Page 182 - Business Plans that Work A Guide for Small Business

Quick Screen Exercise • 171

III. Value Creation and Realization Issues

Higher Potential Lower Potential

Profit after tax 10–15% or more and < 5%; fragile
durable
Time to break even < 2 years > 3 years
Time to positive < 2 years > 3 years
cash flow
Return on investment 40–70% +, durable < 20%, fragile
potential
Value High strategic value Low strategic value
Capitalization Low–moderate; Very high; difficult
require ments fundable to fund
Exit mechanism Initial public offering, Undefined; illiquid
acquisition in vestment
Overall value creation potential
1. Timing Higher _____________avg______________ lower
2. Profit/free cash Higher _____________avg______________ lower
flow
3. Exit/liquidity Higher _____________avg______________ lower

IV. Overall Potential

Go No Go Go, if…
1. Margins and markets
2. Competitive advantages
3. Value creation and realization
4. Fit: “Opportunity” + “Resources” + “Team”
5. Risk/reward/balance
6. Timing
7. Other compelling issues: must know or likely to fail
a.
b.
c.
d.
e.