"Fine" Is the Killer of Value

Julie and I sat next to each other on the couch in her small office that was crowded with supplies and filing cabinets. Two minutes into the Value Report meeting she turned the page on the report and was silent, for what seemed like forever. I thought she was going to like the news, but she wasn’t saying anything. Then she said, “Wow! I felt things were fine. I just didn’t know…”

Julie isn’t alone. Most business owners are not overspending on purpose. If you ask them about their expenses, most will say things look “fine.” Vendors are reliable. Bills are getting paid. Nothing feels broken.

Not broken, okay, under control, etc. is exactly the problem. There are many words for “Fine”, but they all mean the same thing for a business’s bottom line. “Fine” is where value quietly disappears.

Business expenses don’t spike all at once. They drift. A small increase here. A new fee there. A contract renewal that gets signed without much scrutiny. Over time, those small changes stack up, and what was once competitive becomes expensive.

Not because anyone made a bad decision, but because no one had a reason to question it.

I have seen this play out in very real ways.

Julie’s healthcare practice once believed their payment processing was in line with the market. After a review, it turned out they were paying 40.7% more than they should have been. Nothing operationally had changed. The cost had simply gone unchecked.

In another case, a company spending over $240,000 a year on Small Package Shipping assumed their pricing was fair because they valued the service. A thorough review and analysis reduced costs by 25%, saving $61,100 a year, while keeping the same vendor.

Even contracts that feel locked often are not. A family-owned office cleaning business was spending about $60,000 a year on supplies. Yes, they liked the service, but they believed they were paying too much and were concerned that they were stuck paying too much for two more years. By analyzing their spend, understanding the market, and the analyst having a candid conversation with the vendor, a new contract was signed for only $38,000 a year.

None of these businesses were careless. Their expenses were simply “fine,” and “fine” rarely gets reviewed. Phrases like “but they provide great service,” “I’m afraid to bring it up,” or “we’ve always used them” are common. But this is exactly where profits begin to erode.

The short-term impact is reduced cash flow.

The long-term impact is much bigger.

Every extra dollar spent is a dollar that does not reach your bottom line. When you sell, buyers value your business based on earnings. That means unnecessary expenses do not just cost you once. They can reduce your business value by two to three times that amount.

For example, saving $20,000 in annual expenses can increase your business value by $40,000 to $60,000.

That is the real cost of “fine.”

Disciplined owners do not assume their costs are reasonable. They verify it. Regularly. They treat expenses with the same attention as revenue because both drive value.

If you are considering a sale in the next few years, ask yourself, “Which of our expenses have we not challenged recently?” The biggest opportunities are rarely in what is broken.

They are in what feels fine.

Connect with Christian Olson with Schooley Mitchell.