Cash is King and the King Likes Attention

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Cash IS KingEveryone knows that “Cash is King”, right? Cash is critical to a businesses’ survival. But unreported cash can be a problem for a business. There is a tendency for many business owners to hide cash, under report revenue, or exaggerate expenses in order to reduce their tax bill (illegally). Two obvious downsides to doing this, besides facing an IRS audit, are:

  • If the owner needs a loan to cover receivables, inventory, or expansion, it is likely the bank will turn down the loan application or not offer as much as the owner needs because the business will look “weaker” than it should. We have also seen banks call outstanding notes based on poor financial reports. It doesn’t matter if the customer is making all their payments, if the bank thinks there is something wrong with the business, they will ask the business to find a new bank. It happens!
  • The other major impact of under-reporting financial results is that the value of the business becomes greatly diminished. If an owner tries to sell their business with hidden cash, inflated expenses, and unreported revenue, buyers become very skeptical, and banks will only base their loan approval on the tax returns of the business the buyer is pursuing. So a potentially strong business becomes much less desirable in the marketplace, the price has to drop, and the seller may need to finance the sale!

It takes several years to clean up the books to improve the business value. That’s great if you have the time and there are no emergencies. But “things” happen and a business owner should be prepared.

If you want some great advice about how to get the most for your business, talk to one of our experienced Apex Business Advisors.

Doug Hubler
President

Check Out Apex’s New Mobile Friendly Website

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Apex Business AdvisorsTime flies and we needed to update the Apex website. For companies needing to keep up with search engines like Google, it’s critical to have a mobile friendly site. KCApex.com is now mobile friendly! Our buddies at Blue Gurus are taking care of all the details and making it super easy to get caught up with the newest technology. We’ll have the same great content about selling and buying businesses, newsletters, and a list of our clients who want to sell their businesses.

Although I don’t have any plans to sell, I’m trying to follow our own advice, which is to keep up with marketing, have a strategy for growth, and have a succession plan. One of the mistakes many owners make is to get complacent and comfortable. This may be a good strategy if change is too stressful and there is no care about business value, but businesses really need to change just to keep pace with competition and to satisfy changing customer demands.

Blue GurusWe’ve encountered too many businesses over the years that have become so outdated there is very little reason for a buyer to acquire the business. In those cases it could be easier and less costly to start from scratch. That’s not a position in which a business owner should find themselves!

So today, we launch our new website with Jason Terry and Mic Johnson because we need to stay relevant!

Reach out to one of our Apex Business Advisors to get some advice on the keys to selling a business.

Apex's New Website