Value Area Score Summary

Your Financial Readiness Value Area Score is:

Financial Readiness Value Area Findings and Recommendations:

Your company doesn’t have the necessary financial reporting, metrics, or expert resources to monitor your company’s “free cash flow”, your employee’s performance or overall value of your business. It’s mission critical that you retain outside experts (ASAP) to help you build and use these financial indictors and systems to determine the business’s profitability, its financial constraints and what the business needs to improve its free cash flow and financial value. These efforts will save the business during uncertain economic times and increase the future Transferable Value of your business.

Financial Readiness Value Area Findings and Recommendations:

You’re doing the “bare minimum” to meet all required financial accounting and reporting standards. It’s unlikely you have the necessary tools and resources to stay out of trouble if problems arise. Re-assess your current financial and reporting systems (if they exist) and consult with an expert (ASAP) to “upgrade” your financial metrics and reporting processes. Begin conducting annual “valuations” and cash flow projections to measure you’re on-going financial health and future Transferable Value.

Financial Readiness Value Area Findings and Recommendations:

Continue monitoring and measuring financial performance to determine the overall strength and value of your business. Monitor “free cash flow” to determine annual increases in financial value. Also, continue investing in and upgrading your financial systems, and make sure your financial metrics are directly tied to the company’s other “Key Performance Indicators”. Continue using qualified financial experts where needed to give you reliable financial data. You’re on the right track!

Financial Readiness Value Area Findings and Recommendations:

Congratulations!! You’re in the top percentile of owners who have adopted the necessary financial metrics to grow the business and its Transferable Value. You’re on track to building a financially strong, self-sustaining company which will be very valuable to you and your future successor. We recommend that you continue using your financial metrics to make smart business decisions as needed. Keep up the good work!

Your Employee Value Area Score is:

Employee Readiness Value Area Findings and Recommendations:

Your business is a “revolving door” when it comes to employees. As a result, it’s likely difficult to vest or retain your people and it’s likely that your staff is not very committed to your business. We recommend paying your people at or above competitive rates, offer them other intangible benefits, if possible, and keep them motivated to meet your expectations. Provide opportunities for raises and advancement, and in the event, you decide these folks are “essential”, you’ll need to “vest” them as “key employees”. (see our blog and E-books on Key Employee Incentive Plans).

Employee Readiness Value Area Findings and Recommendations:

You have “important” or “potentially key” employees and you see the need for keeping them motivated and retained. However, you don’t have clearly defined performance standards and there’s no “objective basis” for their compensation. Also, there’s no clear development plan or opportunities for their advancement. It’s likely they might leave for other opportunities given the right mix of incentives. Begin setting “performance standards” and tie those standards to their compensation and benefits and create a plan for their development and advancement. Vest them into the business!

Employee Readiness Value Area Findings and Recommendations:

Like most “good to great companies” you understand the value of key employees and a strong management team. Define “what’s required” to become a key employee and make sure those performance standards are linked to compensation. Make sure you have clearly defined development and “promotion” opportunities which are built into the Employee Handbook so it’s clear to everyone. Overall, you’re on the right track to retaining your most prized assets!

Employee Readiness Value Area Findings and Recommendations:

Congratulations!! You’re in the top class of companies which appreciate their most important asset…their key employees. It’s critical to define objective standards for who “is” a key employee, review and modify their performance standards annually and award them with “cash” and potentially “equity” if they continue exceeding their performance standards. These key employees will likely become your “next level management team” and will continue the business in the event something happens to you.

Your Strategic Value Area Score is:

Strategic Value Area Findings and Readiness Recommendations:

You don’t have documented systems, processes, or procedures (“SPPs”) or performance indicators and it’s likely that you do everything (or most things) in the business. You’ll need to learn how to delegate your operational tasks to the key employees. We recommend “mapping out” what you do, how it’s done and how it can be delegated to others. Implement and document the necessary SPPs, set key performance indicators for the company (financial and organizational) and create a “board of advisors” to help solve problems and make future decisions.

Strategic Value Area Findings and Readiness Recommendations:

You have SPPs but don’t use them (or know how) to increase the value of the business. You are likely way too involved in the daily operations and don’t have a clear plan as to “who” will manage and own the company in the event something happens to you. Review and update your SPPs and make sure your key performance indicators are realistic and obtainable. Adopt a process to hold you and others accountable for using and documenting the SPPs and meeting your KPIs.

Strategic Value Area Findings and Readiness Recommendations:

You’ve done a nice job of creating SPPs, however you need to link them to your key performance indicators (financial and organizational) so that you can determine which areas of the business are creating the most value and where you need improvement. Review and update your key performance indicators and make sure that you include your key employees (managers) and outside advisors in your decision-making process. Lastly, make sure that your internal documents reflect your goals and objectives and protect your interests in the event something happens to you.

Strategic Value Area Findings and Readiness Recommendations:

Congratulations!! Your operations are likely running well and your managing and monitoring all key areas of the business. Continue assessing your SPPs to make sure there efficient and include all necessary key employees. Check your performance indicators (financial and operational) to make sure you’re getting the data you need to make good strategic decisions. Involve your managers and advisors in your strategic decision-making process and look for opportunities to delegate to others. Lastly, create a “business continuity plan”, it’s your company’s roadmap for the future.

Your Market Value Area Score is:

Market Value Area Findings and Readiness Recommendations:

You need to diversify your current products or services, the markets you sell into and the number of customers you serve. Find ways to strategically “up-sell” new products or services into your existing customers, while looking for new customer opportunities to sell your current products or services. Implement a “growth strategy” to increase revenue and profits in your current customer base and each new customer area you acquire. You have lots to do but you can increase you’re Growth and Market Value if you diversify and increase your customer value.

Market Value Area Findings and Readiness Recommendations:

Your products or services are NOT diversified enough (they’re too similar in value) and your market concentration is to heavy (meaning that most of your revenue comes from a few customers). Implement a “growth strategy” to sell new or complimentary products or services into your existing customers and your current products or services into new “complimentary markets”. Train one or more salespeople to lead this effort and incentivize them financially. You’re behind the “8 ball” but can increase your Growth and Market Value Building if you kick it in gear!

Market Value Area Findings and Readiness Recommendations:

You’re on the right track! Continue innovating your products or services while seeking new “complimentary markets” to sell your existing products or services. Formalize a new growth strategy and empower your key employees (in sales) to champion this task. Incentivize them with performance-based metrics to oversee and increase new sales, revenue, and profitability. Adopt new products or services which are “unique” to your brand and improve the skills and capabilities of your sales team. Teach them to “cross sell” your products or services so they become familiar with all new products and services.

Market Value Area Findings and Readiness Recommendations:

Congratulations!! You’ve done a great job diversifying your products or services and your market presence. Continue innovating your deliverables and build a process for becoming a “strategic partner” to your customers. Also develop your salespeople by empowering them to champion these new business development strategies. Incentivize them with “cash” or “equity” based incentive plans to sell and service as if they were owners! This approach will create a highly profitable, self-sustaining company.

Your Aggregate Assessment Results: 40 - 55

“You have a job not a business…”

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 Assessment Results: 56 - 70

“You have a “lifestyle” business…”

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 Assessment Results: 71 - 85

“You’re on your way…”

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 Assessment Results: 86 - 100

“Congrats! You have a transferable 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.

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Business Transferability Assessment

Financial Readiness Assessment.

out of 25

Your Financial Readiness Score is:

Financial Value Area Findings and Readiness Recommendations:

Financial Value Area Findings and Readiness Recommendations:

Financial Value Area Findings and Readiness Recommendations:

Financial Value Area Findings and Readiness Recommendations:

Employee Readiness Assessment.

out of 25

Your Employee Readiness Score:

Employee Value Area Findings and Recommendations:

Employee Value Area Findings and Readiness Recommendations:

Employee Value Area Findings and Readiness Recommendations:

Employee Value Area Findings and Readiness Recommendations:

Strategic Readiness Assessment.

out of 25

Your Strategic Readiness Score:

Strategic Value Area Findings and Readiness Recommendations:

Strategic Value Area Findings and Readiness Recommendations:

Strategic Value Area Findings and Readiness Recommendations:

Strategic Value Area Findings and Readiness Recommendations:

Market Readiness Assessment.

out of 25

Your Market Readiness Score:

Market Value Area Findings and Readiness Recommendations:

Market Value Area Findings and Readiness Recommendations:

Market Value Area Findings and Readiness Recommendations:

Market Value Area Findings and Readiness Recommendations:

out of 100

Value Area Score Summary

Financial Readiness Value Area Findings and Recommendations:

Financial Readiness Value Area Findings and Recommendations:

Financial Readiness Value Area Findings and Recommendations:

Financial Readiness Value Area Findings and Recommendations:

Employee Readiness Value Area Findings and Recommendations:

Employee Readiness Value Area Findings and Recommendations:

Employee Readiness Value Area Findings and Recommendations:

Employee Readiness Value Area Findings and Recommendations:

Strategic Value Area Findings and Readiness Recommendations:

Strategic Value Area Findings and Readiness Recommendations:

Strategic Value Area Findings and Readiness Recommendations:

Strategic Value Area Findings and Readiness Recommendations:

Market Value Area Findings and Readiness Recommendations:

Market Value Area Findings and Readiness Recommendations:

Market Value Area Findings and Readiness Recommendations:

Market Value Area Findings and Readiness Recommendations:

Your Aggregate Assessment Results: 40 - 55

“You have a job not a business…”

Your Aggregate Assessment Results: 56 - 70

“You have a “lifestyle” business…”

Your Aggregate Assessment Results: 71 - 85

“You’re on your way…”

Your Aggregate Assessment Results: 86 - 100

“Congrats! You have a transferable business!”

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