Attractiveness and Readiness Assessments
Business owners are extremely tied to their businesses and can be too close to the situation to see the negatives. For example, some only see the positives in their business. To a business owner, complications are simply a part of the business and not an area for improvement that their customers need. This is where Readiness and Attractiveness Scores come into play. According to Walking To Destiny by Exit Planning CEO, Christopher Snider, business owners must complete personal, financial, and business assessments to produce two scores: Business Attractiveness and Exit Readiness.
1. Business Attractiveness
Business Attractiveness asks the question, “How attractive is your business in the eyes of a buyer?” A buyer could be a family member, another employee, or a third-party buyer. The Attractiveness Index has 25 questions in four categories. Each category provides a score that is averaged to come up with the overall Attractiveness Score. A score of 50% or lower indicates that your company is “discounted” and serves as a red fag for owners. A business with a score between 58%-72% is of above-average attractiveness, and over 72% is considered a best-in-class business.
2.Business and Owner Readiness
Exit Readiness asks the question, “How ready are you and the business to transition?” This index has over 120 questions in 22 personal, business, and financial categories. Again, the results from each category are averaged to get the overall score for the index. Those businesses that score above 72% are considered best-in-class
Attractiveness and Readiness are not the same things. Just because your business scored highly on the Attractiveness Index, does not mean you are personally ready to exit your business. Similarly, if you are personally ready to exit your business, it does not automatically mean your business is attractive to buyers.
By improving business value today, owners prepare their businesses for success when they ultimately decide to exit.