Value Driver Series #3 – Financial Performance
We are talking about more than just the numbers when it comes to financial performance as a value driver.
Financial performance goes beyond simply assessing the top line revenue and the bottom-line profits. This value driver also includes the reporting quality of those financial numbers.
Without question, the numbers themselves are extremely important when speaking about a business’s financial performance. But can you defend those numbers? If a third-party buyer is interested in purchasing your business, will this buyer have any reason to question those numbers?
A third-party buyer is going to want the numbers you are providing to be backed-up and supported through accurate records. This will create trust in the numbers you have provided. Moreover, that third party buyer is going to want to see a recent history of sales and profit. If there is growth within the business that has been accurately translated through reporting, a potential buyer could identify the following:
- The business is well managed
- There is a potential for profit and growth in the future
- The business does not suffer from one-off growth surges or declines
Professional, accurate and up-to-date financial information is critical to give a buyer confidence about the future of your business. Have you just done the minimum for financial reporting, or do you have comprehensively prepared financials reviewed by a professional CPA? Many owners self-prepare financial reports rather than spending time with a CPA. With the help of a CPA and other finance/accounting professionals, you will have more accurate records which will help you identify the strengths and weaknesses within your business.
This blog article is for informational purposes only. It does not create an attorney-client relationship and is not intended to be regarded as legal advice.