cpa Archives - Page 19 of 22

Why Rules of Thumb Don’t Work in Valuation

August 17, 2020July 18, 2019 by josh

Rules of thumb don’t work unless it’s dumb luck. Are you counting on luck to value your business? Find out what to do instead. Secure link here or YouTube here:

Thanks,
Josh

Can I Help You?
Hi, I’m Josh Horn, CPA/ABV, 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 double-credentialed in business valuation (CVA & ABV). 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 adviser to multi-million dollar and small companies in various industries.

“If you’re not working on business value, who is?” Josh Horn, CPA, Certified Valuation Analyst and Accredited in Business Valuation

How You Can Use Valuation in a Business Deal

August 17, 2020July 9, 2019 by josh

Buying or selling a business? How you can use valuation to structure your deal. Secure link here or YouTube here:

Thanks,
Josh

“If you’re not working on business value, who is?” Josh Horn, CPA, Certified Valuation Analyst and Accredited in Business Valuation

Does the CPA Need to Evolve?

August 17, 2020July 2, 2019 by josh

A couple weeks ago, the Journal of Accountancy published an article which stated in part:

“The National Association of State Boards of Accountancy (NASBA) and the AICPA are seeking feedback from the profession and its stakeholders as they consider ways to evolve the model for initial CPA licensure to support a growing need for new skills amid rapid technological advancement.” “…CPAs need skills and knowledge in…business intelligence, data management, analysis, and reporting, predictive analytics, cybersecurity risk management, IT risks, controls, and assurance, information security governance.”

I know the world is moving fast but is anything missing from the above? Here are the areas that have been critically important to my career as a CPA, none of which were covered on the CPA exam.

Managing Humans
It’s as if the CPA gods think we’re all going to be sitting in rooms by ourselves. This couldn’t be further from the truth as human interaction will become even more important to clarify new and complex technologies. There’s nothing on the CPA exam about managing, let alone leading. And yet this is what separates those who succeed in business and life from those who don’t. To manage humans, you better get really good at…

Communicating
Eye contact, speaking, reacting on the fly, smiling, creating chemistry, writing, making people laugh, and getting a small army to move in the same direction. Does this come natural to those with an inclination toward the CPA? Nope. Is it essential? Absolutely. Because if you can’t do this, you certainly won’t be doing this…

Marketing
Even with all the advanced technologies at our fingertips and those to come, nobody has come up with an effective non-human way to create good customer marketing. Good marketing has been described as everything that happens to a potential customer from beginning to end and at any point along the way. With great marketing, sales can be a chip shot. Do CPA firms plan to be successful in the future without good marketing implemented by those selling their services? Good luck with that.

The Bottom Line
Yes, the CPA needs to evolve. It needs to evolve to solve the issues that keep us from leading others, communicating with impact, and creating powerful messages that resonate with our customers. Some will say, “what do these skills have to do with being a CPA?” Everything…but only if success is your barometer.

For what it’s worth, my recommendation would be to build on the fundamental accounting skills, abstract problem solving, and critical thinking the CPA is known for. Then, let’s consider sprinkling in these areas that will truly move the CPA professional to a new level at the outset of their career. New age technical skills can…and should…be learned on the job.

Thanks,
Josh

“If you’re not working on business value, who is?” Josh Horn, CPA, Certified Valuation Analyst and Accredited in Business Valuation

Three Bookkeeping Myths Killing Your Business

August 17, 2020May 28, 2019 by josh

Bookkeeping isn’t fun or sexy. It may make the difference between hitting home runs and going broke though. Here are three myths that could be killing your business.

QuickBooks will Save the Day
Everyone has heard of QuickBooks. Since it continues to be a cost-effective solution for most businesses, I’ll likely keep recommending it. There’s only one problem. It’s only as good as the people who maintain it. Unfortunately, most users have been trained little, poorly, or not at all. That puts your most important financial information—cash flow, profitability, and operational effectiveness—in the hands of a mad scientist. That brings us to the second myth…

My Accountant is Keeping it Clean
The outside accountant will swoop in and come to your rescue! This doesn’t work either. The last several valuation engagements I worked on had some level of outside accounting assistance. All but one had basic accounting issues that required multiple adjustments. The one with no issues had a well-trained internal bookkeeper and a good outside CPA. This is a combination I’ve found works quite well. When there’s little internal knowledge [and/or] little outside help, things get sloppy and the bookkeeping falls behind. That brings us to our third myth…

Getting Behind is No Big Deal
Running the business and dealing with the day-to-day emergencies takes the wheel. “We’ll get to the accounting later.” “We only need that for the tax return.” “There’s money in the bank.” These are statements that make me cringe since you’ll be reacting instead of planning. Don’t believe me? This is where they usually lead:
-> Tax penalties and interest.
-> Income tax and no cash to pay it.
-> Below average or no profitability.
-> Inability to borrow or missed loan payments.
-> Blowing relationships with customers and suppliers.
-> Difficulty finding and keeping employees.
-> No chance to sell your business.

What Should You Do?
-> Get someone trained on your accounting system (inside and outside).
-> Have a backup for your primary bookkeeper. At least two people keep the wheels turning.
-> Trust but verify the outside accountant. Get a consult from a CPA (like me ????).
-> Stay on top of it. Close the books in days or real-time.
-> Use forward-looking accounting metrics. You can’t fix your business looking backwards.

Don’t let these bookkeeping myths kill your business. They will if you ignore them.

Thanks,
Josh

I’m a licensed Certified Public Accountant (CPA) and double-credentialed in business valuation (CVA & ABV). 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, Certified Valuation Analyst and Accredited in Business Valuation

What to Watch for When Buying a Business

December 11, 2020May 7, 2019 by josh

There are tons of articles about selling a business. What if you’re buying a business? Here are a few quick suggestions to keep you on the right path.

Valuation
Needless to say, it’s one of the reasons you’re here and reading this. You need to know the value of what you’re buying and whether you’re paying a reasonable price. Find an expert certified in valuation who can help you. More on this here and here. The language of valuation starts with…

Accounting
Many sellers are maximizing tax deductions instead of profits. Many sellers also have terrible bookkeeping. More on this here. What key accounting metric should you be looking for? Simply stated…

Cash
The business should be generating cash flow and it should be consistent. If it isn’t, should you walk away? Maybe not. Find out why. There are two other elements that will make or break a business and often outweigh everything else…

People and Culture
Good people can take a business to unimaginable heights. One bad person can wreck the entire business. Find out what kind of people and culture you’re considering buying…before you buy it. More on this here.

The Bottom Line
It can feel a little lonely if you’re thinking about buying a business. Professionals tend to beat a path to sellers, possibly thinking they’ll get a piece of the deal. If you’re buying a business, review these suggestions, take your time, and please ask for help. I’m here if you want to talk.

Thanks,
Josh

Sign up for this blog here if you want tools to increase the value of your business or want a refreshing view on business valuation from a recovering CPA. I’m Josh Horn, CPA, CVA of Horn Valuation. I value businesses for owner exits with a focus on HVAC and trade contractors. I also assist litigation and divorce attorneys as a business valuation consulting or testifying expert. My clients are business owners and attorneys. If you’d like more information, 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 advised small family-owned and multimillion-dollar companies. You can connect with me here on LinkedIn, Facebook, Twitter, YouTube and Instagram.

“Once-in-a-lifetime events demand an expert.”
Josh Horn, CPA and Certified Valuation Analyst