How does someone else, for example, a potential buyer, rate your business on the issues listed below? Rate your business and yourself on the time-honored “A” to “F” scale. You can even use a plus or minus. What’s your average? Too many business owners operate on gut feel or “from the heart.” Nothing wrong with that; many people start or buy their own business and operate it successfully with nothing more tangible than this kind of factor. But, every now and then, perhaps once a year, seize the moment and take a more realistic look at your business. Grade yourself, using the following business report card as yardstick:
1. Difficulty or the lack of competitive entry
2. Stature of the business or product . . . exciting/glamorous
3. Perceived level of required expertise – or licensing
4. Ability of the business to secure funding — seller carry-back
5. Volatility of business/customer loyalty
6. Diversity of customers and/or suppliers. Exclusives?
7. Length of business – history
8. Reliability or fuzziness of financial records
9. Key-man syndrome
10. Severity of business seasonality
11. The people factor
12. Hours of operation
13. Hazardous work, work place, products, or neighborhoods
14. Bad lease – no lease
15. Owner to stay
16. Trend or erratic numbers –non recurring
17. Goodwill (Blue Sky) as percentage of price
18. Sparkling physical appearance or needing upgrade
19. Regular or home office
20. Remote location
21. Contemporary and ship-shape equipment
22. Franchised or Independent
23. Visible expansion opportunity
24. Loyal key employees in place
25. Broker involved with deal
26. Potential
27. Name and reputation
