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Improving the Odds to Grow and Exit a Business

Posted by EAA on May. 30, 2025  /  Subscribe 0

Growing a business is hard.  According to Verne Harnish, author of Scaling Up, only 3% of companies ever rise above $1 million in revenue or three employees.

Building a business that survives the founder is also very difficult.  20% of companies fail in their first year, and only 50% make it five years.  According to the Exit Planning Institute, only 17% of businesses are sold – the rest are liquidated or shut down.  Of those sales, the owner is dissatisfied with the exit value and terms 75% of the time after 6 months.  Only 30% of family businesses transition to a 2^nd generation and only 18% transition to the third.  Yet, on average, 80% of an owner's perceived net worth is locked up in their business.  So, owners who fail to plan and orchestrate an effective exit can have little to show for years of hard work.

Why are the odds of exit so low?  Many owners run out of time to sell a successful business.  Exit Advisor Alliance (EAA) advisors tell me that owners contact them when sales have plateaued or the owner’s energy and passion for the business diminish.  Commonly, one or more of the five D’s – death, divorce, disagreement, disability, or disaster has caused an owner to start the process.  Without a strong planning foundation, the owner’s ability to find the right buyer with the right offer is significantly reduced. 

These statistics are reasons why many of us have joined EAA: to become better advisors who can help our owners grow and exit businesses by leveraging our area of expertise and working with a larger team of advisors who can collectively improve growth, exit value, and the transfer of legacy wealth to benefit the owner, their family, their employees, and sometimes the larger community.

I work with business owners who want to significantly grow profits, build stronger teams and systems to scale, and plan for and execute legacy-defining exits in the future.

In this article, I will introduce my favorite planning tools, which are used by thousands of successful businesses across various industries. They are universally applicable to your use and that of your customers. 

Know the Value Of The Business, and How to Make it More Valuable and Transferable.

Most business owners run their businesses like managers rather than owners.  They focus on the quarterly and annual profit metrics, but often overlook the goal of building a business that is highly transferable and valuable.  An ideal exit isn't to a buyer who needs to scrape up the money to buy a lifestyle.   The ideal buyer sees strategic value in a business and will pay a premium to buy a business that is packaged to fit into a larger enterprise and drive accelerating profitable growth across the integrated business. I advise owners to get a baseline valuation for their business and to monitor increasing value annually.   Getting a benchmark valuation is simple and relatively inexpensive.   I use the Valuebuilder system, but there are many simple systems available to provide a quick estimate, usually in under an hour, plus additional work with your accountant to "recast" the owner's expenses and determine a reasonable comparable for prospective buyers.   You can use a business coach like me for a rough estimate. Still, it's best to consult a qualified accountant, commercial realtor, or valuation specialist if you have assets or real estate that will be part of a future transaction.  

In the Value Builder system, there are 8 major categories that impact the transferability and valuation of a business:

The key idea is to understand how your business is performing on criteria like recurring revenue, customer concentration, financial reporting and documentation, etc.   Don't wait until you want to sell your business.  Typically, it takes 1-3 years of documented performance to withstand buyer scrutiny, but the investment can significantly improve the quality of offers.   I should note that a quality offer isn't just the price, but also includes things like the upfront payment and any requirements relating to hitting performance targets after the transition.

Here is an example of a valuation that identifies how much more a business may be worth by improving performance on the 8 key drivers if a business performs in the top 20% of its peer group.

In this real-life example, an owner of a large trades business got an unsolicited, low-ball offer from a Private Equity firm.  During the valuation process, we identified several relatively straightforward operational improvements that nearly doubled the business's value.

A key theme of this blog is to remind owners to focus on the value of their business and plan for an eventual transition several years before they intend to sell.   Once you've confirmed how your business is performing compared to peers, we recommend that the business leadership team meet annually to create a strategic plan for 3-year, 1-year, and the next 90-day periods and set goals for things like revenue, profit and customer success.  For the latter, I recommend using the Net Promoter Score.   

The One-Page Strategic Plan

This strategic planning tool was invented by one of the most successful businesspeople ever, John D. Rockefeller, Sr., and popularized by Verne Harnish in his book Mastering the Rockefeller Habits.

Owners, leadership teams, and their coaches implement this planning process in different ways.  I prefer doing the first version in an annual 1-2 day off-site meeting.  Some of my clients prefer to break down the exercise into hour-long sessions, tackling each session weekly.

The key idea is to create a comprehensive view of Values, Business Performance Goals, Initiatives, and Annual and Quarterly Priorities (Rocks). This provides the context to understand how each stakeholder’s work contributes to organizational and personal successes.   

Once you and your team are on the same page, it's time to get work done.

However, not all work is the same. Many professionals believe that working from a task list is the most effective way to be productive.  Sometimes, the opposite is true because we procrastinate and delay high-value tasks in favor of smaller, less essential tasks. 

Professionals who prioritize the most strategically important tasks first, using their most productive, high-energy thinking time, usually work fewer hours and achieve far better business results.  One of my clients, a partner at a large regional accounting firm, used the following method to save two hours a day while improving billings and employee satisfaction measures. 

Introducing the Eisenhower Matrix

This prioritization method was employed by former Allied Supreme Commander General Dwight Eisenhower when the future of the free world depended on the successful invasion of Normandy.  If it worked for him, maybe you should give it a try…

The primary objective is to track your multi-year and annual targets outlined in the strategic plan.  The magic happens when you spend your time working on essential tasks, such as hiring and developing your team, rather than the urgent but not important tasks that dominate most of our to-do lists. 

Email is a great example. Most emails we reply to each day are someone else’s priorities, not ours. So many of us personally read and respond to ALL our emails and don’t get to important tasks like checking in on our most important customers or mentoring a promising employee who may become a future leader.

You should plan three high-priority tasks or projects that will receive your undivided attention during your most productive working hours each day and each week. 

Important but less urgent tasks, such as mentoring staff, developing standard operating procedures, and cultivating strategic relationships, should be scheduled and completed on time. 

So, what about all the tasks you routinely do on the bottom half of the matrix that are relatively unimportant?  Automate.  Delegate.  Eliminate.

I recommend that business owners and professional advisors consider hiring an assistant to read and respond to the easy emails and prioritize the important things that need your attention at a designated time in the day after completing your important tasks that require uninterrupted attention.  If you want to learn how to hire and train a virtual assistant, I recommend Michael Hyatt’s Your World-Class Assistant. I can also help you and your assistant.

Learn to delegate relatively low-value tasks to your admin or a more junior associate.  Ask yourself: Would I pay another person who earns my hourly rate (your annual earnings divided by 2,000 hours) to do this task?  If the answer is no, consider delegating, automating, or eliminating the task.  The Eisenhower chart above provides examples of low-value tasks that highly paid professionals routinely complete.  The result is that important tasks get put off, and the professional feels burnt out because they work more hours than they should.

Develop Yourself and Your Team 

Why does business growth stall?  A fast-growing, high-profit business attracts a lot of competition for customers and the best employees.  As a result, companies that experience early success often slow down or stall as competition increases.

The business owner and key leaders must continue to develop skillsets that will enable the business to expand into new markets, add new products and services, and operate at a larger scale.

Leaders often gravitate to work they are passionate about and skilled at. But if they don’t learn the new skills needed to take the organization to the next level, both the leader and the business may hit a stall point.

My favorite coach, Michael Hyatt, introduces the Freedom Compass in his book Free to Focus.

We all have done work that we are neither proficient nor passionate about at certain times.  This area of the compass is called the Drudgery Zone.  We also spend time in the Distraction and Disinterested Zones. 

The two most important ideas for a growing business, or one that hopes to exit successfully, are:

Returning to our discussion at the Exit Advisor Alliance, a business buyer wants to understand the likelihood that the business will thrive after purchase, especially if the owner won’t stay on. An owner or leadership team that prepares future leaders, creates documented standard operating procedures, and takes steps to package the magic of the business so that the magic transfers to the new owner is both more valuable and more transferable. By allocating some of your best thinking time to building lasting value into your business that will outlast you, you will increase its value and transferability. This is Development Zone work.

Conclusion

 I’ve introduced highly productive and popular tools used by thousands of businesses for valuation, strategic planning, time mastery, prioritization, and personal development.  Using them diligently will improve work-life balance, grow profits, and increase your odds of a successful exit. If you know a business in growth or exit planning mode, or if you personally are interested in using these resources, please reach out to me at [email protected] or call me at 650.867.0207. I’ll be happy to send you the forms and schedule a call to get you started.

Charlie Janes, CEO at Focal Point Growth and Exit Advisory, helps visionary leaders optimize business outcomes and realize their fullest potential.  He believes that ambitious businesspeople benefit from a trusted guide with a fresh perspective to eliminate uncertainty, stress, and frustration, which is common when a business or career temporarily plateaus.  Charlie’s clients want accelerated profit growth, stronger teams, and systems to scale and optimal business valuation and transferability.  They want to build “legacy” businesses that will thrive without them.  His clients find purpose and achieve a work-life balance to enjoy life while reaching their fullest potential in less time with less stress.  Last year, his clients averaged revenue growth exceeding 50%.

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