Don’t Make These Dumb Selling Mistakes I Made

selling

I made these dumb selling mistakes so you don’t have to. You can avoid them in just four minutes. Thanks. Secure link here…or YouTube here:

Thanks,
Josh

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Can I Help You?
Hi, I’m Josh Horn, CPA/ABV, CVA of Horn Valuation. I help with business valuations in friendly or unfriendly situations. I also help owners build valuable companies. My clients are business owners and attorneys. If you’d like more information, check out my website hornvaluation.com, email me at josh@horncpa.com, or call me at 217-649-8794.

Josh Horn CPA

I’m a licensed Certified Public Accountant (CPA) and double-credentialed in business valuation (CVA & ABV). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and been the primary advisor to multi-million dollar and small companies in various industries.

“If you’re not working on business value, who is?” Josh Horn, CPA, Certified Valuation Analyst and Accredited in Business Valuation

Why Your Business Won’t Sell and How to Fix It

sell

If you’re trying to sell your business, I’m going to give you the absolute best advice I can right here.  I’ve been engaged to help a potential buyer several times—only to have the deal fall apart before it got started.  This is written from the perspective of buyers on what caused problems in order of importance.

#1 Accounting.  I once “coached” someone who couldn’t pay me to do due diligence on buying a business.  When he was done digging through bank records, he said, “I think she’s losing a couple thousand bucks a month and I’m not sure she even knows it.”  “Thanks for saving me from making a really bad decision.”  Now, this is a bit of an extreme example.  Still a true story.  I’ve seen multiple situations when all the seller has is a poorly-prepared income tax return and disastrous books or…no books.  This is the major leagues.  If you can’t push a button and hand me these items below, I’m going to have difficulty taking you seriously:

-> Balance Sheet that’s clean as a whistle.  Not one with Accounts Receivable that has balances over 90 days past due.  You won’t see that customer money so please write it off.  Inventory adjusted to cost and obsolete inventory written off.  Cash reconciled to the bank statement.  Loans from banks and other creditors tied out to the penny.  Tighten the balance sheet up and most everything else will “fall out.”

-> Income Statement with predictable and explainable trends.  Generally, a clean Balance Sheet will lead to a clean Income Statement.  However, an issue that will give a buyer pause is bouncing expenses.  Why were utilities $10K this year and $5K last year?  Likely, it was sloppiness.  Any personal expenses being paid through the business?  Junior’s car payment?  Disney Vacation for the whole family?  Hey, I’m not the IRS (and won’t turn you in), but if you’re selling let’s find that stuff, put a circle around it, and cut it out going forward.  You’re only hurting yourself since a smart buyer wants to maximize…

-> Cash Flow (statement).  Smart buyers want to see good cash flow—ideally growing or a belief that they can grow cash flows with different decisions.  In my experience, few businesses or even CPAs prepare the Cash Flow Statement.  Ironically, it’s the most important financial statement, and not preparing it is usually driven by the pain it takes to create it, not its lack of importance.  The good news is a CPA can crank out a Cash Flow statement if he or she has a good Balance Sheet and Income Statement.

BTW, having a CPA provide you annual financial statements may not be enough to get your deal done.  Even some CPAs are a little confused by this.  If the financial statement was done in December and I’m buying today, what good is a six-month-old financial statement?  Think about it from the buyer’s perspective.  You need to be able to hand someone clean financials dated as of TODAY.

#2 Expectations. Real life exchange: Seller: “I think it’s worth 1X revenues.” Buyer (or Me): “Can I see the data you used to come up with that?” Seller: “I think it’s worth 1X revenues.” If the seller goes into negotiations like this, it’s doomed.  Nobody cares about that beach house you want or the huge debt hanging over you or that you’re living beyond your means.  Sorry, it’s true.  Those things don’t determine the value of your business.  After-tax cash flows and the value of comparable companies do.  So, swallow your pride and get realistic about what a credentialed business appraiser (like me) tells you (see CVAABVASA).  Business appraisers are in their best role if you immediately help them establish…

#3 Trust.  I recommend everyone—EVERYONE—with a stake in the deal get around a table immediately if a sale is even being considered.  Think about it.  If you’re the seller and you call me and don’t bring your potential buyer in to meet me, is he or she going to trust me?  No!  They think I’m on your “side” immediately.  It’s better for you if I’m either an impartial advisor to both buyer and seller or working in tandem with another business appraiser for the other side—early.  Establish trust at the beginning so you don’t waste any…

#4 Time.  “Time kills deals.”  It’s a universal truth.  If the buyer and seller are ready to get a deal done, then GET THE DEAL DONE NOW!  I’m not suggesting you rush it or put anyone in a bad financial situation.  You still need to strike while the iron is hot and push hard to move through it.  If it drags on too long, someone will get cold feet and then the deal will rot quicker than a Wal-Mart banana.

Contact me if you’re buying or selling a business so we can talk about your challenges and put you in the best position to succeed.  Thanks, Josh

Sign up for this blog here and connect with me on LinkedInFacebookTwitter, and YouTube.

Can I Help You? Hi, I’m Josh Horn, CPA/ABV, CVA of Horn Valuation. I help with business valuations in friendly or unfriendly situations. I also help owners build valuable companies. My clients are business owners and attorneys. If you’d like more information, check out my website hornvaluation.com, email me at josh@horncpa.com, or call me at 217-649-8794.

Josh Horn CPA

I’m a licensed Certified Public Accountant (CPA) and double-credentialed in business valuation (CVA & ABV). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and been the primary advisor to multi-million dollar and small companies in various industries.

“If you’re not working on business value, who is?” Josh Horn, CPA, Certified Valuation Analyst and Accredited in Business Valuation  

Employees or Unicorns?

unicorns

I hope you’ll watch this very short video…

“Hi, Josh Horn, CPA here of Build a Valuable Business, where we help owners build growing and sustainable businesses by driving up your business value.  Here’s a job ad I see often:  Full-time/part-time employee needed to answer phone, provide bookkeeping, collections, accounts receivable posting, accounts payable processing, analysis, and human resource functions.  Whoa!

I understand small businesses are under a lot of pressure.  Cash is tight.  Employees are expensive.  I get it.  However, I see this is usually a function of one or more other causes:

You Don’t want to Give up Control.  You want it all in house so you can feel in control even if you may not do it well in house.  To grow your company, you must give up control and be willing to accept…

Mistakes.  This is tough for perfectionists and business owner/managers.  I’ve been there as a CPA who had nobody to rely on at times and I’ve seen my clients struggle with this too.  Nobody does it as well as you…or so you convince yourself.  Relax and take a deep breath.  Very few mistakes are fatal.  Let your employees make mistakes so they can learn.  Also, how well do people drive when they send text messages?  So, why are we asking our people to get all the details right when they’re on the phone?  Sometimes, the real reason for all the mistakes is…

Not enough Automation.  Many of the data entry duties could be streamlined or even eliminated with some careful thought.  Recognize you may be very well-served by…

A separate set of eyes.  It’s always been fascinating to me how several people can view the same problem entirely differently.  Get someone from the outside to look at your employee and business challenges.  Find a CPA (like me) who will give you some free front-end time to assess your processes.  I think you’ll be amazed at what you come up with.

Parting call to action:  Build specialized employees and outsource what you’re not good at.  Then, you’ll spend time growing instead of looking for unicorns.”

See you again soon,

Josh

Let me know what you think about this.  Send me a message here.

Why Do I Do This?

Josh Horn, CPA/ABV, CVA created Build a Valuable Business for serious private business owners who consciously seek to build valuable businesses.  It is not for those who want to pursue old ideas or do things the way they’ve always been done.  It is not traditional accounting services.  It is not seasonal.  It is not cookie-cutter.  There’s a big gap between CFO and value-building resources available to private and publicly-traded businesses.  My aim is to fill that gap for the private business owner who doesn’t have a CFO on staff.  My passionate pursuit is to give private businesses access to a strategic CFO and the tools to build a business that grows to become a world-class asset with international impact.  Here, we focus on increasing your business value as the primary goal.  The achievement of that goal is realized when your business is always “sale-ready”, doesn’t require constant attention, and your owner hours are dropping while your business cash is rising.  My clients want a business that gives them options, a good quality of life, and plenty of time with their families.  Who is helping you build your valuable business?

Josh Horn

Josh is a licensed Certified Public Accountant (CPA) and double-credentialed in business valuation (CVA & ABV).  He’s been a tax and business consultant in a top 100 CPA firm and a controller in a large international company.  He’s also valued and been the primary advisor to multi-million dollar and small companies in various industries.

“To everything your business can be with a little help–for you, your family, and your employees.  I wish you all the success and happiness you can imagine.”  Josh Horn, CPA

Sign up for this blog here and connect with me on LinkedIn and Facebook.

Accountants Created a Monster for You with the Monthly Closing

monster

I’m sure it wasn’t intentional.  We just wanted to help, and we don’t like to speak up.  So, let’s just do this once a month.  Ah, us accountants sometimes can’t see the forest of business success for the trees of our checklist.  Mission accomplished for the next 30 days!  I think we accidentally created the Frankenstein monster.

I don’t know how we got to this point and it doesn’t matter now.  I suspect that in the old days of green bar paper, producing a financial statement was such an excruciatingly painful experience, we decided once a month was enough.  Can any business in this international, always on, 24/7 world afford to wait sometimes 2 weeks or more to look backwards on what already happened a month ago?  I don’t think so.

Real-time information is so critical, so essential to our business survival, that anything less than a daily “soft” closing of your books can leave your business coming up short time and time again.  If you’re still not convinced your accounting data is anything more than a necessary evil to keep the IRS and your bank happy, consider these issues…

You can’t manage CASH without a good real-time accounting systemCash is oxygen for your business.  Without it, your business dies.  Is cash moving up or down?  Do you know?  A downward trend only means 3 poor options—borrow money (if you can get it), put your own personal capital in (if you have it), or ask investors for capital (diluting your share of your business).  Understanding cash is the key to understanding multiple other areas of your business.  It’s the gateway to making ground level decisions.  Once you have a handle on cash, you can…

Monitor a handful of simple, straightforward METRICS for daily decision-making.  I believe in the KISS principle whenever possible.  Keep it simple and set up a dashboard that feeds you a daily list of 5 to 10 (max) data points you can use for business decisions.  Every business will have different “key indicators” that drive success in their industry.  (If you’re struggling with determining these, please contact me).  Maybe you want to see daily sales figures.  Maybe you want to see how well you are collecting cash from customers.  Maybe you want to see how fast your inventory is turning.  Maybe you want to see how many “net” customer accounts you are opening.  Maybe you want to see what kind of cash and profit margins certain products are contributing to your bottom line.  This is great stuff, but still short of where you want to be.  The ultimate place you want to go is…

FORECASTING where your business is going.  Can you predict where you will be in the upcoming months or even years?  That’s where I want you to be.  It’s next to impossible to make big decisions like plant expansions, hiring or staff cuts, equipment purchases, and acquiring other companies if you can’t see a long way down the road.  You’ll either be making some wild and risky guesses or you’ll be so shackled with fear that you won’t do anything.  Unfortunately, I see too many businesses living in one of these 2 worlds with their big decisions—maverick or paralyzed.  This is a preventable problem after you start forecasting.  Here’s my call to action…

Make it your goal to get your accounting system automated and “real-time” as soon as possible.  You have a lot of cost-effective options available to you so there’s no excuse.  And, please…please, don’t let your accountant talk you out of getting a real-time accounting system.  They’re likely imposing their pain on you.  Heck, it may put them out of a job if all they are providing is the numbers and no advice!  That may be the real reason they are shying away from it.  Will you have a little short-term pain in the switch?  You bet.  However, there’s a good chance someone nearby can help you steer through that short rough patch and make your company stronger than ever.  If not, call me.  Start today and let’s slay the monster together.

See you again soon,

Josh

Let me know what you think about this.  Send me a message here.

Why Do I Do This?

Josh Horn, CPA/ABV, CVA created Build a Valuable Business for serious private business owners who consciously seek to build valuable businesses.  It is not for those who want to pursue old ideas or do things the way they’ve always been done.  It is not traditional accounting services.  It is not seasonal.  It is not cookie-cutter.  There’s a big gap between CFO and value-building resources available to private and publicly-traded businesses.  My aim is to fill that gap for the private business owner who doesn’t have a CFO on staff.  My passionate pursuit is to give private businesses access to a strategic CFO and the tools to build a business that grows to become a world-class asset with international impact.  Here, we focus on increasing your business value as the primary goal.  The achievement of that goal is realized when your business is always “sale-ready”, doesn’t require constant attention, and your owner hours are dropping while your business cash is rising.  My clients want a business that gives them options, a good quality of life, and plenty of time with their families.  Who is helping you build your valuable business?

Josh Horn

 

 

 

Josh is a licensed Certified Public Accountant (CPA) and double-credentialed in business valuation (CVA & ABV).  He’s been a tax and business consultant in a top 100 CPA firm and a controller in a large international company.  He’s also valued and been the primary advisor to multi-million dollar and small companies in various industries.

“To everything your business can be with a little help–for you, your family, and your employees.  I wish you all the success and happiness you can imagine.”  Josh Horn, CPA

Sign up for this blog here and connect with me on LinkedIn and Facebook.

Are You a Carpenter?

carpenter

As far back as I can remember, I’ve always admired the profession of carpenter.  I can still picture myself as a proud 4-year-old wearing an over-sized tool belt and “helping” my father fix up our old house.  My dad was a coal miner, not a carpenter by profession.  I didn’t know the difference!  He was building something, shaping it, and putting his own unique flare into it.  Something we could touch and be proud of for years to come.

A couple of things occurred to me recently.  First, in the specific definition of the word “carpenter”, I couldn’t fill up one hand with good ones I’ve hired since I bought my first house 15 years ago.  Second, I think we’re lacking good carpenters in every sense of the word, whether it be in the trades, manufacturing, professional services, or whatever.  We need more builders of problem-solving solutions in every area of our economy.  How do we fix this?

Build something useful before trying to become a guru.  I admit it.  I’ve been sucked into this many times.  Smart phones have created a never-ending “shiny object” syndrome as we check for the next quick fix to make us millionaires.  What your phone never tells you is that before anybody ever became a millionaire or certainly a billionaire, he or she stumbled and fell at least a dozen times on the way.  I’ve started to dig below the surface and find out which of my mentors are truly carpenters.  The ones that have stood the test of time–they’re carpenters.  They laid their foundation brick by brick.  Framed it up.  Built the walls and the roof.  And then they went further.  They went back to their customers and built the next one even better.  I think one of the big keys is to…

Make a plan and do the front-end work.  This is the toughest part, but a carpenter doesn’t just plow into a project without a plan.  He starts with a vision and then puts pencil to paper.  He sketches it out so he can decide what tools and materials he will need.  I just completed a video course project that took me a lot of time.  I had to learn some new skills and experiment in areas where I have little talent.  However, it could have taken me twice as long without a good plan.  I created the outline and the script before diving in.  I thought deeply about what ideas I wanted to convey.  I created a strong vision for what I wanted to see when I finally came out the other side.  I also had a lot of fun along the way.  So, here’s my challenge to you…

Set a goal to build something for your ideal customer in the next 30 days.  Please don’t try to build Rome the first time out.  Set a realistic goal and still stretch to build something highly useful for your customer.  Something you can leverage in multiple areas of your business.  Something that can be communicated using all the fancy technology you have at your disposal.  The deep work—the thinking required to get it done—won’t come from your smart phone.  You have to reach out to your customers and find out what they need.  In some cases, you’ll be anticipating what they might need.  It may be a guess.  You may fail.  So what.  Pick yourself up and build something else.  Be a carpenter.

And if you are an attorney or know one, please look at what I built here:

http://build-a-valuable-business.thinkific.com/courses/business-valuation-for-attorneys

https://youtu.be/uyyuSYl1sp4

See you again soon,

Josh

Let me know what you think about this.  Send me a message here.

“To everything your business can be with a little help–for you, your family, and your employees.  I wish you all the success and happiness you can imagine.”

Josh Horn, CPA

Sign up for this blog here and connect with me on LinkedIn and Facebook.