Whether you’re running a business or buying one, it’s important to understand losses. By “losses”, I mean when expenses exceed sales. In simplest terms, it’s when the income statement or profit and loss shows a negative number. You don’t need to immediately panic. You need to review the causes.
Here’s my list for non-accountants:
-> Are there personal expenses? (Pull those out).
-> Is it a Tax loss or a Cash loss? (You care about Cash).
-> Cash losses can’t keep going unless more money is invested or borrowed.
Or, stated another way…
-> Is the business worth more “alive than dead?” (Supporting a family without more debt, capital, or fraud).
-> How much cash is going in the owner’s pocket? (Assuming they’re following the rules).
Yes, there’s a lot more I could teach you about accounting if you had the time. But you don’t, so this will put you ahead of 90% of the world.
Can I Help You?
Hi, I’m Josh Horn, CPA, CVA of Horn Valuation. I help with business valuations in friendly or unfriendly situations. I also help owners build valuable companies. My clients are business owners and attorneys. If you’d like more information, check out my website hornvaluation.com, email me at [email protected], or call me at 217-649-8794.
I’m a licensed Certified Public Accountant (CPA) and credentialed in business valuation (CVA). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and been the primary advisor to multi-million dollar and small companies in various industries.
“If you’re not working on business value, who is?” Josh Horn, CPA and Certified Valuation Analyst