Value Strategy News: Increase Your Business Success By Building Your Business To Sell

Increase Your Business Success
By Building Your Business To Sell
(Even if you aren't thinking about selling)

By Paul DiModica

To grow your company's top line revenue or to sell your business requires an active business model that uses a structured and premeditated approach.

No acquiring buyer wants an unorganized company run like a private kingdom or a business operating structure that is not predictable and replicable. The more your business infrastructure is designed to grow revenue, the higher the business valuation will be by a buyer. Buyers want assets that they can transfer and manage. Buyers want both intellectual and human capital to be documented and base their investment on the ability to identify, transfer and manage these assets after a sale.

To grow your business as a privately-owned firm, build it for sale - even if you are never going to sell!

It is not uncommon for companies seeking to grow or sell their business to decide to move their management style from an entrepreneurial management model to a professional management model.

Take the CEO Exit Strategy Evaluation to determine if your business is ready to sell or grow.

CEO Exit Strategy Evaluation

1. Are your financial statements filled with personal expenses?

      ___Yes ___No

2. Are your financial statements set up to show line item details of profit and loss by department before and after corporate general and administrative expenses?

      ___Yes ___No

3. Do you reinvest at least 5% of your company's gross revenues each year into business asset improvement like new product and service development, employee training and physical assets betterment?

      ___Yes ___No

4. Do you have a written sales process listing step-by-step each sales action needed to sell a prospect?

      ___Yes ___No

5. Do you have a written job description and compensation plan for each employee?

      ___Yes ___No

6. Do you have a written prospect demographic profile of your most likely customer?

      ___Yes ___No

7. Do you have a management team that can operate your business successfully without you?

      ___Yes ___No

8. Is part of your management team's compensation based on their departments' profitability?

      ___Yes ___No

9. Is your firm profitable?

      ___Yes ___No

10. Can you manage your business decentralized and off premises by the weekly reports you receive?

      ___Yes ___No

11. Does one customer generate 10% or more of your total company revenue?

      ___Yes ___No

12. Does at least 50% of your total company revenue come from business with new customers?

      ___Yes ___No

13. Has your business revenue increased at least 20% annually year-over-year for the last three years?

      ___Yes ___No

14. Do you have a written succession plan if something happens to you?

      ___Yes ___No

15. Do you have a written strategic business plan that is updated yearly?

      ___Yes ___No

16. Is anyone in your firm related to you by marriage or by lineage?

      ___Yes ___No

17. Is your total employee turnover (through termination or by resignation) less than 20% per year?

      ___Yes ___No

18. Do you have key executive insurance for yourself?

      ___Yes ___No

19. Does your AR (accounts receivable) average less than 90 days?

      ___Yes ___No

20. Have you legally identified and secured the intellectual property and the credible assignment results of your company?

      ___Yes ___No

21. If you create unique products or services, do you have detailed written guidelines, scope specifications or development designs for their creation?

      ___Yes ___No

22. Have you built scalable and replicable revenue capture programs for each product and service you sell?

      ___Yes ___No

23. Is at least 20% of your current annual revenue derived from recurring, contracted revenue streams (multi-year contracts, maintenance agreements, annual client assessments, etc.)?

      ___Yes ___No

24. Does at least 25% of your revenue come from inbound leads generated from prospects who seek you out based on your market brand and positional strength?

      ___Yes ___No

25. As CEO, are your responsible for 25% or more of your company's sales (directly or indirectly through personal relationships)?

      ___Yes ___No

Correct Answers:

1. No
2. Yes
3. Yes
4. Yes
5. Yes
6. Yes
7. Yes
8. Yes
9. Yes
10. Yes
11. No
12. Yes
13. Yes
14. Yes
15. Yes
16. No
17. Yes
18. Yes
19. Yes
20. Yes
21. Yes
22. Yes
23. Yes
24. Yes
25. No

Each correct answer is worth 4%.

Scoring Above 80%
If you scored in this range, your business is structured for successful growth and potential acquisition. You have a professionally managed company that is attractive to employees and investors while simultaneously maximizing its potential for success and a high valuation.

Scoring 48% - 80%
Scoring in this range implies that you are moving from an entrepreneurial to a professional management model but are not quite there yet. Continued progress in your company transformation will increase your valuation and employee satisfaction.

Scoring Below 48%
If you scored in this range, more than likely you are managing your business using an entrepreneurial model and may even have the "king in the kingdom" syndrome. This happens when CEOs make decisions based on emotion or personal income maximization, do not track operational details, and think they know everything. This approach makes it hard for your business to grow or attract anyone to buy (or want to buy) your firm.

"Business growth is a premeditated process -- not a    haphazard guess!"

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