Penny Wise And Pound Foolish..

Do you know John?

He was a real salt of the earth entrepreneur. He worked hard, saved his money, and jumped in to start his own company. He put in long hours, made difficult decisions, and slowly but surely, his business grew.

Years went by, and John’s business was now a success. It was profitable and had a strong reputation. John was happy growing the business and would easiy run it for the next 20 years.

The email was unexpected.

From a large international player…

Let’s grab a coffee it started…

And that coffee turned into dinner, a golf outing, and a few discussions. Eventually, the big company offered to buy John’s business.

The offer was substantial and would give John enough money to send all four of his young children to university and take care of his family for generations.

John almost broke the kids’ beds when he jumped on them to wake them after he got home from a final dinner to finalise the terms.

His wife was too excited to care about the children waking up. The children cried and then squealed and joined in, because it became a rare evening of a play fest past bedtime.

That night John and his wife shared new plans and bigger dreams as they explored all the implications of the exciting offer.

John’s wife quit her job.

Summer was nearby and they booked a non-refundable aall-inclusive family trip. Perfect timing for when the deal closed.

Due diligence began…

The golf playing, back slapping guy who made the offer was gone.

Now his questions were direct, numerous and cold.

Where are some of the financial records? Why did you report items such as these? Who are your customers and how often do they buy from you? How and why did you do the tax filings this way?

The tax filings…. John’s accountant was a deer in the headlights.

John was screwed.

You see, he had tried to minimise costs and hired a cheap bookkeeper who had made mistakes, including key tax filing ones.

Why? John was asked by the backslapper…

John didn’t have a good answer. How could he explain he was being cheap and hired incompetence and mediocrity.

He asked for patience and promised that it would all be sorted so the deal could go through. He just needed a few weeks, no more than a couple months, to redo the books and sort the taxes.

John’s invitation for golf the next weekend was not answered.. nor the two invitations sent out the next two weeks thereafter.

Finally, John’s phone rang and the caller was the buyer.

Well actually it was the buyer’s PA.

“I’m sorry to inform you….”

The buyer pulled out….

Days later John found out the buyer acquired one of his competitors.. who was less strong and less profitable.

Sitting at his desk, John could feel the pain pulsating in his neck and shoulders.. too much slumping over.. too much reading the same sentence over and over.. too much twisting the knife in his heart.

It sunk in…

An interested buyer with millions had slammed the door in his face.

Bad recordkeeping and tax filing..

How much would it have cost him to have outsourced this properly? $500 a month?

John would be late that night.
How will he tell his wife?

 

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