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Women in Business

Transcript 

Dr. Gayle (host):

Hello, and welcome to Women In Business, where we interview entrepreneurs and senior managers and show you the strengths, successes, obstacles, and roadblocks women experience in business. Since I believe every person in business needs to be visible, I'd like to invite you to watch www.sob6, that's the number six, tips.com, which will give you some valuable information should you get the call to be on radio or TV, which I think is extremely important.

Dr. Gayle (host):

If you'd like to contact me personally, drop me a line at Gail Carson. That's G-A-Y-L-E, gaylecarson13@gmail.com or go to my website, www.spunkyoldbroad.com and sign up for my weekly newsletter.

Dr. Gayle (host):

My guest today is really very interesting. Her name is Kathy Svetina and she is the founder of new castle finance, which is a company offering fractional CFO services to women owned small businesses, which is really unusual. She did for 14 years, senior level financial planning and analysis for fortune 500 companies and saw firsthand how big companies use financial information to drive their companies forward.

Dr. Gayle (host):

So she started Newcastle finance because she wanted to offer the same powerful financial insight to women owned businesses. And now she helps business owners as the 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.

Dr. Gayle (host):

Well, welcome Kathy to women in business because wow, this is something unique that I've never heard of before. So I have a lot of questions for you. How are you?

Kathy (guest):

I'm great, Gayle. Thanks so much for having me. I'm so happy to be here.

Dr. Gayle (host):

Well, I have to say, I've been an entrepreneur all of my life and I've never had a business course and I'd never known about finance. I know when I make a profit, I know what a profit is. I can't read a P&L statement, but I've always been okay in business. So here I am, this person who has built, well, my first business, I started when I was 21 and I built it from zero to seven offices and 350 people, which I never want to do again, but I really just did it on gut, if I can say that. So, how would I know that I need someone like you?

Kathy (guest):

Yeah. And that's a great question because, and by the way, those are great stats on your behalf, especially since you said that you're not comfortable using financials. So the fact that you did that, kudos to you, that's extremely impressive. But that's a great question, because I keep getting asked that a lot. And there's really no magic answer to it. And my answer to it is, when the business gets really complex to the point where your accountant or your bookkeeper cannot handle it. So, it's basically the time when you go into those meetings and they come back and say, I don't know, that's just not, I just don't know. And, and there's usually a point at about a million dollars. That's where the businesses get a lot more complex.

Kathy (guest):

There's a lot more processes, a lot more financial systems that have to be behind it. There's a lot more planning that's involved too. So usually people take them into... I've noticed that a people take them into a million dollars pretty easily, but if they have plans to go to 10 million, 20 million, that's when you really need to start looking at it more broadly than just from the accounting perspective and just from the tasks compliance and basic planning that accountants provide. You have to look at it from a more broader perspective and more holistically versus just immediate, reactive type of looking at your financials. You have to start looking at more proactively.

Dr. Gayle (host):

Yeah, I would think so. So how do you let people know who you are? I mean, do you prospect or do people come to you? Is it mostly your referral business? Do you go out looking for business? How do you get your business?

Kathy (guest):

A lot of, for me is word of mouth and referrals, because either accountants or bookkeepers come to me and say, this is a client that really needs help. I'm doing their accounting and bookkeeping, but they're asking me all these questions and that's just not my forte. That's not my expertise. So they send them over to me. And the other thing is, people either find me on LinkedIn or on Google when they're actually searching for those types of services. And they come to me and they look at what I offer. They look at the content that I put out there.

Kathy (guest):

I do a lot of educational content, because fractional CFOs, although they're not new, but people don't really understand exactly what they do. I mean, they understand the type of service that they want to get, but they don't really know how to call it and who to call out. So I do a lot of educational events through podcasting, through presentations that I give out. I go to a lot of small business events so that they know that these are the type of services that fractional CFOs offer so that when they need it, they know who to go to.

Dr. Gayle (host):

Fabulous. Well, you also, you mentioned bookkeepers, you mentioned accountants and you say there is a difference between what you do and bookkeepers and accountants. And I would think so because, large corporations have bookkeepers. Well, they don't really have bookkeepers. They have more accountants, but they also have CFOs. So how, when you approach these women who maybe have never even thought about something like this, how do you make your cake? What do you tell them?

Kathy (guest):

So, what I usually tell is, accountants and bookkeepers deal with your past and your current numbers. So they only look at what happened. What's the history of it, your business. They record the transaction to do the transactional piece, to do the reporting, but that's basically where it stops. When were you starting to look at the future of your business, the strategy piece, where you want to be six months from now, a year from now, five years from now, when it comes to your succession planning, when it comes to your, for example, what do you do with the money that you have in your bank account? You might have too much money in there and it just sitting there. What do you actually do with that? So that it actually gives you a return, so that it's not just sitting there and doing nothing for you.

Kathy (guest):

If you're, for example, looking to expand into another market, if you're looking to add another business into your business, and you need someone to help you with figuring out how to do the financials for that, how to do the business case for that, how do you plan it out. That's not something that accountants do. So what I tell them, the easiest and the simplest way to think of it in this way is, accountants and bookkeepers are very important people in your business. I want to make that very clear. They deal with the past and the current situation of your business, but when you're looking at the future and if you're looking at the strategy, that's when you need fractional a CFO.

Dr. Gayle (host):

That's really interesting. That's a great definition. I like that. So, why are you focused on women owned businesses only?

Kathy (guest):

That's a great question. I was in fortune 500 companies for so many years. And one thing that really bothered me was that there's not a lot of women in the C-suites. So one thing that I really wanted to help women, was actually get them into those C-suites. And I said, you know what, if women have such a hard time climbing the corporate ladder, why don't we just say, forget the corporate ladder, we're going to make our own thing. And the best way to do that is to build your own company, get to the real CEO level into your company, but to get there, you really need someone to help you with the financials.

Kathy (guest):

And that's my goal. My goal is to get more women into the C-suite and I help them get there with the financial analysis, the strategic planning and all this stuff that I do. And that's why I'm so passionate about helping women business owners.

Dr. Gayle (host):

I think that's great. I think that people need someone like you. So, you talk about a financial framework that you have. The five pieces of a healthy financial house. Tell us a little bit about that, because I don't think, well, maybe people think about it, but I don't know. I think that sometimes I think people are so busy running their business, they don't have time to think about the things that you would put into place. So what are those? What are the framework there, the five pieces of a healthy financial house, what are they?

Kathy (guest):

So I started doing this because finances are pretty complex topic, and I wanted to separate it into pieces that people understand and they can relate to. So usually what I like to do is, I start with the analogy of a house, because everyone understands that a house is... When you build a house, there's a lot of pieces and components that go into it. So the bookkeeping and accounting is essentially the foundation of this house. So, and as we talked before, it's about recording of all the financial transactions and the business, making sure that they're accurate and making sure that they're timely, that you can file your taxes.

Kathy (guest):

And then the second piece is, you have to use that financial information that you actually feeding into the system, that your bookkeeper and accountants are feeding into the system. And that's where your financial analysis comes in.

Kathy (guest):

So that's the second piece. It's like walls of the house, if you will. They put the strap or the structure together, and they enable you to make decisions based on actual data, than just guesswork. So you're looking at the numbers that you have, and you try to find out if there's any trends in them. For example, if you are a seasonal business, what are the dependencies between the numbers? What are the levers that you can pull?

Kathy (guest):

So, for example, if you, let's say that you increase a certain expense and you know that you're going to get a certain amount of revenue out of that, marketing is a good example for that. If you increase your marketing by, let's say $5,000, your sales are going to go up by $20,000 and you don't really see that dependency unless you do the financial analysis. So that's the second one.

Kathy (guest):

And then the third one, is the financial systems and the processes. So those are the processes and the systems that you have in place that gather that financial information, that report it. So I like to think of that in the terms of interior design in a house. And looking at what makes sense for you and for your business. So just like you would not put a bathtub in the middle of your kitchen, you don't want to use a certain financial systems and processes that don't make sense for you and for your business. So, looking at it from that perspective really helps to structure your financials. Making sure that you using the right accounting software, that it gives you the right information that you need, that you using the right payment processes as well. So if you're sending invoices manually and you have a lot of time to get the cash from your customers, that is essentially, what you're doing is you're blocking your cashflow. So looking at that as well.

Kathy (guest):

And then the fourth one is, your financial planning and strategy. Which is just basically your roof of this financial house. It's mapping all of the future of your business. It's setting up the objectives and plan and how to achieve them. The budgeting and forecasting that comes in, all the strategic planning and basically a 10,000 foot view of your business.

Kathy (guest):

And then the last one, are the, the one that unfortunately gets really overlooked in small businesses, and it's safeguarding this house. Those are the internal controls. Those are the checks and balances that essentially protect you against fraud in your business, and it keeps your assets safe. So for example, the separation of duties. You don't want to have someone enter the bill into your accounting system, reconcile that bill, and then pay it, because those are three different touch points. And if one person is doing that, you are exposing yourself to fraud. So thinking in those terms that you have a separation of duties when you're thinking about your finances, that is a huge piece. So again, that's like a structure of this financial house that you want to have in place as your business grows and becomes more complex.

Dr. Gayle (host):

I have to tell you, I probably wouldn't think about half of those things. So I have to ask you, you mentioned at the beginning about a business growing to a million dollars, I think you said, or something like that. Do you find that women grow a business to a million dollars and still don't know these five pillars?

Kathy (guest):

Yes. Yes. And I've seen that. I've actually... Most of the clients that I deal with are higher even than a million dollars to five million plus. And they still just have someone in the office doing their bookkeeping. They have an accountant who does their taxes and that's it. They don't have a structure in place that supports your business. And they are growing businesses.

Kathy (guest):

And usually, it's actually even worse for those type of businesses because they have the money in the bank, they have all the cash, so they don't feel the need to really put the structure in place because they have that comfort. So having the money, it's a great thing, but it also gives you that, almost like a false sense of comfort of thinking, "Oh, I don't have to deal with that because it's just, that's for businesses that, they're not doing well." Which is not true. I mean, whether you're doing well or not, you have to put this in place.

Dr. Gayle (host):

Yeah. I can see that. I think it's amazing, because I can tell you, I guess in today's dollars that would have been a million dollar business, back in the fifties and sixties, it wasn't a million dollar business. It was a six figure business, but in today's dollars it would probably be that. But I had none of that in place, none of that, Kathy.

Dr. Gayle (host):

So, if we're talking about this, you're talking about a sustainable and healthy business. What is that definition to you?

Kathy (guest):

Yeah. And I talk a lot about sustainability and a healthy business. And for me, it goes back to not being shortsighted in the business. It means looking at the decisions that you making, and how is that going to affect you in the longterm. Because if you're in business, you're not just going to be there for a year or two. You're going to be there for hopefully multiple, multiple years, maybe even decades. And at the end, you're either going to sell your business or you're going to pass it on to your, either to your partners or if you have any, or to your children, or whatever you going to do with it. So the decisions that you making you right now, how is that going to enable you so that the business is actually doing well and it's healthy.

Kathy (guest):

So I like to think of it, like every decisions that you make in your business, it's like throwing pebbles in the water. When you throw a pebble, it has all those ripple effects on the water and that's how it is-

Dr. Gayle (host):

Right.

Kathy (guest):

... When you make. Yeah, and that's how it is when you make decisions on your business, is every decision you make, it's going to affect something else. And it's going to affect you down the line. And thinking of it in terms of how is that going to affect me a year from now, two years from now. For example, the easiest thing, when people say, I want more profit, the easiest thing to get more profit is, you either increase your revenue or decrease your cost. If you want to just do it on paper.

Kathy (guest):

And the problem with that is, if you're just decreasing your costs, just willy nilly, because you want to have profit, and you're not really thinking about what is it when I decrease this cost, what is that going to do for my business in the long run? If I'm in... Let's go back to marketing. If I'm decreasing my marketing right now, that is going to affect you a couple of weeks, a couple of months down the road, because you're not going to have all those customers coming into your business. So I think of it in terms of what's really a cost and what's really an expense.

Kathy (guest):

And the other thing is, for example, cashflow, if you want to increase your cashflow, there's two really easy ways to increase it. Either pay your bills late, or you have long payment terms with your vendors. But the problem with that is, what is that really going to do for your relationships with the vendors? Are they really going to be a partner when you need them, or they're just going to service you and hopefully, it's just going to be this transactional relationship. And it hurts the relationship when you not making good on the promises to the vendors. So think of it in those terms of, how the decisions that I'm making, how does this affect not only the business in terms of the customers, but also in terms of your employees, your vendors and your community at large.

Dr. Gayle (host):

Yeah. I'm thinking, I'm thinking of, people are so busy running their businesses, that they don't actually think about a lot of things that we're discussing. Which is sad in a way, because they really need to understand what's going on. And there are people who focus on the marketing. There are people focus on the profit and people who focus on how many customers they are getting. And a lot of people don't realize that, if they just take care of the current customers they have, they'd be a lot better off than if they're always trying to get new customers. But I also think that, when we talk about businesses and growing, and it's funny because I never, ever thought about selling any of my businesses. I actually did sell the first one, but it wasn't in my plan until something else came along.

Dr. Gayle (host):

People call me all the time. Do you want to sell, do you want to sell? And I'd say, why would I want to sell? I'm loving it. But I just went into it. I went into it, not as a business person, Kathy. I went into it as someone who loved what I was doing. And there's a big difference in that. And I had... I talk about the fact that I was in business for two weeks when I got a cease and desist order, which I didn't even know what that was. And I had to hire an attorney.

Dr. Gayle (host):

And my biggest competitor thought I was going to be, well, she thought I was going to be her biggest competitor. And I thought, why on earth would this successful woman think that a 21 year old who is just starting her own business, would be her biggest competitor. She caused me a lot of grief, but I got through it. There were so many things that I did wrong and it was a miracle that I existed and did what I did.

Dr. Gayle (host):

So, I think that your background of being part of that fortune 500 world, and having your background as a financial person, is something that women just would benefit so much from you. So how many, as a fractional CFO, can you deal with more than one business at a time?

Kathy (guest):

I can, because what fractional CFO means, is that you're not there full-time. I'm not there full-time with them. So, I'm not sitting or virtually sitting with them 40 hours a week. Because it just doesn't make sense for small businesses to have someone there full-time because they don't have enough work. And the other piece is, having someone like that full time, it gets really expensive. So what fractional CFO means, is that I'm there for a fraction of the time.

Kathy (guest):

So I'm able to work with multiple clients, but I also have, I'm a boutique business and I have a very, very high touch point. And I only work with select clients and they work with me one-on-one. I do have a team that supports me, but when they do work with NewCastle Finance, they get me, they get my expertise and I'm there to guide them.

Kathy (guest):

And I have two services, one is the monthly retainer, which is the one that it's really high touch. And the other one is advisory. If they're trying to put this financial structure in place, but they don't need someone there that it's on a monthly retainer, on a monthly service with them. They still want to put that together and they need someone to guide them through it. And they want to maybe have another fractional CFO, that's where I come in and I guide them through this process so that they have that.

Kathy (guest):

And like I said, because I'm limited in the amount of people that I can work with, that's why I do a lot of these educational, podcasting, going into the conferences, talking to small business owners, so that they understand that even though I might not be able to help them physically, who to go to and who to actually talk to so that they can get these systems and planning and all this stuff in place, so that they have that as a foundation as they grow.

Dr. Gayle (host):

So where can people get in touch with you? And I also know that you have this wonderful gift for people on an eBook on the five critical mistakes that business women make and what to do instead. So tell us how to reach you, where to get the eBook, all of that.

Kathy (guest):

So the easiest way to reach me is through my website, newcastlefinance.us, where you can also get this eBook as well. And there's a couple of resources that I have on my website. The two books as well that you can read if you want to start implementing this. I didn't write them, but they're great resources for people. And then, the other pieces, I'm also on LinkedIn. So if you want to follow my content, follow me, connect with me. You can also find me on LinkedIn.

Dr. Gayle (host):

So again, how you spell her name is K-A-T-H-Y, Kathy Svetina, S-V-E-T-I-N-A. And the website is newcastlefinance.us. So remember it's the U-S at the end. This has been just so delightful, Kathy. I can't tell you how much we've enjoyed hearing from you.

Dr. Gayle (host):

And folks, remember, if you want to hear more about what I have to offer, go to my website, spunkyoldbroad.com. You'll find my programs there, my other radio shows, my store that I have, just a whole bunch of stuff there for you.

Dr. Gayle (host):

So Kathy, this has been delightful. I think people need people like you. I think they could benefit from you. Hopefully, there are some of our listeners who will be in touch with you because gosh, if I had my chance to do work with someone like you when I was younger, that would have been wonderful, because you could have solved a lot of issues for me. So thanks so much for being with us today and good luck in your future.

 

Speaker 3:

Thank you so much, Gayle.

Dr. Gayle (host):

Thanks for listening to women in business. I hope you enjoyed today's show. And if you have any suggestions as to who you'd like me to have as a guest, just email me at gaylecarson13@gmail.com. Be sure to check out www.sob6tips.com. And in the meantime, go to www.spunkyoldbroad.com to see the resources I have for you.