Investability self-assessment

Part 1 of 8

About the business

A

What the business does in a few words, the industry it sits in, the country it trades from, and your own role in it.

Start typing the industry the way you would say it out loud, not the way a statistician would write it: dentist, joiner, cafe, mechanic. Country is where the business trades from, not where you were born. For your role, start typing your own title and pick it from the list, or type it in full if it is not there. It is what makes a comparison between two people in the same business possible, and it is why it is asked here rather than at the end.

what it does

industry

Country it trades from

Your own role in it

B

Revenue for your last full financial year, the currency you report in, and the month that year ended.

Revenue, last full financial year

Currency you report in

Month that year ended

C

What year did it start trading?

Year it started trading

D

How many people own a share of it, and what's your share?

People who own a share

Your share, per cent

E

How many people work in the business today, and how many of those are family? Of the total, how many aren't on your payroll, and how many of those are on a signed agreement a new owner could rely on?

Count everyone who does the business's work regularly, whoever pays them and wherever they are: employees, contractors, agency and offshore alike. Leave out firms you buy a service from, like your accountant or your ad agency. Count yourself unless you tick the box, and tick that only if you're out of the work and out of running it. Item 11 counts the same people.

People working in the business todayOf those, familyOf the total, not on your payrollOf those, on a signed agreement a new owner could rely on

I don't work in the business; someone else runs it

Part 2 of 8

Your week

1

How many hours did you work last week? Of those, how many were doing the work customers pay for, and how many were admin?

Doing the work: delivering, producing, serving. Admin: invoicing, bookkeeping, payroll, and paperwork you do yourself rather than approve. Whatever's left counts as running the business.

Hours you worked last weekOf those, doing the work customers pay forOf those, admin

2

Apart from you, how many people can do each of these without asking you first? And what's the largest amount anyone other than you can commit the business to without asking?

Write 0 wherever it's only you.

sign a customer contractapprove a supplier paymenthire someonegive a customer a discount

Largest amount, without asking you

3

When were you last away from the business for two weeks or more with your phone off, and who ran it?

4

Think of the last time something went badly wrong: a lost customer, a failed job, a system down. What was your part in fixing it?

your part in it

I fixed it myselfI directed it, others did the workI was told about it

5

Of your ten largest customers, how many have had no dealings with you at all in the last three months?

Fewer than ten customers? Count them all and write the total in the second box.

No dealings with you in the last three monthsOut of how many customers

Part 3 of 8

Your customers

6

How many customers did you have twelve months ago, and how many of those have bought from you since?

Count the ones you were selling to or working for that month. If you sell to the public and can't count them, count the regulars you know by name.

Customers twelve months agoOf those, bought from you since

No record of either

7

Of last year's revenue, how much came from your largest customer, and how much from your largest three together?

From your largest customer

No record of this figure

From your largest three together

No record of this figure

8

Of last year's revenue, how much came from customers who'd bought from you before? And how much of next month's revenue is already booked, contracted, or on subscription today?

From customers who'd bought from you before

No record of this figure

Already booked for next month

No record of this figure

9

Of your ten largest customers, how many are on a signed contract that runs past the next twelve months? And of those, how many would carry on if the business changed hands, without the customer having to agree?

If you have not read what the contract says about the business changing hands, count it as one that would not carry on. That is how a buyer counts it too.

On a signed contract running past the next twelve monthsOf those, would carry on if the business changed hands

10

The largest customer you've lost in the last two years: when, how much they spent with you in their last full year, and why?

Their spend in the last full year they were a customer, from your accounts.

Month and year you lost them

What they spent in their last full year

Why you lost them

Part 4 of 8

Your people

11

How many people worked here twelve months ago, how many of those are still here, and how many have you hired since?

People working here twelve months agoOf those, still hereHired since then

12

How many people, other than you, could take customers with them if they left? Of those, how many have signed a restraint that would stop them?

Could take customers with themOf those, signed a restraint that would stop them

13

How many of your people have a written description of what their job is and how it's measured?

With a written description of their job and how it's measured

14

The last person you hired: how long was the role open before you filled it, and how many days before they could do the job without someone standing over them? Did they learn it from something written, from a person, or both? And how hard is it to find somebody competent for that kind of role?

Anyone you brought on to do the work counts: an employee, a contractor, a virtual assistant, somebody offshore. Long onboarding for a remote worker is the same signal as long onboarding for a local one. How hard it is to hire is about your experience of it, not about the industry in general.

days the role was opendays before they worked alone

Learned it from something writtenLearned it from a person

How hard it is to find somebody competentnot answered yet

nobody has ever been taken on, including virtual assistants and offshore

15

In the last twelve months, how many people have you dismissed because their work wasn't up to your standard, and in which month was the most recent?

Dismissed in the last twelve months

Month of the most recent

Nobody dismissed

Part 5 of 8

What comes with the business

16

Tick whatever is in your own name rather than the business's, then count the personal guarantees you've signed for it (lease, bank, suppliers).

17

How many suppliers, contractors, or platforms would stop the business inside a month if they pulled out? And how many of those are on a signed agreement a new owner could rely on?

Would stop the business inside a monthOf those, on a signed agreement a new owner could rely on

18

How many software systems hold your customer, job, and financial records, and from how many of those could you export everything today?

Systems holding your recordsOf those, you could export everything from today

19

Of these six, how many are written down well enough for somebody else to follow them without asking you? And how many of those were written or last changed in the last two years?

quoting or pricing; delivering what you sell; invoicing and chasing payment; buying from suppliers; taking somebody on and training them; handling a complaint or a job that went wrong. Count what exists today, not what you mean to write. A checklist counts, and so does a recording somebody could work from.

Written down well enough to follow, out of the sixOf those, written or changed in the last two years

None of the six is written down

20

Does the business have any intellectual property?

Almost every business does, and most owners say no. Your trading name, your logo, your website and the words on it, your domain name, photographs of your own work, drawings or plans, software or a spreadsheet somebody built for you, your customer list, a method or a recipe you keep to yourself. If any of that sounds like you, the answer is yes.

intellectual property

yesno, none at all

What else counts. It is a longer list than most people expect

Not exhaustive, and not every kind exists in every country. You do not need to work out which of these you have. It is here so that “no” is an answer you give on purpose rather than by accident.

Things you register

You apply, it is granted, and it sits on a public register.

Patents, for an invention, a process or a method
Registered trade marks: a name, a logo, a slogan, and in some countries a sound, a shape or a colour
Registered designs, for how a product looks
Plant breeder's rights
Geographical indications, such as Champagne or Roquefort, which matter most in Europe
Utility models, a shorter and easier patent in Germany, China, Japan and elsewhere, with no Australian or United States equivalent

Things you own the moment they are made

No form to fill in, no fee, no register. These are the ones owners most often forget.

Copyright in anything written or drawn or recorded: website copy, software source code, photographs, illustrations, video, audio, manuals, training material, reports, plans
An unregistered trade mark, meaning the reputation your name has built through use
Moral rights, which belong to the person who made the thing and, in Australia, cannot be signed away
Circuit layout rights, for semiconductor design
Unregistered design rights, in the United Kingdom and Europe only
Database rights, in the United Kingdom and Europe only

Things you keep to yourself

Protected by secrecy and by contract rather than by any register.

Trade secrets: a formulation, a recipe, an algorithm, a manufacturing method, a pricing model
Know how: your playbooks, procedures, checklists, methods, internal research, cost structures
Your customer and prospect lists
Data you have gathered that nobody else holds
The written record of what you tried and what failed, which is often the hardest thing for a buyer to replicate

Things held by agreement

Not owned outright, and a buyer reads them on the same page as the rest.

Licences you hold to use somebody else's: software, fonts, stock images, music, a patent, a brand
Licences you have granted to others, and what they pay you
Franchise rights, in either direction
Assignments: whether what your contractors, agencies and freelancers made is actually owned by the business
Confidentiality agreements, which are what keeps a trade secret a secret
Restraints of trade, which are what stops it walking out
Anything owned jointly with somebody else
A lender holding security over any of it

Things that travel with the business

Strictly these are registrations or goodwill rather than intellectual property. A buyer values them all the same, and they are the ones most often in the wrong name.

Your domain names, often the single most valuable thing on this list
Your social media handles and the accounts behind them
App store listings, developer accounts, and the ratings history attached to them
Business name and company name registrations
Your mailing list, and the consents that came with it
Goodwill and reputation, including reviews, ratings, press and awards
Certifications, accreditations and licences to operate
The software itself, and the infrastructure it is built and deployed on
Brand assets: typefaces, colour systems, photograph libraries, style guides

21

Who owns it? Tick every one that applies.

Tick more than one if different things sit in different places, which is usual. An owner means somebody who owns a share of the business, which is question 4. The first two are separate boxes so you can say whether the owner holding it is you; tick both if it is you AND somebody else. Somebody outside the business means anybody not on your payroll: the designer who drew your logo, the developer who built your site, whoever is listed as the owner of your domain name. Anything made for you by somebody who invoiced you can belong to them, unless an agreement says the business owns it. Anything an employee made while employed already belongs to the business. If you do not know, say so: it is an honest answer and a common one, and it is better than a guess. If you have not seen a signed document, answer as though there is not one, because that is how a buyer's lawyer will read it.

the business itselfyou personally, and you are an owneranother owner, personallyyou or somebody else inside the business, not an ownersomebody outside the businessI don't know who owns it

Part 6 of 8

Your numbers

22

The most recent financial year your accountant has finished full statements for. And in the last twelve months, how many monthly profit and loss reports arrived within a month of the month ending?

Financial year of the latest full statements

No full statements yet

Monthly reports that arrived on time, out of 12

23

From those accounts, or the latest you have: net profit before tax; the total the business paid its owners who work in it (salary, dividends, drawings, benefits); and what it would cost to hire people at market rate for the roles those owners fill.

A buyer swaps what the owners take for what the roles would cost, before anything else.

Net profit before tax

No record of this figure

Paid to the owners who work in it

Cost to hire people at market rate for those roles

No record of either

24

How many separate costs went through the business last year that wouldn't continue under a new owner: personal, family, or otherwise not the business's? And roughly how much in total? Then the other way round: what would a new owner have to start paying that you don't, a year?

Cars, travel, phones, family wages above the going rate, rent paid to yourself. Every sale has a list like this. A buyer only needs to see it. The other way round matters just as much and is the one people miss: rent you pay yourself below the going rate or not at all, a family member working unpaid or under the odds, a shed or a vehicle of your own the business uses for nothing. Leave your own wage out of this one, it is already covered above.

How many separate costs

Roughly how much, in total

What a new owner would start paying, a year

nothing extra

25

What was the business owed by customers at the end of that year, and how much of it was more than 60 days overdue?

Owed by customers at year end

No record of this figure

Of that, more than 60 days overdue

No record of this figure

26

How many disputes, claims, or notices are open against the business right now (customer, employee, supplier, regulator, or tax office), what's their total value, and is anything owed to the tax office past its due date?

Write 0 if there's nothing. A buyer finds these anyway.

Open disputes, claims or notices

Their total value

Owed to the tax office past its due date

27

What did it cost to run the business last year before the work itself: rent, wages, insurance, vehicles, software, the things that arrive whether you're busy or not? If every customer stopped paying tomorrow, how many days could you keep paying the bills out of what's in the bank? And how much cash did the business actually generate after paying for all that and after replacing worn out gear?

Your accountant calls these three operating expenses, days cash on hand, and free cash flow, and they're on your statements or a page away from them. Running costs leave out materials and the subcontractors on jobs. Days you could last is the one we can't work out for you, and we don't need your bank balance to use it. Cash generated is after replacing worn out gear, not before, and it can be a negative number.

Running costs last year

Days you could keep paying the bills

No record of either

Cash generated, after replacing worn out gear

No record of this figure

Part 7 of 8

The money on each job

28

For the thing you sell most of: what do you charge, what does it cost you to deliver including labour, and when did you last put the price up?

What you charge

What it costs you to deliver, including labour

No record of either

When you last put the price up

never put the price up

29

Gross profit for your last full year, and revenue and gross profit for the year three years before it.

Gross profit is sales minus the direct cost of delivering them, as your accountant shows it.

Gross profit, last full year

No record of this figure

Revenue, three years before

No record of this figure

Gross profit, three years before

No record of this figure

Part 8 of 8

Growth without you

30

Of your last ten new customers, how many came in without you being part of it at all: not your name, not your referral, not you in the pitch, the quote, or the close?

Fewer than ten new customers? Count them all and write the total in the second box.

Came in without youOut of how many new customers

31

What's the one thing you'd have to fix before the business could take on 50 per cent more work?

the one thing

What the business does in a few words, the industry it sits in, the country it trades from, and your own role in it.

Revenue for your last full financial year, the currency you report in, and the month that year ended.

What year did it start trading?

How many people own a share of it, and what's your share?

How many people work in the business today, and how many of those are family? Of the total, how many aren't on your payroll, and how many of those are on a signed agreement a new owner could rely on?

How many hours did you work last week? Of those, how many were doing the work customers pay for, and how many were admin?

Apart from you, how many people can do each of these without asking you first? And what's the largest amount anyone other than you can commit the business to without asking?

When were you last away from the business for two weeks or more with your phone off, and who ran it?

Think of the last time something went badly wrong: a lost customer, a failed job, a system down. What was your part in fixing it?

Of your ten largest customers, how many have had no dealings with you at all in the last three months?

How many customers did you have twelve months ago, and how many of those have bought from you since?

Of last year's revenue, how much came from your largest customer, and how much from your largest three together?

Of last year's revenue, how much came from customers who'd bought from you before? And how much of next month's revenue is already booked, contracted, or on subscription today?

Of your ten largest customers, how many are on a signed contract that runs past the next twelve months? And of those, how many would carry on if the business changed hands, without the customer having to agree?

The largest customer you've lost in the last two years: when, how much they spent with you in their last full year, and why?

How many people worked here twelve months ago, how many of those are still here, and how many have you hired since?

How many people, other than you, could take customers with them if they left? Of those, how many have signed a restraint that would stop them?

How many of your people have a written description of what their job is and how it's measured?

The last person you hired: how long was the role open before you filled it, and how many days before they could do the job without someone standing over them? Did they learn it from something written, from a person, or both? And how hard is it to find somebody competent for that kind of role?

In the last twelve months, how many people have you dismissed because their work wasn't up to your standard, and in which month was the most recent?

Tick whatever is in your own name rather than the business's, then count the personal guarantees you've signed for it (lease, bank, suppliers).

How many suppliers, contractors, or platforms would stop the business inside a month if they pulled out? And how many of those are on a signed agreement a new owner could rely on?

How many software systems hold your customer, job, and financial records, and from how many of those could you export everything today?

Of these six, how many are written down well enough for somebody else to follow them without asking you? And how many of those were written or last changed in the last two years?

Does the business have any intellectual property?

Things you register

Things you own the moment they are made

Things you keep to yourself

Things held by agreement

Things that travel with the business

Who owns it? Tick every one that applies.

The most recent financial year your accountant has finished full statements for. And in the last twelve months, how many monthly profit and loss reports arrived within a month of the month ending?

From those accounts, or the latest you have: net profit before tax; the total the business paid its owners who work in it (salary, dividends, drawings, benefits); and what it would cost to hire people at market rate for the roles those owners fill.

How many separate costs went through the business last year that wouldn't continue under a new owner: personal, family, or otherwise not the business's? And roughly how much in total? Then the other way round: what would a new owner have to start paying that you don't, a year?

What was the business owed by customers at the end of that year, and how much of it was more than 60 days overdue?

How many disputes, claims, or notices are open against the business right now (customer, employee, supplier, regulator, or tax office), what's their total value, and is anything owed to the tax office past its due date?

For the thing you sell most of: what do you charge, what does it cost you to deliver including labour, and when did you last put the price up?

Gross profit for your last full year, and revenue and gross profit for the year three years before it.

Of your last ten new customers, how many came in without you being part of it at all: not your name, not your referral, not you in the pitch, the quote, or the close?

What's the one thing you'd have to fix before the business could take on 50 per cent more work?

Your place is saved

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