Unfortunately, your aggregate score suggests that your company has little Transferable Value and is not likely going to sell or transition for any considerable amount of money. Likewise, it’s going to be difficult to successfully gift or sell your company to your business active children or key employees. Our recommendations are to fundamentally change the business structure by implementing the following:

• Hire a CPA or financial consultant to implement a financial accounting and reporting system to measure the relevant financial metrics/indicators for your business. Value the business (using those metrics) annually to measure fluctuations in growth and to manage your level of “Free Cash Flow”. These indicators are the lifeline to surviving uncertain times and will provide the necessary data for making good strategic decisions as you grow the business and prepare for your future exit.
• Next, determine if you’ll need the support of your employees to grow the business. If so, you’ll need to determine what responsibilities and tasks they need to perform, what skills and competencies they need to possess, what “performance standards” are needed to manage and incentivize them and how to compensate them so that they are motivated to stay and grow your business. We strongly suggest hiring an experienced HR consultant to help you with each of these tasks…they need to be done properly and legally.
• It’s critical that you map out your current business processes and procedures to determine how to profitably scale your business and delegate key tasks and functions to your employees. You’ll also need to determine the “key performance indicators” for measuring the short and long term growth of your company. Also, involve your key employees in the decision making and make sure you create a “business continuity plan” to preserve the value of the business in the event something happens to you or your key employees.
• Lastly, begin diversifying your products or services and your customers. It’s important that your deliverables have unique value to your customers and that you’re not dependent on any one deliverable or customer group. Adopt a “growth strategy” to up-sell new product and services to your current customers while selling your current products and services to new customers in different industries. Make sure that all business development efforts include select key employees (not just you!).

Your aggregate score suggests that you're like the majority of business owners in the U.S. - you have a "life-style" business. Unfortunately, it's likely that the business has little Transferable Value and will not provide you the money you need when you sell or transition the business. Focus on implementing the following recommendations and Value Drivers to increase the growth, profitability and sustainability of your business.

• Hire your CPA or financial consultant to build the financial metrics for measuring your new KPIs and other performance goals, and begin conducting annual valuations to track increases or decreases in your fair market value. Being able to measure increases in your financial performance, and the "contributing factors", is critical getting the money you need when you sell or transition.
• It's also critical that you adopt objective employee performance standards to determine who's an "important" and "key" employee, what performance standards they need to be held to, how they will be compensated and what retention benefits they'll be eligible for. All these key employee incentive strategies will be needed for you to motivate and retain your people.
• Upgrade and document your internal Systems, Processes and Procedures...make sure they accurately measure all your new KPIs and performance indicators (financial and non) and that they are utilized by all your key employees. Your internal reporting systems are the "back bone" of your business which your successor or buyer will rely upon when you're gone.
• Lastly, it's critical that you re-assess your products or services and adopt a growth strategy (vertical and horizontal) to diversify your customer base; no more than 25-30% of all revenue coming from any one customer. Find ways to become a "strategic partner" to your customers by offering them "subscription or on-going service" programs which "lock them in" for longer term commitments. Lastly, identify qualified and vested key employees to handle the new sales and marketing activities and who can manage the new customer accounts.

Your aggregate score suggests that you’re on your way to building a transferable business. You’ve taken many of the required steps to build a self-sustainable company that can run profitably without you, and which will provide you the money and outcomes you desire. Here are some key recommendations to keep things moving in the right direction.

• Continue using and building out your current financial indicators to measure growth and increases in value. Your indicators need to reflect the performance of each area of the business and need to be tied to the success of your key employees. Begin segregating the metrics so they show which areas of the business are most and least profitable, why some areas are more profitable and what changes need to be made to increase performance. Also, continue conducting annual valuations and quarterly cash flow projections to determine how much cash flow is available for growing the business.
• As for your key employees, incentivize them by determining the correct mix of benefits that make the most sense for them…addressing their needs, and those of the business is critical. Use both “cash and equity” incentives and make sure that all key employees are meeting or exceeding their performance standards. All compensation should be directly tied to meeting those standards. Find ways to empower and reward your key employees as they grow and develop…they are the future of your business!
• Continue updating your Systems, Processes and Procedures and make sure they accurately indicate the performance of the business. Make sure they are tied to your KPIs and financial indicators and can be amended or changed when needed. Flexibility and accuracy are the two key attributes for all good internal systems. Keep your key employees committed to the systems, processes, and procedures and reward them for correct use and innovative improvements. Your “internal operating infrastructure” is what buyers and successors are relying on after you leave the business.
• Continue your marketing and sales efforts since your customer diversification is good and your customer value is high. Thankfully, you’re not dependent on any one customer and your likely viewed as a “strategic partner” not at vendor. It’s important to continue diversifying your customer base, looking for new ways to add and becoming a necessity to your customers. Lastly, make sure your salespeople are on track to become key employees who are vested and committed to the success of business.

Your aggregate score suggests that you are in the top 11% of the closely held businesses in the U.S. You’ve implemented most of the key Value Drivers required for creating a self-sustaining, highly profitable company which can easily be transferred to any successor on YOUR terms…congratulations! Here are some additional recommendations to keep you on track to the promise land.

• Continue upgrading your current financial reporting systems. Measure changes and increases in enterprise value and ensure that the business has enough “free cash flow” to continue its operations and growth strategies. Continue your cash flow projections for the upcoming years and continue utilizing your CPA and other financial experts to give you accurate, reliable financial information for making good strategic decisions. Great job on the financial front!
• You’ve done a great job of identifying, vesting, and motivating your key employees to stay and grow your business. Your next objective is to make sure they can work collectively together as the “Successor Management Team” and that they become experienced enough to eventually run the business. Make sure they all have professional development plans and continue using cash and equity-based incentive programs to keep them vested. Begin including them in some or all of the strategic management decisions…perhaps putting some of them on the Board of Directors.
• Given your solid internal systems, processes and procedures, it’s likely your company can run on auto-pilot without you. Continue monitoring and updating your internal operating systems to ensure they capture all financial and operational information, and that the key employees responsible for those systems, processes or procedures remain committed to the success of the business. Your buyers or successors will reward you handsomely ($$) when the time comes!
• Congrats on creating a “customer magnet” …your customer diversification and customer value are extremely high, and it appears that you will be able to continue growing and pursuing new market opportunities. Continue your current mix of deliverables and look for strategic ways to add more value to your customers. Also, look at ways to increase your margins through higher value products and services and eliminate lower value deliverables. Lastly, continue rewarding and incentivizing your salespeople since they are the “golden geese” that will take you to the promised land.