Becoming a Top Engineering Firm – Zoom Like a Rocket Ship!

A professional service firm such as an engineering design firm or construction engineering and inspection firm can be thought of as a rocket ship. Looking at the business as a rocket ship, it gets easier to remember and share the elements of developing a successful business.

Like a rocket ship a business has two basic parts, the engines that power the ship, and the guidance systems to set course. Our rock ship has five engines and four guidance systems.

Thinking back to when you first started your firm, if you did not go through the checklist you see below formally, you did so informally.

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Get Ready to Exit with a Comprehensive Business Transition Plan

Prepare-to-Exit–Know-Your-Business-Transition-Readiness-Score

Owners depend on their businesses to support them today, and more importantly, they depend on them to support their families, their retirement, and their way of life in the future. What assurances do you have that things will go as planned? Reports have shown that 8 out of 10 business owners do not know what they need to do today to have a successful business transition in the future.

Because of this, only 2 out of 10 business owners will get the amount they expect to receive when they sell their companies. Why is the percentage of successful transitions so low?

The lack of knowledge about the exit/transition process, which is not a one-time event, prevents business owners from profiting on all those years of hard work, and ultimately diminishes their plans for retirement. We cannot stress enough the importance of PLANNING in advance to ensure the value of their business will be enough to meet their personal financial objectives. Will you, as an owner, and your company be ready?

An effective way for business owners to view their current business situation is by doing an Exit/Transition Readiness Assessment. The best assessments will highlight the degree of readiness in a number of key areas that if addressed ahead of time, can enable a smooth and successful exit and transition from the business. This evaluative process drives an accurate perspective of a company’s readiness and helps owners and their advisors identify the areas that need improvement, to help ensure they successfully reach their financial goals and other personal objectives.

We can provide you a scorecard that calculates an overall score, and assesses each of 14 areas with an individual readiness indication. Contact us here to request the exit readiness assessment. Download a sample report here.

The best representation of a company’s readiness will be based on the information you provide.  By answering the right questions, you can evaluate 14 key elements which are critical to both your personal and business’ readiness, for your ultimate exit or transition from the business.  

An exit/business transition assessment will include:

  1. Financial Reliance on the Business

This measures how much of an owner's financial goals depend on monetizing the value they built in the business. Red indicates over-reliance and green indicates proper financial diversification.

  1. Desired Control Post Transition

A desire to maintain control post transition will reduce the number of exit options available to an owner.

  1. Clearly Defined Goals

Having clear goals is one of the critical indicators to determine an owner's personal readiness to exit or transition the business.

  1. Company Size

Often, the size of the company determines the risks associated with the business, and the likelihood of buyers’ interest.

  1. Profitability

Buyers not only measure the level of profitability but also look carefully at the consistent level of profit and growth over time.

  1. Business Valuation

Measures whether owners took the first step to understand their business value.

  1. Value Drivers

This measures the value drivers already existing in the business.

  1. Business Weaknesses

This is a measurement of critical weaknesses existing in the business.

  1. Vision

Buyers seek businesses with a clear future vision & direction, which helps ready the business for transition.

  1. Strategy

Execution of the strategy based on a clear vision, indicates whether the business can remain sustainable through transition.

  1. Management Team

The ability to develop a management team that can run the business without an owner, is a key indicator to the business readiness.

  1. Customers

This measures a company’s focus on its’ customer relationships. Having strategies that are updated and monitored regularly, will ensure customers remain throughout the sale/transition process.

  1. Contingency Plan

This measures how well owners have prepared a contingency plan in case something happens to them prior to a planned exit.

  1. Time to Implement

Generally, the more time owners have before exiting their business, the more time they will have to achieve their goals and financial objectives.

AFTER THE QUESTIONNAIRE

After taking the initial steps of completing a questionnaire, you will be on your way to understanding your readiness to exit your business.

As you begin to prepare your business for an eventual exit or monetizing event, regardless of the exit strategy, the goal should be to maximize the positive impact of “Value Drivers” on the business, to increase business value, and to help ensure the long-term sustainability of the business post exit.

As business exit and transition specialists, we would be happy to answer any questions you may have and work with you to build from this initial analysis. We can help you create a more comprehensive exit plan based on your personal exit objectives and assist you with the critical steps of implementing it successfully. Contact us here to request the exit readiness assessment.

THE ASSESSMENT

We offer a full EXIT/TRANSITION READINESS ASSESSEMENT that will address in depth, value drivers such as having:

  • Management depth and adequate capabilities within a solid organizational structure
  • Operating systems that are measured, monitored, and adjusted regularly to improve efficiencies
  • Customer relations and business development strategies
  • A vision and culture with strategic actions being implemented to maintain and enhance it
  • Effective financial management and monitoring
  • Processes that minimize or eliminate owner dependency issues

THE ALTERNATIVE – THE RISK

The alternative to successful Exit & Transition planning is to do nothing, or to work on only one or two areas that are not part of a comprehensive plan, where each action step builds on each other.

Some of the more frequent unintended consequences are:

  • Risk of insufficient funds to support an owner and his/her family through retirement
  • Risk of selling the business for less than it’s worth and not knowing the business value
  • Transitioning and exiting at the wrong time
  • Family and stakeholders who are unclear as to what an owner's goals are
  • Risk of not realizing an owner's business and personal goals
  • Not having the chance to enjoy life or letting the business work for the owner
  • Creating issues of continuity, which could affect employees, customers and suppliers

TAKE CONTROL

To take control of your exit plan and avoid becoming another unsuccessful statistic, feel free to contact one of our exit and transition specialists and request the EXIT/TRANSITION READINESS ASSESSMENT.

This more in-depth report will address each of the gauges individually, and how they could impact one's unique transition planning and implementation. We have also include the initial steps an owner needs to take.

Business owners invest countless hours, energy, and risk their money hoping that one day when they retire, their company might provide them sufficient value for a comfortable and enjoyable lifestyle.

Are you ready to get educated on the exit and transition process? Have you been thinking about implementing steps to create a valuable company that will support your future dreams, and a successful business transition?  

Take the first step with our
Comprehensive Business Transition Workbook.

This comprehensive workbook includes:

  • The Right Way to Exit
  • Analyzing Your Current Situation
  • Identifying Your Objectives
  • Reviewing Your Options
  • Creating Your Plan

Preparing-For-Business-Transition-Workbook-Hunter-CPA
Get Your Copy >

Lewis Hunter
ABOUT THE AUTHOR | Lewis Hunter
Lewis founded Hunter & Associates in 1990 to help small-business owners achieve their potential. He manages the firm’s client relationships, regularly soliciting assessments of our team’s progress and seeking feedback on our performance and value-added services. He is an expert in cost accounting, overhead rate management and transition planning for architecture and engineering firms. Lewis also manages or performs all examinations of overhead rates that are reported to state transportation departments, including indirect cost rate audits for firms qualified as disadvantaged business enterprises (DBEs). He has managed the attestation services for applicants seeking reimbursement from the Florida Department of Environmental Protection for costs incurred in remediation of petroleum contamination of underground storage tanks as well.
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Business Transition Strategy

Download your free Exit Planning Workbook to start planning your transition on your terms, for your price.

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