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Increasing Value

Avoid Inconsistencies

By February 14, 2024No Comments

I admit I’m not an expert on financial statements, accounting, HR, and other admin aspects of a small business (there are CFOs, CPAs, etc. for the deep dive). What I’ve come to realize is I’m good at seeing inconsistencies.

For example, I asked an advisor to a business how confident he was in the firm’s financial statements. The answer, “Oh, 100%.” My response, “Then why are there balance sheet items on the income statement?” A blatant inconsistency.

Owners become good at this also. So good they become a “conscious competent.” They do things by rote and often can’t explain their process.

The best example is from about 10 years ago. The owner had 45 years of industry experience, 20 years of business ownership, worked part time, but could see things off track almost instantly, and make corrections well before others would even notice what’s going on.

His value to the company wasn’t the time he put in; it was what he was able to do in limited time (20 hours per week max). It would take a buyer 50 hours a week to be anywhere close.

“If you can’t be kind, at least be vague.” Judith Martin