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Casual Articles - Due Dilegence 101 Or What You Do Not Know Can Kill You! - Part 1
Continuing with our review of medical billing formats, we're going to cover NSF 3.01 format for the BA0 record, fields 13 - 28 which will conclude our coverage of the BA0 record, which is for provider data.BA0 field 13, positions 90 - 104, is the provider CHAMPUS number. Not a lot of people, even those in the medical billing field, know what CHAMPUS is. CHAMPUS stands for Civilian Health And Medical Program for the Uniformed Services. This field is the assigned number that the provider needs to send if they are sending a CHAMPUS claim, which isn't very common.BA0 field 14, positions 105 - 119, is the provider Blue Shield number. This is the number that needs to be sent if the provider is sending a claim to Blue Shield.BA0 field 15, positions 120 - 134, is the provider commercial number. This is the number that needs to be sent if the provider is sending a commercial claim. A commercial claim is one that would go to a place like Prudential or Mutual Of Omaha.BA0 fields 16 and 17, positions 135 - 164, are the provider other numbers. These are other provider numbers assigned for sending claims to companies that don't fall into any of the regular categories or if a provider has more than one Blue Shield or commercial number.BA0 field 18, positions 165 - 197, is the provider organization name. It is critical that the name entered here be the full name and not some nickname like Pru Life. It must be the legal name of the company.BA0 field 19, positions 198 - 217, is the provider last name. This is in case the provider isn't a clinic and is an actual doctor. His last name must appear here. Field 20 is the doctor's first name and also follows the same rules as does field 21 which is his middle initial.BA0 field 22, positions 231 - 233, is the provider's specialty. This is actually a code that the doctor can get from a list of specialties that carriers accept.BA0 field 23, positions 234 - 248, is the provider's specialty license number. Each provider that has a
Seller owns a dry cleaner. The buyer and seller have opened escrow and the deal is subject to a 15-day physical observation period. The seller doesn’t want the buyer to find out that business volume is very slow. The seller tells all his friends to bring their dry cleaning in to the shop for a two-week period, at no charge. They bring in the clothing, get it cleaned, pick it up and pay for it. Later the business owner meets the customers and reimburses all of them for the cost of their dry cleaning. The day after escrow closes all that business traffic stops. Think it never happens? The same is true of restaurants. Seller tells all his friends to bring all of their friends in for a free meal. Customers pay the bill and some time later or at home, the business owner reimburses all the customers for the cost of their meals.
Actual time sellers spends working:
Determine how many hours the seller really works. You are buying an income stream based on a known number of hours of work. Make sure the seller isn’t working 80 hours and telling
There are many things which most people still do not understand about marketing on the internet. And, as the internet continues to evolve, the successful web sites will change to meet the new criteria. Those that seek new information on a constant basis will be successful and those that do not will fall away.However, there are three basic concepts that all good websites must adhere to if they are to thrive in this rapidly changing environment. It may not always be like this but at least it is for the foreseeable future.First and foremost, to be successful, a website must have traffic. Without traffic a website is like posting a flyer in the rain forest. If nobody’s around to see it, what good is it? It still amazes me that the vast majority websites constructed give no thought at all to this most basic of principals.A good traffic generating plan must be part of the original construction of the website with a nice mix of textual content and keyword density. Why? Because, no matter how you slice it, most of your traffic will come from search engines. For example, my most successful website gets 85% of its traffic from search engines. This concept is called SEO or search engine optimization. If you don’t know how it works my highest recommendation is you’d better find someone that does.Think about it this way. What do you do when you want to find some information, a product or a service on the internet? Of course, you go to Google, Yahoo, MSN or any other search engine for that matter. And therefore, what do you think most everyone else does? The very same thing!The second most important element to your website is the most highly overlooked element and the one which is easily corrected and that is; good copy writing. You see, once a web surfer has landed on your website through a search engine, that person devotes very little time to figure out whether your site has what they’re looking for. In fact, statistics have shown that you’ve got 15 seconds at the most to grab your re
This article is written as a general discussion on the subject of “Due Diligence”. It is for informational purposes and not intended to be a definitive guideline for your exact situation. You should consult the appropriate professionals with regard to your specific transaction or situation. Further, this article is in no way advocating, suggesting or implying that anyone engages in any type fraudulent activities whatsoever. These are simply the things a buyer should be aware of when doing due diligence in buyer a business.
Due Diligence Defined:
The phrase is composed of two words. “Due” which the dictionary defines as “Proper or Adequate” and Diligence, which is defined as “Degree of care or caution expected of a person. Especially as a party to an agreement.” Caution: is the watchword in this definition.
Financial Statements – What to look for:
Add Backs: If you bought the business through a business broker you should have received the business financial statement with a separate worksheet showing adjustments to those statements. These adjustments show the owner’s benefits received from the business besides the profit and salary he receives. These can also be defined as personal expenses that need to be added back to the profit. Depreciation, incomes taxes, interest expense are add backs that are not personal. Personal includes such things as family auto expenses, owner life insurance, owner health insurance, business entertainment that was not really spent on clients, business trips not really for business, home office expenses, family cellular phones and much much more.
Make the seller show you the details on some or all of these expenses to verify that they are really personal and not actually business expenses that shouldn’t be added back to profit. Spend time asking detailed questions with the general ledger in front of you. Go through individual charges and what they mean, until you fully understand what is being added back and why.
Inventory:
Inventory of resale merchandise must be checked for two reasons. One is you have to pay for it. Be careful, you do not want to buy merchandise that is old, worthless and not saleable anymore. Only pay for current marketable product. The price you are suppose to te pay for the inventory is the seller’s cost. The price for old slow inventory is negotiable. Always spot check the price and count the merchandise listed on the inventory list. Do people put down that there is three of an item when there are only two? Of course, especially when they think no one is going to be checking them out. Comparing prices from purchase invoices is how you check prices. You cannot check every item against the actual cost but you can do 5% of the items. Pick at random, not by any suggestion made by the seller or others. If you do not understand how marketable the inventory is that you are buying, hire an expert, from that industry. Your broker should be able to help you in finding someone. Do not be cheap, and think you do not need to spend the money on an expert adviser. I will take a lunch bet that they will pay for them selves many times over.
The second reason for checking inventory is that if a seller doesn’t take inventory at least yearly and adjust his inventory value in his accounting records, accurately, the profit figure you are receiving will not be accurate. As a rule, the higher cost of goods sold, the lower the profit. Some business owners reduce the inventory value on the books, intentionally, to a lower value so as to make the business show a higher cost of goods sold, which then creates a smaller taxable profit. If they do this year after year, the profit may or may not be accurate for the current year. It might take a CPA to figure this one out for you, if you do not have a background in retail.
Equipment value:
Next thing to check on the financials is the real, current value of the equipment you are buying with the business. The balance sheet might, if it shows all the equipment the company owns, give you the cost of the equipment when it was purchased. If you are buying assets rather than cash flow, the equipment valuation becomes more important. No one wants to overpay for used equipment. Also check that the equipment works and is actually being used rather than sitting behind the building with other junk.
Cash Sales:
If all income is being reported, check sales volume activities that you have observed against the daily records during your “Due Diligence” to see if the volume corresponds to what was reported last year in the same month. If you see income of $500 per day but the seller shows sales of $1,000 per day, you need to find out why. Some smart buyers sit in the business all day, watch the sales and observe the activities of the staff. This works if the seller is not putting on a full fledge production fraud for you the buyer.
Fraud:
How does a seller defraud a buyer on current sales activity levels? Sellers who keep poor records or no records, many times, suggest the buyer doing a 15-day visual inspection. This helps but it is very dangerous to rely solely on physical inspections alone because the seller can still defraud the buyer. Here is the most famous of the stories I have heard over the years.
Seller owns a dry cleaner. The buyer and seller have opened escrow and the deal is subject to a 15-day physical observation period. The seller doesn’t want the buyer to find out that business volume is very slow. The seller tells all his friends to bring their dry cleaning in to the shop for a two-week period, at no charge. They bring in the clothing, get it cleaned, pick it up and pay for it. Later the business owner meets the customers and reimburses all of them for the cost of their dry cleaning. The day after escrow closes all that business traffic stops. Think it never happens? The same is true of restaurants. Seller tells all his friends to bring all of their friends in for a free meal. Customers pay the bill and some time later or at home, the business owner reimburses all the customers for the cost of their meals.
Actual time sellers spends working:
Determine how many hours the seller really works. You are buying an income stream based on a known number of hours of work. Make sure the seller isn’t working 80 hours and telling
A picture is never worth a thousand words. After all, why do newspapers and websites contain more words than images? Because pictures are insufficient on their own. Would you date someone whose nice photo you saw online, if that’s all you had to go on? Of course not. Pictures are not worth a thousand words.Pictures can’t tell a story on their own. They need a narrative. They need words to help them out. That’s why you must put captions under the photographs in your donor newsletters. I’m not talking about stock photos that your designer places on pages for artistic effect. I’m talking about the newsy photos, the photos of your work, your volunteers, your latest event, the people you help, the photos that must communicate news or facts to your donors.Photos in donor newsletters need a caption to explain what the photo cannot. And that’s the secret of a great caption. It moves your story along by describing the news behind what the donor is seeing without simply describing what the photo already illustrates.For example, if your newsletter features a story about therapeutic horse riding for young people with Down syndrome, you could simply place a photo of a young man and a horse somewhere on the page and hope that your readers figure out the relationship of the photo to your story. I recommend you don’t do this.Or you could place a simple caption under the photo that says, “A young man with Down syndrome and his horse.” This I also recommend you don’t do, since this caption merely describes what they reader can already see in the photo.Instead, you should caption this photo with a line or two that describes what the reader cannot see. For example: “When Brian Phillips rode his first horse three years ago, Brian could not speak. But today, Brian says: ‘Horses are awesome! Trigger is my best friend, next to my Mom, that is.’”Look for the news in your photographs, the meaning behind each picture that you know but that your readers do not. Look for the who, what, why, where, when and h
Make the seller show you the details on some or all of these expenses to verify that they are really personal and not actually business expenses that shouldn’t be added back to profit. Spend time asking detailed questions with the general ledger in front of you. Go through individual charges and what they mean, until you fully understand what is being added back and why.
Inventory:
Inventory of resale merchandise must be checked for two reasons. One is you have to pay for it. Be careful, you do not want to buy merchandise that is old, worthless and not saleable anymore. Only pay for current marketable product. The price you are suppose to te pay for the inventory is the seller’s cost. The price for old slow inventory is negotiable. Always spot check the price and count the merchandise listed on the inventory list. Do people put down that there is three of an item when there are only two? Of course, especially when they think no one is going to be checking them out. Comparing prices from purchase invoices is how you check prices. You cannot check every item against the actual cost but you can do 5% of the items. Pick at random, not by any suggestion made by the seller or others. If you do not understand how marketable the inventory is that you are buying, hire an expert, from that industry. Your broker should be able to help you in finding someone. Do not be cheap, and think you do not need to spend the money on an expert adviser. I will take a lunch bet that they will pay for them selves many times over.
The second reason for checking inventory is that if a seller doesn’t take inventory at least yearly and adjust his inventory value in his accounting records, accurately, the profit figure you are receiving will not be accurate. As a rule, the higher cost of goods sold, the lower the profit. Some business owners reduce the inventory value on the books, intentionally, to a lower value so as to make the business show a higher cost of goods sold, which then creates a smaller taxable profit. If they do this year after year, the profit may or may not be accurate for the current year. It might take a CPA to figure this one out for you, if you do not have a background in retail.
Equipment value:
Next thing to check on the financials is the real, current value of the equipment you are buying with the business. The balance sheet might, if it shows all the equipment the company owns, give you the cost of the equipment when it was purchased. If you are buying assets rather than cash flow, the equipment valuation becomes more important. No one wants to overpay for used equipment. Also check that the equipment works and is actually being used rather than sitting behind the building with other junk.
Cash Sales:
If all income is being reported, check sales volume activities that you have observed against the daily records during your “Due Diligence” to see if the volume corresponds to what was reported last year in the same month. If you see income of $500 per day but the seller shows sales of $1,000 per day, you need to find out why. Some smart buyers sit in the business all day, watch the sales and observe the activities of the staff. This works if the seller is not putting on a full fledge production fraud for you the buyer.
Fraud:
How does a seller defraud a buyer on current sales activity levels? Sellers who keep poor records or no records, many times, suggest the buyer doing a 15-day visual inspection. This helps but it is very dangerous to rely solely on physical inspections alone because the seller can still defraud the buyer. Here is the most famous of the stories I have heard over the years.
Seller owns a dry cleaner. The buyer and seller have opened escrow and the deal is subject to a 15-day physical observation period. The seller doesn’t want the buyer to find out that business volume is very slow. The seller tells all his friends to bring their dry cleaning in to the shop for a two-week period, at no charge. They bring in the clothing, get it cleaned, pick it up and pay for it. Later the business owner meets the customers and reimburses all of them for the cost of their dry cleaning. The day after escrow closes all that business traffic stops. Think it never happens? The same is true of restaurants. Seller tells all his friends to bring all of their friends in for a free meal. Customers pay the bill and some time later or at home, the business owner reimburses all the customers for the cost of their meals.
Actual time sellers spends working:
Determine how many hours the seller really works. You are buying an income stream based on a known number of hours of work. Make sure the seller isn’t working 80 hours and telling
Library cubicles are independent study rooms for individuals. They are meant for individuals who need to spend more time in reference work. The cubicles are a calm and quiet place to go through available study material.In colleges and universities, library cubicles are specially made for graduate students and faculty members. It can be used by those individuals doing research work and handling special projects. With limited number of cubicles, individuals need prior permission from library members to make use of the cubicles. There is need to follow certain rules and regulations to access cubicles.Library cubicles are complete with shelves for books. The books and journals in cubicles are available for references and consultations and cannot be taken home, in most cases. The cubicle shelves come with or without doors. Locked cubicles are mainly given for faculty members with long term projects and research work. Such cubicles are usually shared by two or more persons to keep valuable books and other related materials safe and secure.There are cubicles equipped with computers, DVD, and VHS players. With computers, individuals can utilize Internet facilities that are needed for study. Moreover, some institutions provide facilities for intranet access.Library cubicles are considered one of the best possible ways to study in a calm environment. There are individual and group study cubicles in libraries. Some cubicles are assigned for scholars and researchers. Single cubicles are smaller in size and shared cubicles are a bit larger. Almost all cubicles have space enough to keep manuals and other study materials. But it does not have much space to spread out and study. However, the place is ideal to concentrate on studies with minimum distractions.Library cubicles are available on rental basis. Terms and conditions vary.
The second reason for checking inventory is that if a seller doesn’t take inventory at least yearly and adjust his inventory value in his accounting records, accurately, the profit figure you are receiving will not be accurate. As a rule, the higher cost of goods sold, the lower the profit. Some business owners reduce the inventory value on the books, intentionally, to a lower value so as to make the business show a higher cost of goods sold, which then creates a smaller taxable profit. If they do this year after year, the profit may or may not be accurate for the current year. It might take a CPA to figure this one out for you, if you do not have a background in retail.
Equipment value:
Next thing to check on the financials is the real, current value of the equipment you are buying with the business. The balance sheet might, if it shows all the equipment the company owns, give you the cost of the equipment when it was purchased. If you are buying assets rather than cash flow, the equipment valuation becomes more important. No one wants to overpay for used equipment. Also check that the equipment works and is actually being used rather than sitting behind the building with other junk.
Cash Sales:
If all income is being reported, check sales volume activities that you have observed against the daily records during your “Due Diligence” to see if the volume corresponds to what was reported last year in the same month. If you see income of $500 per day but the seller shows sales of $1,000 per day, you need to find out why. Some smart buyers sit in the business all day, watch the sales and observe the activities of the staff. This works if the seller is not putting on a full fledge production fraud for you the buyer.
Fraud:
How does a seller defraud a buyer on current sales activity levels? Sellers who keep poor records or no records, many times, suggest the buyer doing a 15-day visual inspection. This helps but it is very dangerous to rely solely on physical inspections alone because the seller can still defraud the buyer. Here is the most famous of the stories I have heard over the years.
Seller owns a dry cleaner. The buyer and seller have opened escrow and the deal is subject to a 15-day physical observation period. The seller doesn’t want the buyer to find out that business volume is very slow. The seller tells all his friends to bring their dry cleaning in to the shop for a two-week period, at no charge. They bring in the clothing, get it cleaned, pick it up and pay for it. Later the business owner meets the customers and reimburses all of them for the cost of their dry cleaning. The day after escrow closes all that business traffic stops. Think it never happens? The same is true of restaurants. Seller tells all his friends to bring all of their friends in for a free meal. Customers pay the bill and some time later or at home, the business owner reimburses all the customers for the cost of their meals.
Actual time sellers spends working:
Determine how many hours the seller really works. You are buying an income stream based on a known number of hours of work. Make sure the seller isn’t working 80 hours and telling
Q. What is a premium? A. In direct mail fundraising letters, a premium is an item offered to a donor, usually at no charge, to encourage the donor to make a donation. Q. What’s the difference between front-end and back-end premiums? A. Premiums that are included in the mail package are called front-end premiums. Premiums that the donor must request are called back-end premiums.Q. What are some examples of front-end premiums? A. Labels, note pads, greeting cards, calendars and decals.Q. What are some examples of back-end premiums? A. Books, DVDs, tote bags.Q. Which kind of premium is the most popular among mailers? A. Front-end premium.Q. Why do non-profit organizations mail premiums? A. To boost response rates.Q. What are some advantages of premiums? A. Premiums tend to attract more gifts when mailed to current donors, and attract more first-time donors when mailed to prospective donors. Also, because of their bulk, they tend to encourage more people to open, rather than pitch, fundraising letter envelopes.Q. What are some disadvantages of premiums? A. Premiums tend to attract gifts that are smaller than those generated by packages that contain no premium, and they attract donors who are less likely to give again. Some donors who are acquired with premiums can only be renewed with premiums. Premiums also attract gifts from donors who are motivated by guilt or obligation rather than by philanthropy.Q. How do I know if premiums are right for my organization? A. Test and find out.Q. What kind of premium should I offer? A. The most important factor in choosing a premium is that it complements your mission. Greenpeace offers a cotton tote bag that is an environmentally friendly alternative to plastic shopping bags. The Billy Graham Evangelistic Association offers books writte
Equipment value:
Next thing to check on the financials is the real, current value of the equipment you are buying with the business. The balance sheet might, if it shows all the equipment the company owns, give you the cost of the equipment when it was purchased. If you are buying assets rather than cash flow, the equipment valuation becomes more important. No one wants to overpay for used equipment. Also check that the equipment works and is actually being used rather than sitting behind the building with other junk.
Cash Sales:
If all income is being reported, check sales volume activities that you have observed against the daily records during your “Due Diligence” to see if the volume corresponds to what was reported last year in the same month. If you see income of $500 per day but the seller shows sales of $1,000 per day, you need to find out why. Some smart buyers sit in the business all day, watch the sales and observe the activities of the staff. This works if the seller is not putting on a full fledge production fraud for you the buyer.
Fraud:
How does a seller defraud a buyer on current sales activity levels? Sellers who keep poor records or no records, many times, suggest the buyer doing a 15-day visual inspection. This helps but it is very dangerous to rely solely on physical inspections alone because the seller can still defraud the buyer. Here is the most famous of the stories I have heard over the years.
Seller owns a dry cleaner. The buyer and seller have opened escrow and the deal is subject to a 15-day physical observation period. The seller doesn’t want the buyer to find out that business volume is very slow. The seller tells all his friends to bring their dry cleaning in to the shop for a two-week period, at no charge. They bring in the clothing, get it cleaned, pick it up and pay for it. Later the business owner meets the customers and reimburses all of them for the cost of their dry cleaning. The day after escrow closes all that business traffic stops. Think it never happens? The same is true of restaurants. Seller tells all his friends to bring all of their friends in for a free meal. Customers pay the bill and some time later or at home, the business owner reimburses all the customers for the cost of their meals.
Actual time sellers spends working:
Determine how many hours the seller really works. You are buying an income stream based on a known number of hours of work. Make sure the seller isn’t working 80 hours and telling
Pre employment background screening is necessary if you want to check out your applicants before hiring. Before you try to get into a thorough background check of a new recruit, you must consider the potential legal landmines that can impact your small business. Screening the background of a potential hire can help minimize the risk of negligent lawsuits. Your company can be held liable for the actions of a new employee, especially if a background check is not performed. When performing a background check, the creditors or employers are allowed to verify the background history of applicants and ensure that there are no criminal convictions and the person is who they say they are.Background screening is good for checking criminal records, falsified educational credentials and other serious liabilities. Gaining this information, about the people you are planning to hire is absolutely essential, because a business can be held liable for accidents and crimes committed by its employees. The use of background check and pre-employment screening ensures that you hire personnel with appropriate levels of education and skills that your business or company requires. It results in saving valuable time and money for the company. Employment background screening solutions have the depth and breadth to satisfy the needs of any organization.Screenings can also include checks on vendors, nanny, tenants, etc and include their educational background and potential criminal records, employment verification and other kinds of screening, so that the final report is accurate. Such stringent way of screening result in good hiring practices that help in recruiting qualified employees.
Seller owns a dry cleaner. The buyer and seller have opened escrow and the deal is subject to a 15-day physical observation period. The seller doesn’t want the buyer to find out that business volume is very slow. The seller tells all his friends to bring their dry cleaning in to the shop for a two-week period, at no charge. They bring in the clothing, get it cleaned, pick it up and pay for it. Later the business owner meets the customers and reimburses all of them for the cost of their dry cleaning. The day after escrow closes all that business traffic stops. Think it never happens? The same is true of restaurants. Seller tells all his friends to bring all of their friends in for a free meal. Customers pay the bill and some time later or at home, the business owner reimburses all the customers for the cost of their meals.
Actual time sellers spends working:
Determine how many hours the seller really works. You are buying an income stream based on a known number of hours of work. Make sure the seller isn’t working 80 hours and telling you he is only working 40 hours, per week. I had an absentee fast food owner tell the buyers and me that he worked part time - 5 hours per week. Closer inspection showed he was working 25 hours per week. One auto repair seller, we’ll call him Bob, said he never was at the business, because he had a second full time job. Inspection found he was working 30 hours a week (4 plus hours every night, and 8 hours on Saturdays).
Find out what job functions the seller does:
Get a list of functions that the seller does. Is one of them bookkeeping? Sometimes the wife does the books part time and this is never said. Again you may find the owner does the bookkeeping, at home, every night, for an extra hour. In an auto repair shop, you may find the owner is doing auto body repair work, personally, on Saturdays, which is work that you, as a buyer, will never be able to duplicate. You need to be sure you know how to do every job function that the seller does or learn them. The time to find out what technical knowledge you need to have to take over the business is when you are doing your investigation, not the day after escrow closes.
Verification of things that are not on the Financial Statements:
It is a common occurrence that businesses do not record all of their income on their financial statements. Yes, this is true. Many people do not, in fact, report the truth on their tax returns. In fact, when I am talking about small retail or service businesses that deal with the public directly, I find it is over 90%. “Will the people with an honest set of books, please leave the auditorium. There are two golf carts outside waiting to chauffer you home. You do not need to hear this.”
The balance of this article will discuss how a buyer might do their “Due Diligence” for different types of businesses. These types of businesses include Restaurants, auto repair shops; real estate services contractors, non-real estate repair/ services, and retail stores.
Restaurants- Non-Franchise:
Restaurants compose over 25% of all businesses for sale. This is not because they all go broke, as the SBA reports. It is because 28% of all retail businesses are food service or food sales. It is the largest segment of the consumer market. Because it is a retail consumer business, it deals in 33% cash. Every independent-non-franchise food service business I have been into shows zero profit on the books. Some even go overboard and show a tax loss. It is because they do simple tax planning that does not require an MBA degree to figure out. If the business doesn’t show all of its cash, or any of its cash, the expenses will equal the reported income. This alone makes it attractive to many buyers. We will not discuss the moral issues of this attitude; it is what it is. What we have to discuss is how do you, the buyer, can prove that the business is making a profit? And if it is, how much?
Restaurants come in two categories. 1. Fast food-counter sales. 2. Sit down. Fast food restaurants have computerized cash registers that record the sales into its computer, which has a memory. This memory has daily totals going back to the beginning of the computer’s history. Most owners close out their cash registers at the end of the day and print out the tape of each day’s activities. This does not automatically wipe out the information for the day. The computer does, I am told, have a delete button on it allowing the owner to wipe out the full memory in the computer, in the event of an audit. I have also been told, but do not believe, that an electrical blackout can wipe out the memory in the computer and that is why one seller said he couldn’t give me access to this information.
If we are talking about a sit down restaurant sales information, you can use the daily order ticket, which are then imputed into the computer. This gives 3 sources: tickets, computer and daily tape totals.
When this information is not available, for any reason, an experienced restaurant consultant can tell you the sales activities just by inspecting the restaurant and counting the number of customers eating at 4 key times in a day, and on several key days per week. Then the consultant can figures out what the average sales ticket amount is. With this information like magic the consultant knows the gross sales figure, for the year.
A double check procedure for restaurant consultants is to then look at the food purchases and its costs and can confirm that it matches the actual sales figures. One consultant that was hired to review a Johnny Rocket restaurant for $7,000 did the audit and put together a marketing program for the buyer. The marketing program included delivery and catering. Both of which do not normally show up on the computerized cash register.
Restaurants - Franchise:
You would imagine that franchise restaurants records would be very accurate because the franchise company gets a percentage of the gross income. The bigger ones connect up to the individual franchise and know what is happening faster then the owner. As stated above, the only sales t
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