November 2026 Newsletter
Maximize the Value of Your Business for a Big Exit
CEO Advisor, Inc. is a business advisory firm focusing on growth acceleration, Exit Planning, Exit Strategy and preparation work for an optimal sale. We advise CEOs, Presidents and business owners on accelerating sales, profits and value of their businesses.
Growth involves many aspects of any business throughout the life of your company. The fact is you never know when a potential buyer is going to knock on your door to acquire your company, or you decide to conduct a competitve sale process, so it is critical that you prudently manage your business to optimize A) Sales and Profits, B) Value of your business and C) Being prepared when considering selling for an optimal exit.
There are many aspects of your business that contribute to maximizing your profits and the value of your company and building a sellable, attractive growing business. How you manage your business, your strategy and business model, your growth rate, your pricing, your gross margins, recurring revenue stream, renewal rates, the strength of your management team, size of your market and other critical factors not only play into the growth and profitability of your business, but your ability to sell your business and sell it for a maximum value when you decide to conduct a competitive sale process.
A successful business is built over time by a CEO or business owner who is able to assemble a cohesive, focused management team that produces quality products and services and operates the business profitably while in growth mode. The business must create a sales and marketing machine coupled with operational processes that generate profits of a magnitude to both compensate the shareholders adequately for their risk, attract buyers and ultimately make for a lucrative exit. This requires astute planning and skilled execution.
Why do most CEOs and business owners fail to create a sellable business or a business that has a value worthy of the risk of ownership? Or better yet a business that is attractive to buyers and yields a large exit? CEO Advisor, Inc. has advised CEOs and business owners for twenty-two years on achieving accelerated growth, building value and preparing for an optimal sale.
Here are 10 key components to maximize the value of your business and generate a large and lucrative exit.
1. Planning and Goal-Setting to Grow to the Next Level
Planning and goals are vital to focus your efforts, measure progress and track achievements. Forecasting, accountability and strong management are the path to success. Creating a path to growth in the form of annual and short-term goals as part of a Business Planning process helps you and your business reach new levels of success. Seek a trusted business advisor with the expertise to formulate, quantify and implement your goals to maximize your company's profits and value.
2. Management
Your Management team is the number one factor in achieving success and building a business of real value. CEOs and business owners must share in the responsibilities and manage a well-chosen, seasoned team, even if small, to enable the company to grow and prosper. In companies of 5 - 50 employees, the Management team typically comes in the form of a few internal members and an outside business advisor, along with other professional service firms that round out and provide specialized expertise to facilitate this growth and success so reach out to a professional for the help you need. Companies with over 50 employees will require you and your business advisor to focus on, recruit, screen and build out the Management team and create and implement new processes to further accelerate sales and scale the business.
3. Recurring Revenue
The true test of a solid business model is, a) A "Need to have" product or service and b) A recurring revenue model. CEO Advisor, Inc. advises on formulating repeat, forecastable contracted revenue to increase sales, profits and value of your business. Not only recurring revenue, but sticky, low churn, contracted renewing customers that enable you to grow profitably and are attractive to a future buyer. This is not only critical in software and other technology companies, but in all types of businesses.
4. Growth Rate
Your growth rate is a major factor in the value of your business. Many CEOs, Presidents and business owners of the companies that I meet feel that a 10% growth rate is typical and acceptable and will suffice when they get to the point of selling their business. The truth is that this lack of strong growth not only costs them tremendously each year in profits, it cripples their business value and in fact inhibits them from being able to sell their company in many cases. A stronger growth rate of 15 - 25% or greater is needed each year as a small to mid-size business to maximize your value. In order to achieve this growth rate, planning and investment is needed for the proper level of marketing, sales coverage, reseller channel sales and operations to enable such scale of the business.
5. Sound Sales Strategy
Without a solid, well thought out sales strategy and plan to focus resources effectively toward goals, there is little to no opportunity to grow sales, increase profits and maximize the value of your business. This is critical and is rarely done consistently in small and mid-size businesses today despite its importance. Strong sales management is the first step to implementing a sales strategy and this is also lacking in most small and mid-size companies. Seek help to nail this aspect of your business to accelerate sales, profits and the valuation of your company.
6. Strong Sales, Sales Management and Marketing
In the end, it is a sales and marketing play that makes for a growing, profitable, valuable, sellable business. Sales and marketing execution is not only the most critical aspect of most businesses, it is the hardest to execute on. Faltering or failing in sales, sales management and marketing will cost any business from millions of dollars to tens of millions of dollars over the life of the business through to the sales price of the business.
7. Gross Profit Margins
Gross Profit Margin (Sales minus Cost of Good Sold, divided by Sales) is the profit margin from creating and providing your products and services to customers exclusive of expenses and overhead. This is the most important aspect of achieving strong profits and a high value for your business. Predominantly, businesses valuations are based on a multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). If your Gross Profit Margin is low, then your Net Profit after expenses is highly likely to be low (or negative), as well. Depressed earnings or losses will crush the value of your business or preclude you from selling your business at any price.
8. Large Market
Sellable businesses have large markets – a lot of greenfield - to sell into and grow. If you simply can't grow your business past a few million dollars in sales, it is highly unlikely that anyone would pay good money for it and expect to grow it further. Your strategy and planning should position your company to sell products and services into a large market, while being focused on the highest and best target markets within your total addressable market.
9. Unique or Proprietary Products and Services
"Me too" companies tend to be far less valuable, as well as, have a much harder time achieving sales goals due to extensive competition. Having unique or proprietary products and services sets you apart in the marketplace with sought after, in-demand services. Because this and other factors are so critical to your successful exit, engage an experienced business advisor to assist in sorting out your strategy and formulating your products and services to optimize your business model and sales, as well as, reviewing your current products, pricing, sales channel and gross profit margin to ensure optimal profitability.
10. Addressable, Identifiable Target Market
A critical mistake by many small to mid-size company CEOs and business owners is trying to sell to anyone with a pulse and a dollar in their pocket. This creates tremendous inefficiencies and is the largest waste of time and money in most small to mid-size companies. These small, marginal unqualified customers represent high churn - a sales and value killer and a waste of your sales teams’ valuable time. A strong sales strategy includes an identifiable target market that is researched, secured and imported into your CRM software with 90% of your sales focus and efforts selling to these qualified prospects in your target markets. In order to maximize your value for a large exit, you must specialize and provide expertise in a few target markets and bring exceptional value to your customers today and to your buyer in the future.
Timing is another critical factor although it is tough to time the market for most privately-held companies. The fact is, valuations are relatively high now with a tremendous opportunity for nearly all CEOs and business owners, but this cannot continue for long. Business cycles are recurring every 7.9 years since WWII and we are now many years into the current business cycle. Selling on the way up is critical. Selling at the peak is challenging and selling on the way down is nearly impossible and may delay your plans for an exit for another 5 to 10 years or more.
CEO Advisor, Inc. provides hands-on advice to grow your business to the next level and to help you with Exit Planning and your Exit Strategy. With over 40 years of experience, we can provide a full service to realize your ultimate goal. We address your specific needs with hands-on work performed, expertise and seasoned advice. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information. Disclaimer. This article is provided solely for educational and informational purposes. It is not intended for business or other types of advice. The views expressed by CEO Advisor, Inc. reflect general observations on various business issues.
Growth involves many aspects of any business throughout the life of your company. The fact is you never know when a potential buyer is going to knock on your door to acquire your company, or you decide to conduct a competitve sale process, so it is critical that you prudently manage your business to optimize A) Sales and Profits, B) Value of your business and C) Being prepared when considering selling for an optimal exit.
There are many aspects of your business that contribute to maximizing your profits and the value of your company and building a sellable, attractive growing business. How you manage your business, your strategy and business model, your growth rate, your pricing, your gross margins, recurring revenue stream, renewal rates, the strength of your management team, size of your market and other critical factors not only play into the growth and profitability of your business, but your ability to sell your business and sell it for a maximum value when you decide to conduct a competitive sale process.
A successful business is built over time by a CEO or business owner who is able to assemble a cohesive, focused management team that produces quality products and services and operates the business profitably while in growth mode. The business must create a sales and marketing machine coupled with operational processes that generate profits of a magnitude to both compensate the shareholders adequately for their risk, attract buyers and ultimately make for a lucrative exit. This requires astute planning and skilled execution.
Why do most CEOs and business owners fail to create a sellable business or a business that has a value worthy of the risk of ownership? Or better yet a business that is attractive to buyers and yields a large exit? CEO Advisor, Inc. has advised CEOs and business owners for twenty-two years on achieving accelerated growth, building value and preparing for an optimal sale.
Here are 10 key components to maximize the value of your business and generate a large and lucrative exit.
1. Planning and Goal-Setting to Grow to the Next Level
Planning and goals are vital to focus your efforts, measure progress and track achievements. Forecasting, accountability and strong management are the path to success. Creating a path to growth in the form of annual and short-term goals as part of a Business Planning process helps you and your business reach new levels of success. Seek a trusted business advisor with the expertise to formulate, quantify and implement your goals to maximize your company's profits and value.
2. Management
Your Management team is the number one factor in achieving success and building a business of real value. CEOs and business owners must share in the responsibilities and manage a well-chosen, seasoned team, even if small, to enable the company to grow and prosper. In companies of 5 - 50 employees, the Management team typically comes in the form of a few internal members and an outside business advisor, along with other professional service firms that round out and provide specialized expertise to facilitate this growth and success so reach out to a professional for the help you need. Companies with over 50 employees will require you and your business advisor to focus on, recruit, screen and build out the Management team and create and implement new processes to further accelerate sales and scale the business.
3. Recurring Revenue
The true test of a solid business model is, a) A "Need to have" product or service and b) A recurring revenue model. CEO Advisor, Inc. advises on formulating repeat, forecastable contracted revenue to increase sales, profits and value of your business. Not only recurring revenue, but sticky, low churn, contracted renewing customers that enable you to grow profitably and are attractive to a future buyer. This is not only critical in software and other technology companies, but in all types of businesses.
4. Growth Rate
Your growth rate is a major factor in the value of your business. Many CEOs, Presidents and business owners of the companies that I meet feel that a 10% growth rate is typical and acceptable and will suffice when they get to the point of selling their business. The truth is that this lack of strong growth not only costs them tremendously each year in profits, it cripples their business value and in fact inhibits them from being able to sell their company in many cases. A stronger growth rate of 15 - 25% or greater is needed each year as a small to mid-size business to maximize your value. In order to achieve this growth rate, planning and investment is needed for the proper level of marketing, sales coverage, reseller channel sales and operations to enable such scale of the business.
5. Sound Sales Strategy
Without a solid, well thought out sales strategy and plan to focus resources effectively toward goals, there is little to no opportunity to grow sales, increase profits and maximize the value of your business. This is critical and is rarely done consistently in small and mid-size businesses today despite its importance. Strong sales management is the first step to implementing a sales strategy and this is also lacking in most small and mid-size companies. Seek help to nail this aspect of your business to accelerate sales, profits and the valuation of your company.
6. Strong Sales, Sales Management and Marketing
In the end, it is a sales and marketing play that makes for a growing, profitable, valuable, sellable business. Sales and marketing execution is not only the most critical aspect of most businesses, it is the hardest to execute on. Faltering or failing in sales, sales management and marketing will cost any business from millions of dollars to tens of millions of dollars over the life of the business through to the sales price of the business.
7. Gross Profit Margins
Gross Profit Margin (Sales minus Cost of Good Sold, divided by Sales) is the profit margin from creating and providing your products and services to customers exclusive of expenses and overhead. This is the most important aspect of achieving strong profits and a high value for your business. Predominantly, businesses valuations are based on a multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). If your Gross Profit Margin is low, then your Net Profit after expenses is highly likely to be low (or negative), as well. Depressed earnings or losses will crush the value of your business or preclude you from selling your business at any price.
8. Large Market
Sellable businesses have large markets – a lot of greenfield - to sell into and grow. If you simply can't grow your business past a few million dollars in sales, it is highly unlikely that anyone would pay good money for it and expect to grow it further. Your strategy and planning should position your company to sell products and services into a large market, while being focused on the highest and best target markets within your total addressable market.
9. Unique or Proprietary Products and Services
"Me too" companies tend to be far less valuable, as well as, have a much harder time achieving sales goals due to extensive competition. Having unique or proprietary products and services sets you apart in the marketplace with sought after, in-demand services. Because this and other factors are so critical to your successful exit, engage an experienced business advisor to assist in sorting out your strategy and formulating your products and services to optimize your business model and sales, as well as, reviewing your current products, pricing, sales channel and gross profit margin to ensure optimal profitability.
10. Addressable, Identifiable Target Market
A critical mistake by many small to mid-size company CEOs and business owners is trying to sell to anyone with a pulse and a dollar in their pocket. This creates tremendous inefficiencies and is the largest waste of time and money in most small to mid-size companies. These small, marginal unqualified customers represent high churn - a sales and value killer and a waste of your sales teams’ valuable time. A strong sales strategy includes an identifiable target market that is researched, secured and imported into your CRM software with 90% of your sales focus and efforts selling to these qualified prospects in your target markets. In order to maximize your value for a large exit, you must specialize and provide expertise in a few target markets and bring exceptional value to your customers today and to your buyer in the future.
Timing is another critical factor although it is tough to time the market for most privately-held companies. The fact is, valuations are relatively high now with a tremendous opportunity for nearly all CEOs and business owners, but this cannot continue for long. Business cycles are recurring every 7.9 years since WWII and we are now many years into the current business cycle. Selling on the way up is critical. Selling at the peak is challenging and selling on the way down is nearly impossible and may delay your plans for an exit for another 5 to 10 years or more.
CEO Advisor, Inc. provides hands-on advice to grow your business to the next level and to help you with Exit Planning and your Exit Strategy. With over 40 years of experience, we can provide a full service to realize your ultimate goal. We address your specific needs with hands-on work performed, expertise and seasoned advice. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information. Disclaimer. This article is provided solely for educational and informational purposes. It is not intended for business or other types of advice. The views expressed by CEO Advisor, Inc. reflect general observations on various business issues.
The Role of Consultants -
Excerpts from The Private Equity Handbook
Per the CEO of a Private Equity-backed Company:
I have to say that my own personal opinion of consultants has changed dramatically over the last two decades. As a young guy, I used to joke with a bit of arrogance, "If you can't do, teach or consult."
Since then, I have totally changed my tune. As a leader, as a CEO, I recognize that there is a time and a place to bring in consultants.
EBITDA: Consultants represent an add back. Even though you're expensing cash, it's not a permanent expense. Consultants can be expensive, but it's a one-time cost, and if you have the cash, don't sweat it!
Best Practices: Consultants spend a significant amount of time working with companies, and they pick up best practices. They come into an organization and impart wisdom that the company itself does not have.
Different Views: Within a company, everyone has a job, a task list to complete, and so it's not always easy to take a step back and conduct a successful self-assessment or assess a project when the goal is to focus on serving current and existing customers. Consultants come in with a fresh set of eyes and will quickly spot what you can't.
We bring in consultants frequently. They help us look for process bottlenecks, help redesign existing processes, and help us build a better mousetrap. In this way, we can serve existing customers and future customers more efficiently and cost effectively, increasing your EBITDA by improving margin.
As an example, I'm working on a large redesign of the sales organization and account management in my current company. Sure, I could probably solve this problem by hiring a couple of employees and taking a few years to do a project, but the consultants can provide the capacity and completely redesign the sales process from the top to the bottom in a couple of months. At the end, I have a new comp plan, new job descriptions for the different players, and a manager's playbook that discusses metrics and the cadence that should be put in place.
Takeaways
You built the business and know every aspect of it. There's not a single consultant out there who can come in and tell you how to run your business better.
That was my attitude when I came into the world of Private Equity and running companies, but I very quickly rethought that position. The consultants aren't necessarily experts in your business, but they are experts in certain areas of running a business. I now fully embrace consultants.
The key is to assess exactly where you are. Do you know everything? Do you have the expertise? And more importantly, do you have the bandwidth? If you do, fine. Consultants probably aren't necessary. But if there are problematic areas of the business or ones that could use improvements and you don't have the time or expertise to attack them, consultants can help.
Ask for help and move forward.
Contact CEO Advisor, Inc to help you with your business issues and to grow your business to the next level. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Disclaimer. This article is provided solely for educational and informational purposes. It is not intended for business or other types of advice. The views expressed by CEO Advisor, Inc. reflect general observations on various business issues.
I have to say that my own personal opinion of consultants has changed dramatically over the last two decades. As a young guy, I used to joke with a bit of arrogance, "If you can't do, teach or consult."
Since then, I have totally changed my tune. As a leader, as a CEO, I recognize that there is a time and a place to bring in consultants.
EBITDA: Consultants represent an add back. Even though you're expensing cash, it's not a permanent expense. Consultants can be expensive, but it's a one-time cost, and if you have the cash, don't sweat it!
Best Practices: Consultants spend a significant amount of time working with companies, and they pick up best practices. They come into an organization and impart wisdom that the company itself does not have.
Different Views: Within a company, everyone has a job, a task list to complete, and so it's not always easy to take a step back and conduct a successful self-assessment or assess a project when the goal is to focus on serving current and existing customers. Consultants come in with a fresh set of eyes and will quickly spot what you can't.
We bring in consultants frequently. They help us look for process bottlenecks, help redesign existing processes, and help us build a better mousetrap. In this way, we can serve existing customers and future customers more efficiently and cost effectively, increasing your EBITDA by improving margin.
As an example, I'm working on a large redesign of the sales organization and account management in my current company. Sure, I could probably solve this problem by hiring a couple of employees and taking a few years to do a project, but the consultants can provide the capacity and completely redesign the sales process from the top to the bottom in a couple of months. At the end, I have a new comp plan, new job descriptions for the different players, and a manager's playbook that discusses metrics and the cadence that should be put in place.
Takeaways
You built the business and know every aspect of it. There's not a single consultant out there who can come in and tell you how to run your business better.
That was my attitude when I came into the world of Private Equity and running companies, but I very quickly rethought that position. The consultants aren't necessarily experts in your business, but they are experts in certain areas of running a business. I now fully embrace consultants.
The key is to assess exactly where you are. Do you know everything? Do you have the expertise? And more importantly, do you have the bandwidth? If you do, fine. Consultants probably aren't necessary. But if there are problematic areas of the business or ones that could use improvements and you don't have the time or expertise to attack them, consultants can help.
Ask for help and move forward.
Contact CEO Advisor, Inc to help you with your business issues and to grow your business to the next level. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Disclaimer. This article is provided solely for educational and informational purposes. It is not intended for business or other types of advice. The views expressed by CEO Advisor, Inc. reflect general observations on various business issues.
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