A couple of years ago, we were hired by a client to help her increase the value of her business.
She was looking to retire and the offers she was receiving were too low for her.
So we worked together, helped her focus her business and crafted an investment letter that netted her an offer $1.75 million more than before. However, we also noticed her financial reporting was abysmal.
So we warned her several times: improve financial documentation or risk everything.
Despite our urgent recommendations to enhance financial transparency and accuracy, she decided against firing her incompetent finance manager, believing the audited statements sufficient.
This decision proved catastrophic.
When due diligence began, the $4 million deal collapsed due to the lack of timely, accurate and comprehensible financial reporting. She could have avoided losing a $4 million deal and the chance to retire comfortably if she had just invested $5,000-$10,000 in professional financial oversight.
This story isn’t just a tale of lost opportunity; it’s a stark reminder of the critical role documentation plays in valuing and eventually selling a business.
After all, accurate, timely, and clear documentation isn’t just a checkbox for auditors; it’s the bedrock of trust between sellers and buyers, the difference between a comfortable retirement and years of needless toil until you can no longer function.
To make the most of tomorrow’s opportunities, make sure you document everything today.
That’ll not only help you run the business better now, but it’ll also set you up for success in the future.
If you want to find out more how to make your business more independent, profitable and attractive so you can stop watching opportunities pass you by, then sign up for our Masterminds.
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