4 Business Assessment Facts You Need to Know Right Now

Business assessments allow company owners to pinpoint what is and isn’t working in their businesses. By identifying strengths (and playing to them) and weaknesses (and filling in the gaps), entrepreneurs are better equipped to lead strategically.

Of course, business assessment is a huge undertaking that requires substantial preparation. To make the process a little bit easier, we got in touch with Beth Coyle Faris, Business Coach and Facilitator at TAB Texas Hill Country and previous CEO of Coyle Engineering, Inc, and Jo Clarkson, UK Operations Director at The Alternative Board UK, for their tips on all things business assessment.

TAB: What do you need to complete a business assessment?

Beth Coyle Faris: Before conducting a financial valuation of your company (or hiring someone to do it), it’s essential to know where your documents are – especially those a prospective buyer would want to see. Hopefully, your books are up-to-date and in order – if not, that’s the first step. Your CPA will be a big help in this regard.

The documents you need for a comprehensive business assessment include:

• Corporate charter
• Corporate minutes
• 3-5 years of tax returns
• Listing of company assets and liabilities
• Current accounts receivable and payable
• Cash accounts
• Lists of clients and their vendors and contracts (if long term)
• Your organizational chart
• List of employees and 1099’s
• Copies of all contracts and leases
• Company banking and investment information

Have these documents ready BEFORE you’re even preparing to sell. It takes a long time to gather them from scratch, and you don’t want to miss an opportunity when you’re approached by a prospective buyer out of the blue.

As a real life example: I once had a firm owner approach me about buying his surveying firm. I asked him for a list of his documents, and he responded with: “How would I know where all of that stuff is?” I told him we would talk when he had everything in order – we never did.

TAB: How often should business owners complete a business assessment?

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BCF: Business assessments can be expensive. I would only conduct one when you are really serious about getting “sale ready.”

Jo Clarkson: A business assessment can be as small as asking yourself “Is what I’m doing for my business moving me towards my personal vision of success?” I ask my TAB members this every month, and ask myself as well!

TAB: How has a business assessment benefited your business in the past?

BCF: A business assessment provides you with the knowledge you need for successful negotiations. When I sold my engineering firm, the valuation (and work with my attorney and CPA) helped me to make the best possible deal.

JC: In our business, regular business assessment means we have a solid exit strategy, which we’re implementing as part of our ongoing business development plan.

TAB: What are the most important factors to consider when conducting a business assessment and why?

BCF: Do your homework, ask around and get advice on all of the different ways to value your company.

JC: Be clear why you’re doing it and be committed to taking action based on the results. “Without knowledge, action is useless and knowledge without action is futile." - Abu Bakr

TAB Business Vantage® can help you identify performance gaps in your business, so you can reprioritize your team’s efforts. This online tool will measure the ten most common factors that make or break businesses across every industry. With these results, you are better equipped to focus your Strategic Business Leadership® plan and work towards your personal vision of success. Contact a local board to get started on valuing your business and moving further towards you company goals.