Patrick Good, host of Toledo Business Coaching, makes an interesting analogy between tests and screenings for our own personal health and testing for the health of our businesses. Tune in to find out how to gauge the blood pressure of your business and the difference regular assessments can make when you are preparing your business for sale.
For more information visit Patrick’s website.
A blood pressure test for your business; preparing your business for sale
When was the last time you had your business’s blood pressure tested? Stick around to learn how to gauge your company’s health.
Taking your blood pressure is one of the first things most doctors do before treating you for just about anything. Does it tell the doctor everything they need to know about your health? Of course not, but one powerful little ratio can give the doctor a pretty good sense of your overall wellbeing.
Likewise, your Sellability Score can be a handy indicator of your company’s wellbeing. Like your blood pressure reading, your company’s Sellability Score is an amalgam of a number of different factors and can help a professional quickly diagnose your company’s overall health.
And we can predict good outcomes too. When a doctor takes your blood pressure, they not only rule out possible nasty ailments; they can also use the pressure reading to forecast a healthy life ahead. Similarly, your Sellability Score can predict good things for the future. For example, based on more than 10,000 business owners who have completed their Sellability Score questionnaire, we know the average multiple of pre-tax profit they are offered for their business when it’s time to sell is 3.7. By contrast, those companies that have achieved a Sellability Score of 80+ are getting offers of 6.6 times pre-tax profit.
In other words, if you have an average-performing business turning out $200,000 in pre-tax profit, it’s likely worth around $740,000 ($200,000 x 3.7). If the same company improved its Sellability Score to 80+ while maintaining its profitability of $200,000, it would be worth closer to $1.3 million ($200,000 x 6.6).
Are you guaranteed to fetch 6.6 times pre-tax profit if you improve your Sellability Score to 80? Of course not. But just like blood pressure, one little number can tell you and your advisor a whole lot about how well you are doing; and your advisor can then prescribe an action plan to start maximizing your company’s health – and its value down the road.
If you’re interested in getting your Sellability Score, you should go to my website and click on the Sellability Score link to take the 13 minute free assessment of the health of your business.
About Patrick Good
Patrick Good is the Owner of PAG Associates, a Corporation consisting of 5 business units, including AdviCoach of NW Ohio. Pat founded AdviCoach of NW Ohio in 2010. AdviCoach is the nation’s fastest growing business coaching and advisory firm. Pat has an extremely broad business background with over 25 years of experience and success in a wide range of areas including Sales & Marketing, Business Development, Operations, Materials Management, Purchasing, Manufacturing, and Engineering. His extensive business acumen is rooted in his shop-floor manufacturing and production management experience. He has led the Materials, Purchasing, Operations, and Sales functions of local and global companies, including Honeywell International, Midwest Stamping, Kelsey-Hayes, William Cook North America, and Toledo Stamping.
Pat’s background includes certifications in Six Sigma, Lean Manufacturing, Theory of Constraints, and Total Quality Management systems, including Facilitator roles. He is a Lifetime Certified Purchasing Manager and Six Sigma Black Belt.
Watch Pat’s episodes of Toledo Business Coaching: Making Your Success a Reality