Have you ever missed a phenomenal opportunity because you weren’t fully prepared for it? If you have, then you know it’s an awful feeling. The good news is, it’s not one you have to experience if you prepare for due diligence.
According to Investopedia, “due diligence is an investigation, audit, or review performed to confirm the facts of a matter under consideration." In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party.”
Oftentimes, people don’t understand the risk of not having proper financials until they need them. By then, it’s usually too late. One widespread example of this played out on the national stage when the U.S. Small Business Administration rolled out the Paycheck Protection Program (PPP) last year to help businesses survive the coronavirus pandemic.
Many businesses that were in the most desperate need of funding were unable to obtain loans because they didn’t have proper accounting records. While they may have met every other criterion, their lack of financial documentation left them shut off from critical resources.
If these businesses had properly prepared by hiring a professional to maintain accurate financial records for them, they wouldn’t have been in such a precarious position.
Missing out on a loan isn’t the only negative consequence of not having accurate financial records.
Thinking of selling your business? The potential buyer will want to perform due diligence over your financials.
Want to buy a franchise? The franchisor will perform due diligence over your financials.
Need capital from an investor? The investor is going to perform due diligence.
Due diligence allows potential customers and investors to determine if your company has a healthy cash flow, where your revenue is coming from, the value of your assets, and other important factors.
It helps those who would potentially do business with you determine whether they are making a sound decision.
It’s not too late to take steps to ensure this doesn’t happen to you, nor is it something you have to be afraid of or intimidated by. Maybe you’re phenomenal at what you do, but crunching numbers isn’t really your forte.
Don’t fret.
This is when you’d implement the advice from our last blog about having an aligned team and hire an employee or contractor to do the work for you. That’s where we come in.
At DesCPA, we can help you get your company’s financial house in order. We can work with you to position your business so the next time a great opportunity comes knocking at your door, you can answer it with confidence and close the deal.
Don’t let failure to prepare for due diligence hinder you from reaching the highest heights in business.
There’s a reason the Bible instructs that we ‘be ye ready’ at all times. It is a sentiment also echoed by Roman philosopher Seneca who said, “Luck is what happens when preparation meets opportunity.”
At DesCPA, we believe when you’re intentional about preparing for due diligence, it’s not luck at all.
Are you building a business, but wonder how you can be more successful? DesCPA, a woman-owned Business Advisory Firm, has advised business owners from all walks of life. Founder Lydia Desnoyers knows what it means to pursue passion, financial freedom, and flexibility. As South Florida’s trusted Business Advisors, our team empowers business owners to make the best financial decisions for personal and professional success. If you enjoyed this blog and want to know more, join our mailing list.
All information contained in this post is for informational purposes only. The information found on Descpa.com and its affiliates does not constitute financial advice.