? And a lot of women what I see, unfortunately, they just put everyone else except of themselves. I think it’s unfortunate.

Melinda Wittstock:         Yeah, no, it’s really important. So there’s a lot of different ways you can get paid. I mean, you can put yourself as W-2. Perhaps if you have an LLC you’re taking a draw, or do you say dividends, or you’re taking some sort of bonus. I know at our company, we’re very focused on incentive compensation. So people have their base salary, but there’s a way tied to the financial success of the company, but also tied to non-financial objectives. And we change those objectives for everybody, including me as the CEO every quarter. And it’s a way to incentivize and align everyone towards the overall company performance as well as their individual goals. So some folks are being do you reach your quota of your bonus, or do you exceed it? Do you do even better? And we found that to be really a wonderful way of tying everyone, including me, to the results, but it means that everybody is doing well through their effort.

Kathy Svetina:                  And that’s a great point that you put that you have financial and non-financial quotas, especially, for the non-financial quotas one of the things that I’ve seen is customer service, especially, with the customer facing roles. If you have, let’s say you have salespeople, or you have someone who’s actually dealing with customer support. A good non-financial quota would be how satisfied are the customers? How really are you serving them? Are you serving them well? And sometimes I see people sending questionnaires after the customers come and ask for support, how did you really like interacting with this salesperson, or with the support person?

And if they give them five stars the person, actually, if they get enough of those, they get a boost in their incentive. And that’s a great way to incentivize people to be that customer-focused because happy customers are returning customers, and that’s really good for your business. Your business will grow. It will get a better standing on the market. You will get a better brand. I mean, these are all the things that you should be looking at. It’s not just about the money. It’s also about the non-financial pieces that can really affect the money as well.

Melinda Wittstock:         So very, very true. So you had a big corporate career, you were doing this in big companies. What made you take the leap into starting your own business, and focusing on women in smaller businesses?

Kathy Svetina:                  I was in corporate for 14 years, and I was in big Fortune 500 companies. After I left my last job and I was thinking what should I be doing next? What’s really next for me? There were two things. I come from a family of entrepreneurs. My family has had businesses for generations. I come from that mentality of having your own thing. And then when I was in corporate as well, the thing that always bothered me is that these big companies have all these departments, and there’s a lot of people helping them with their finances. I mean, you have the tax department, you have the accounting department, then you have the financial planning, the strategy department. There are all these people working together, but when I looked at the small businesses and especially because I knew that from my own experience having a family of entrepreneurs, no one’s really there to guide them.

Yeah, they have the accountant and a bookkeeper, but no one’s really there to take a look at all these pieces and help them with the finances and the financial strategy for a 10 foot view. So that’s when I said, “You know what? I really want to go and help small businesses with that piece.” Especially, for the women what I found is for women, it’s really hard to climb the corporate ladder, get into the CEO, CFO roles. And I said, “You know what? Forget about the ladder. How about women build their own ladder with their own companies, get into their own CEO, CFO positions in their own companies.” And the way to do that is to really understand the finances, and to have people help them. And I said, “I want to be that person that helps women figure out their own companies and build their own companies from scratch so that they can get to that real CEO level.”

Melinda Wittstock:         Absolutely. And so we often talk on this podcast about the mindset blocks that women in business, and female entrepreneurs have because I for one have learned in my own entrepreneurial career that everything manifests really from what’s going on inside our own heads. We all have these money stories, these beliefs about perhaps subconsciously about our own value, or that having money somehow makes you greedy, or I don’t know. We heard our parents argue about money when we were kids. Whatever the origination of it is, most people have some sort of subconscious money block. How much of what you do is actually around that money mindset?

Kathy Svetina:                  It’s actually a lot of it. Sometimes I do feel like a therapist as well.

Melinda Wittstock:         Right. Entrepreneurship is therapy. Come on. Yeah.

Kathy Svetina:                  Yeah, it is. If you want to develop yourself personally, do personal development on steroids, start a business, really.

Melinda Wittstock:         Yeah, because it’s going to confront you with everything that you haven’t released, all those beliefs. And things will keep repeating over and over and over again until you clear that stuff out, right? All those cobwebs. And so do you often find when you’re working with clients do they have a repeating money story?

Kathy Svetina:                  They do. A lot of it is around scarcity, actually. It’s like, “Can I really do this? Is my business going to grow? How do I make this happen?” And a lot of it is too defensive as well. What if this doesn’t happen? Well, what if things go wrong? And I mean, my answer to that is, “What if things go right?”

Melinda Wittstock:         Exactly. Exactly. Well, that’s actually in a weird way a lot of people are afraid of success.

Kathy Svetina:                  Yeah. And it’s interesting because I did not really realize that, but the more I work with people and the more I actually work with myself there really is that interesting component of it. There’s not just the fear of failure, but a lot of it is a fear of success because, especially, it’s almost like we come to this ceiling of success from what we’ve seen in our own life, and especially from the surroundings from the environment that we’ve been in. And if you’re trying to break from that ceiling there’s a lot of mindset work that has to go into it, and really looking at what does it really mean to be successful for you, and are you able to change that?

Melinda Wittstock:         Yeah. And there’s also a lot of people who are driven to success and they reach it, but then they’re not happy. That’s another interesting one, right? Where the fear, or the scarcity is driving the money success, and you’re measuring yourself entirely by your monetary value, if you will. And then you hit this destination, like woo-woo. And then don’t feel any different. I’ve seen that happen to a lot of entrepreneurs as well. They get there, but the money wasn’t everything. So it’s an interesting balance.

Kathy Svetina:                  Yeah. And when you do make more money, there’s usually when your company grows there’s a lot.

Melinda Wittstock:         The new problems.

Kathy Svetina:                  Yeah, they’re new problems. And the other interesting piece that I found out is that when people started businesses, they started because they really loved what they do. And they want to go and offer that to other people as a service, or as a product, or whatever it is. And then the more your company grows, the more you go from this, actually, working with the client, or the customers directly, the more you’re going to managing people because you’re going to have to manage all these people since you can’t serve everyone on your own you need help. And a lot of times what I’ve seen is where people struggle as is now I’m actually not being customer facing, but I actually have to manage my team, and what they realize that that’s not really what they want to be doing.

That’s not really what brings them joy. That’s not really what they’ve been in business with to just sit in meetings all day. It just feels sometimes if you’re coming from the corporate world and you escape that because you didn’t want that. And now you’re almost replicating it again. And it is yours, but you also have all these layers that you really didn’t think about that before. And that makes them unhappy. So think about that really is how big is big enough? And how much money is enough so that it still makes you happy to where you want to be?

Melinda Wittstock:         Absolutely. So, Kathy, how can people find you and work with you?

Kathy Svetina:                  So I mostly hang out on LinkedIn. You can find me on LinkedIn under Kathy Svetina, or you can also go on my website, the

Melinda Wittstock:         Fantastic. Well, thank you so much for putting on your wings and flying with us today.

Kathy Svetina:                  Thanks so much for having me, Melinda.

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