By Rich Bond
The term “miser” is really pejorative, conjuring up all sorts of negative images. In this fable from Aesop, “The Miser” comes off even worse than you can imagine. The miser sells all he has, buys a lump of gold, and then buries it. Every day, he digs down just to admire the gold. One of his workmen notices this repetitive activity, digs up the gold, and steals it. Needless to say, the miser is beside himself. But a neighbor tells him to bury a stone in the hole and pretend it’s gold, saying, “It will do you the same service; for when the gold was there, you had it not, as you did not make the slightest use of it.”
It’s not too far-fetched to realize that this story gets repeated in businesses. The owner is in love with his or her business and pours all they have into it. But they don’t understand where the actual value lies, or how they could better utilize the assets they have to grow the business and generate more sales, profit, and cash. Even worse, competitors can steal market share and drive the business into the ground.
Often times, a trusted member of the management team such as your CFO or Controller can provide the insight needed to increase the value of your business.
Over the past 25 years, we have seen the dramatic difference actionable financial analyses have made in the growth and profitability in companies where we’ve placed a new financial officer. The new CFO or Controller used solid financial management and the analytical processes to improve their companies’ profitability by 50% to 100%.
One of our clients was able to use such analysis to increase his company’s enterprise value and sell his business to a national private equity firm for much more than he expected.
In another case, a pricing analysis revealed that the company could charge a significantly higher price for their product because it is UL-certified, which enabled their customers to buy insurance against possible catastrophe. Competitive products did not carry this advantage.
Creating a stronger financial infrastructure will help you negotiate better bank terms, lower your audit fees, and significantly increase the value of your company, if you decide to sell it or bring in outside investors.
Feel free to contact me. I’d love to discuss other case histories of how the right CFO or Controller can unearth golden opportunities that are hidden in your business. richard.bond@bondandcompany.com.
