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In today’s rapidly evolving business landscape, it’s not enough to just have a product or service to offer. For businesses to truly thrive, grow, and eventually exit at their peak, they need a strong foundation built on multiple facets. This foundation is what ensures sustainability, growth, and the kind of scalability that potential buyers or investors salivate over. Welcome to the ‘8 Pillars of Business’ – an in-depth exploration into the core components that can either make or break your enterprise. From mastering your finances to establishing a powerful brand presence, these pillars are the backbone of every successful business journey.

Table of Contents

The 8 Pillars of Business……………………………………………………………………………………… 1

Introduction…………………………………………………………………………………………………….. 2

  1. Financial Fitness…………………………………………………………………………………………. 4
  2. Revenue Readiness……………………………………………………………………………………… 6
  3. Management Muscle…………………………………………………………………………………… 8
  4. Value Proposition/Verticalization………………………………………………………………….. 11
  5. Customer Satisfaction and Retention…………………………………………………………….. 13
  6. Sustainable Success…………………………………………………………………………………… 14
  7. Sales and Marketing………………………………………………………………………………….. 16
  8. Intellectual Property Presence…………………………………………………………………….. 19

The 8 Pillars of Business

  1. Financial Fitness
    1. Clean Bookkeeping & Reporting
  2. Revenue Readiness
    1. Predictable Sales & Recurring Revenue
  3. Strong Management
    1. Cross Training & Documented Culture
  4. Strong Vertical Presence
    1. 3 Targeted Customer Avatars
  5. Customer Retention & Satisfaction
    1. Reviews & Scores
  6. Sustainable Success
    1. Redundancy with the team, customers, vendors, and infrastructure
  7. Sales and Marketing
    1. Documented Growth Engine(s)
  8. Intellectual Property Presence
    1. Trademarks, Copyrights, and All Company Material


Greetings, fellow business leaders and operations enthusiasts! As your M&A Advisor, I’m thrilled to present “The 8 Pillars of Business Checklist.”

This comprehensive guide is designed to empower you with the knowledge and strategies you need to fortify the foundation of your organization and achieve sustained success.

In today’s dynamic and ever-evolving business landscape, it’s imperative to have a well-rounded approach to ensure your company’s growth and profitability. That’s why we’ve carefully curated these eight essential pillars that cover a wide range of critical areas.

First and foremost, we have “Financial Fitness.” It’s crucial to have a deep understanding of your company’s financial health, manage your resources effectively, and make informed decisions that drive financial stability and growth.

Moving on to “Clean Bookkeeping & Reporting,” we emphasize the importance of maintaining accurate and transparent financial records. By implementing meticulous bookkeeping practices and generating reliable reports, you’ll be equipped with the insights necessary to make informed business decisions.

“Revenue Readiness” is the next pillar we’ll explore. It revolves around establishing a solid foundation for generating consistent income streams and creating a business model that embraces predictable sales and recurring revenue. This pillar serves as a compass to navigate the ever-

changing market dynamics.

No organization can thrive without effective leadership and management. That’s why we dedicate a pillar to “Strong Management.” We’ll delve into strategies for building and nurturing a

competent and motivated team, empowering them to drive organizational success.

“Cross Training & Documented Culture” is another crucial aspect that cannot be overlooked. By fostering a culture of continuous learning and cross-training, you’ll create a resilient organization that can adapt to new challenges and leverage the collective knowledge of your workforce.

In an era of fierce competition, establishing a “Strong Vertical Presence” is essential. This pillar highlights the significance of positioning your brand as a leader within your industry, cultivating credibility, and seizing opportunities for growth.

At our core, we value the well-being of our team members and recognize the importance of supporting veterans and promoting mental health. Thus, we dedicate a pillar to “Veteran &

Mental Health Focus,” emphasizing the implementation of initiatives that prioritize the mental and emotional well-being of our employees.

The success of any business heavily relies on “Customer Retention & Satisfaction.” We’ll

uncover strategies for cultivating strong relationships, exceeding customer expectations, and creating an exceptional customer experience that fosters loyalty and drives growth.

In the age of online reviews and social media influence, managing your brand reputation is paramount. The “Reviews & Scores” pillar will equip you with the tools and insights to effectively manage online feedback, leverage positive reviews, and mitigate any potential negative impact on your business.

“Sustainable Success” is the ultimate goal we strive for. By embracing long-term strategies, ethical practices, and responsible resource management, we lay the groundwork for a resilient and enduring business that withstands the test of time.

In addition to these core pillars, we’ll explore the importance of “Redundancy with the team, customers, vendors, and infrastructure.” By developing contingency plans and establishing

redundancy across various aspects of your business, you’ll be well-prepared to mitigate risks and maintain continuity during unforeseen circumstances.

We’ll also address the crucial areas of “Sales and Marketing.” From developing a well-

documented engine that drives your business forward to safeguarding your intellectual property through trademarks, copyrights, and all company materials, we leave no stone unturned in this comprehensive checklist.

Together, let’s embark on this journey to bolster your organization’s foundation and achieve operational excellence. “The 8 Pillars of Business Checklist” will serve as your roadmap to navigate the complex terrain of modern business and set your company on a trajectory of

sustainable growth and prosperity. Let’s unlock your business’s full potential!

1.    Financial Fitness

Checklist 1 for Financial Fitness:

  1. Ensure accurate numbers in the financials:
    1. Regularly review and reconcile financial statements to ensure accuracy.
    1. Double-check data entry and calculations to minimize errors.
  2. Apply correct Generally Accepted Accounting Principles (GAAP):
    1. Familiarize yourself with GAAP guidelines and ensure adherence.
    1. Seek professional advice or hire a qualified accountant if needed.
    1. Report gross profit accurately:
      1. Ensure proper allocation of costs and revenue to calculate gross profit.
      1. Review cost of goods sold (COGS) calculations and make adjustments if necessary.
    1. Calculate accurate EBITDA and adjusted EBITDA:
      1. Understand the components of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and adjusted EBITDA.
      1. Double-check calculations and consider any necessary adjustments.
    1. Identify common financial faux pas:
      1. Be aware of common financial mistakes and pitfalls.
      1. Take proactive steps to avoid these errors and improve financial decision-making.
    1. Analyze revenue and gross profit margins:
      1. Assess revenue streams and identify areas for growth and improvement.
      1. Evaluate gross profit margins and compare them to industry benchmarks.
    1. Create projections:
      1. Develop financial projections based on historical data and market trends.
      1. Consider various scenarios and assumptions to anticipate potential outcomes.
    1. Evaluate the “Rule of 40”:
      1. Calculate the sum of the growth rate and profit margin.
      1. Ensure the result is equal to or greater than 40% to maintain financial health.
    1. Assess internal rate of return (IRR):
      1. Evaluate the potential return on investment (IRR) for purchases based on EBITDA multiples.
      1. Aim for an IRR of 20% to 30% to ensure favorable financial outcomes.
    1. Address common financial statement issues with technology companies:
      1. Review revenue recognition practices and ensure compliance with industry standards.
      1. Match revenue with associated cost of goods sold accurately.
      1. Differentiate tax-related CAPEX expenses from GAAP depreciation.
      1. Establish accruals for paid time off (PTO) and payroll obligations.
      1. Implement proper tracking of customer deposits or deferred revenue.
    1. Determine the level of financial statement review:
      1. Identify whether the financials have undergone a review, audit, or compilation process.
      1. Understand the level of assurance provided by each type of financial statement report.
  1. Consider a quality of earnings report:
    1. Engage a professional to conduct a quality of earnings assessment.
    1. Evaluate the reliability and accuracy of reported earnings and financial information.

Remember, financial fitness is crucial for the success of any business. By diligently addressing these checklist items, you can ensure the accuracy of your financial statements, make informed decisions, and maintain a healthy financial foundation for your organization.

2.    Revenue Readiness

Checklist 2 for Revenue Readiness:

  1. Aim for recurring or repeat revenue of 40% or more:
    1. Strive to establish a solid base of revenue that recurs consistently.
    1. Evaluate the proportion of revenue derived from repeat customers or contracted sources.
  2. Identify acceptable forms of recurring revenue:
    1. Consider revenue streams from various sources, such as:
      1. Physical product subscriptions, internal, white labeled, or joint venture.
      1. Monthly Software-as-a-Service (SaaS) subscriptions internal, white labeled, or joint venture.
      1. Packaged solutions within professional services internal, white labeled, or joint venture.
      1. Multi-year contracts for a service schedule (B2C or B2B)
  3. Evaluate acceptable forms of repeatable revenue (non-contracted revenue):
    1. Assess revenue generated from services delivered or software with monthly subscription models.
    1. Consider the sustainability and growth potential of these revenue sources.
  4. Assess geographic concentration:
    1. Evaluate the impact of geographic concentration on revenue generation.
    1. Consider the extent to which physical implementation is required for the target market.
  5. Develop well-packaged offerings:
    1. Maximize the company’s offering capabilities by creating well-defined and attractive packages.
    1. Combine software and services where applicable to provide comprehensive solutions.
  6. Ensure packaged services offerings include:
    1. Acceptable support to cater to client needs during business hours.
    1. Strict service level agreements (SLAs) to define performance standards.
  • Guaranteed deliverables to instill client confidence.
  • Analyze the terms in contracted revenue:
    • Review and negotiate favorable terms in contracts to ensure healthy revenue streams.
    • Consider factors such as payment terms, contract length, and pricing structure.
  • Evaluate acceptable churn rate:
    • Determine an acceptable level of customer churn, considering industry benchmarks and business objectives.
    • Develop strategies to minimize churn and increase customer retention.

By following this checklist, you can assess the readiness of your revenue streams and make informed decisions to drive predictable sales and sustainable growth. Remember, diversifying revenue sources, establishing recurring and repeatable revenue streams, and focusing on customer satisfaction are key to building a strong foundation for your business.

3.    Management Muscle

Checklist for 3 Management Muscle:

  1. Assess the ability of the business to run itself:
    1. Evaluate whether the right hires, retention strategies, and clear documentation are in place to enable smooth operations.
    1. Determine if the business can continue functioning effectively without excessive dependency on specific individuals.
  2. Ensure strong management and leadership:
    1. Confirm that capable managers and leaders are in key positions.
    1. Assess their track record, leadership skills, and ability to drive the organization forward.
    1. Hire in twos and keep the winner.
  3. Utilize personality assessments in hiring:
    1. Consider using DISC and Caliper personality assessments to evaluate potential candidates.
    1. Determine if the assessments align with the desired qualities and characteristics for the specific roles.
  4. Establish a clear organizational chart and cross-training initiatives:
    1. Develop an easily understandable organizational chart that reflects reporting lines and responsibilities.
    1. Encourage cross-training among team members to ensure flexibility and preparedness for emergencies.
  5. Document daily, weekly, and monthly procedures:
    1. Ensure that standard operating procedures (SOPs) are documented and readily accessible to employees.
    1. Implement a process for regularly reviewing and improving task efficiency through input from workers and management.
  • Align everyone with the company’s north star/goal:
    • Ensure that the organization’s mission, values, and beliefs are clearly stated and shared across the company.
    • Confirm that all employees are aligned and working together towards a common objective.
  • Consider culture fit in potential acquisitions:
    • Assess the cultural compatibility of target companies during the acquisition process.
    • Evaluate whether their values and work culture align with the acquiring company’s.
  • Aim for low employee attrition rate:
    • Maintain an attrition rate below 10% as an indicator of a stable and engaged workforce.
    • Higher attrition rates, especially exceeding 15%, should raise concerns and trigger analysis of underlying issues.
  • Implement team events, reward programs, and non-cash incentives:
    • Organize team-building events and activities to foster a positive work environment.
    • Establish reward programs and non-cash incentives to motivate and recognize employee contributions.
  • Design cash incentives aligned with company goals:
    • Create bonus structures that incentivize both individual and company-wide achievements.
    • Ensure that the incentive programs drive desired behaviors and support overall business objectives.
  • Develop a robust hiring process with personality profiles:
    • Establish a well-defined process for hiring, including the use of personality profiles during candidate evaluations.
    • Ensure that the hiring process is consistent, thorough, and aligned with the organization’s values and culture.
  1. Encourage learning and provide training opportunities:
    1. Incentivize employees to pursue continuous learning and skill development.
    1. Offer training programs to enhance their abilities and contribute to their professional growth.
  2. Support a cause or charity as an organization:
    1. Consider engaging in philanthropic initiatives as a way to contribute to society and foster a sense of purpose within the organization.
  3. Allow autonomy and purpose within the team:
    1. Evaluate whether team members have a sense of autonomy and purpose in their roles.
    1. Provide opportunities for employees to take ownership of their work and contribute to the organization’s success.

By implementing these management muscle strategies, you can create a strong and cohesive team, foster a positive work culture, and drive employee engagement and retention. A capable and motivated management team is essential for the long-term success of the organization.

4.    Value Proposition/Verticalization

Checklist 4 for Value Proposition/Verticalization:

  1. Develop a clear value proposition:
    1. Craft a value proposition that effectively communicates how the target solves customers’ problems or improves their situation.
    1. Ensure the value proposition quantifies the specific benefits customers can expect.
    1. Clearly articulate why the ideal customer should choose the target over the competition, emphasizing unique differentiation.
  2. Define the product or service being offered:
    1. Clearly identify the product or service that the target is selling.
    1. Understand its features, functionality, and unique selling points.
    1. Identify the end-benefits for customers:
      1. Determine and communicate the ultimate benefits that customers will experience by using the product or service.
      1. Focus on the outcomes, results, or transformations that customers can expect.
    1. Identify the target customer for the product or service:
      1. Define the ideal customer profile for the target’s offering.
      1. Understand their needs, pain points, and motivations.
    1. Highlight unique and differentiated aspects:
      1. Identify and emphasize what makes the target’s offering unique and different from competitors.
      1. Communicate the value proposition’s key differentiators clearly.
    1. Establish a clear brand story:
      1. Craft a compelling brand story that clearly explains what the target offers.
      1. Clearly communicate how the target’s offerings make customers’ lives better.
      1. Provide a clear call-to-action and steps for customers to purchase the product or service.
  • Focus on serving a specific vertical and sub-vertical:
    • Determine if the target’s focus is on serving a specific industry vertical and sub- vertical.
    • Consider if there are any barriers to entry in these verticals, such as meeting HIPAA and FDA requirements for certain industries.

By following this checklist, you can ensure a well-defined value proposition that effectively communicates the unique benefits and differentiation of the target’s offerings. Understanding the target customers, crafting a compelling brand story, and focusing on specific verticals will help establish a strong market position and drive customer engagement and loyalty.

5.    Customer Satisfaction and Retention

Checklist 5 for Customer Satisfaction and Retention:

  1. Track key projects:
    1. Ensure that key projects involving customers are properly tracked.
    1. Monitor the completion of significant milestones such as onboarding, or projects lasting more than 100 hours.
    1. Pay special attention to projects related to annual and Software-as-a-Service (SaaS) contracts.
  2. Schedule check-ins for annual and SaaS contracts:
    1. Establish specific touchpoints for customers with annual contracts.
    1. Schedule check-ins after onboarding, 90 days before upcoming annual renewals, or if the customer requires more work than the norm.
    1. Consider check-ins in the event of a change in the customer’s account executive.
  3. Utilize customer satisfaction tools:
    1. Implement customer satisfaction measurement tools to gauge customer sentiment and feedback.
    1. Consider using the Net Promoter Score (NPS), Customer Satisfaction (CSAT) surveys, or Customer Effort Score (CES) to collect valuable insights.
  4. Evaluate the customer retention rate (CRR):
    1. Determine the target’s customer retention rate.
    1. Calculate the percentage of customers who continue to renew or extend their contracts.
    1. Regularly monitor the CRR to ensure it remains at satisfactory levels.

By following this checklist, you can proactively monitor and address customer satisfaction, improve retention rates, and strengthen the relationship with your customers. Tracking key projects, implementing customer satisfaction measurement tools, and regularly evaluating customer retention rates will help identify areas for improvement and enhance overall customer experience.

6.    Sustainable Success

Checklist 6 for Sustainable Success:

  1. Employees:
    1. Ensure that each employee has their own job manual outlining their responsibilities and processes.
    1. Present each person’s weekly duties to other departments for cross-functional understanding and collaboration.
    1. Tie bonuses to the completion of job/position manuals to encourage documentation and knowledge sharing.
    1. Encourage employees to take sabbaticals once their job manual is complete to promote professional growth and prevent single-person dependency.
  2. Customers:
    1. Avoid over-reliance on a single customer, ensuring that no single customer drives more than 10% of the revenue.
    1. Combine the revenue from the top three customers to represent no more than 20% of the total revenue.
    1. Track key metrics for these customers, including total revenue by customer, customer lifetime value, and a customer loss report for the last 12 months.
    1. Monitor revenue by partner if selling through a channel.
    1. Maintain equal gross profit margins (GPM) between large and small customers.
  3. Vendors:
    1. Avoid dependency on a single vendor for the majority of the target’s products or services.
    1. Assess vendors to ensure they are not causing margin erosion, security breaches, or brand abandonment.
    1. Diversify vendor relationships to mitigate risks and maintain control over the supply chain.
  • Infrastructure:
    • Avoid reliance on a single piece of infrastructure that could negatively impact growth and profit.
    • Establish geographical redundancies to account for force majeure events.
    • Ensure that essential functions can still operate during a power outage, such as IP phones, email communication, CRM data entry, ticketing system usage, invoice creation and sending, credit card payment collection, and powering cell phones and laptops.
    • Eliminate any single points of failure (SPOFs) to ensure continuity of operations.

By following this checklist, you can build a foundation for sustainable success. Avoiding single- person dependency, customer concentration, vendor reliance, and infrastructure vulnerabilities will minimize risks and position the organization for long-term growth and profitability.

7.    Sales and Marketing

Checklist 7 for Sales and Marketing:

  1. Well-defined offerings that are easy to quote and sell:
    1. Ensure that the target has clear and well-defined offerings that can be easily quoted and sold.
    1. Assess whether the sales team can scale post-acquisition with these offerings.
  2. Effective sales team:
    1. Evaluate whether the sales team is well-staffed and not overly dependent on the owner.
    1. Determine if the team has the necessary skills and experience to drive sales growth.
    1. Digital marketing efforts and close rates:
      1. Assess whether the digital marketing efforts provide the sales team with a close rate of 50% or higher.
      1. Ensure that website and digital metrics are being tracked and split tested for continuous improvement.
    1. Sales engine and pro forma projections:
      1. Evaluate whether the current sales engine supports the provided pro forma projections.
      1. Determine if the sales team is capable of achieving the projected sales goals.
    1. Healthy mix of hunters and farmers:
      1. Ensure a healthy mix of hunters (cold prospecting and outreach) and farmers (maintaining relationships and cross-selling) within the sales team.
      1. Assess the balance and effectiveness of these roles in driving revenue growth.
    1. Repeatable packaged solutions:
      1. Determine if the sales and marketing teams have repeatable packaged solutions that are easy to understand and present to customers.
      1. Ensure that these solutions align with customer needs and drive value.
  • Structured sales team composition:
    • Establish a structured sales team composition that includes:
      • Experienced sales manager to track goals, update tools, and provide coaching.
      • Industry-savvy account executives (hunters) who can effectively communicate the value proposition.
      • Inside salesperson or customer relationship manager (farmers) responsible for nurturing customer relationships.
      • Solutions engineer to handle technical questions and create relevant content.
    • Consider dedicating resources for every $5M in revenue.
  • Key sales metrics tracking:
    • Ensure that key sales metrics are tracked, including:
      • Annual sales forecast, number of leads needed to close a deal, average deal size, and total deals needed to meet goals.
      • Discounted sales pipeline updated with win rates.
      • Win rate analysis, cost of sales (COS) tracking, customer acquisition cost (CAC), and customer lifetime value (CLV).
  • Effective website and marketing efforts:
    • Evaluate the effectiveness of the website by considering factors such as:
      • Placement of the value proposition in the hero image.
      • Tailoring the messaging to the target audience.
      • Identification of visitor personas.
      • Clear and concise messaging with strong calls to action on every page.
      • Demonstration of industry expertise through white papers, videos, and case studies.
    • Monitor the size and engagement of the cold, warm, and hot email lists.
    • Leverage video testimonials and YouTube for marketing efforts.
    • Utilize the email list as a primary marketing channel, followed by the website and social media.
    • Allocate at least 5% of gross revenue to marketing efforts.
  1. Structured marketing team composition:
    1. Establish a structured marketing team composition, including:
      1. Marketing manager to create and manage a marketing plan and maintain a nurture calendar.
      1. Content creator/social media expert/blogger.
      1. Graphic designer to maintain branding consistency.
      1. Videographer to create marketing videos.
    1. Consider outsourcing marketing to reputable companies if applicable.
  2. Integration software for sales and marketing:
    1. Consider implementing sales and marketing integration software, such as HubSpot, Salesfusion, ClickDimensions, Claritysoft, Eloqua, or Infusionsoft.

By following this checklist, you can ensure a well-structured and effective sales and marketing strategy that drives revenue growth, optimize sales.

8.    Intellectual Property Presence

Checklist 8 for Intellectual Property Presence:

  1. Evaluate IP value and protection:
    1. Assess the management and protection of the target’s intellectual property (IP).
    1. Consider the presence and protection of trademarks, copyrights, trade secrets, and patents.
    1. Identify different types of IP, including packaged or product IP, organizational IP, IP to market services, IP to sell services, IP to deliver services, and IP to operate the business.
  2. Implement a process for managing IP:
    1. Conduct an annual brainstorming session involving sales, marketing, delivery, and support teams to identify methodologies and tools used.
    1. Assign value to different IP assets and determine their frequency of use to prioritize their significance.
    1. Document and name each IP asset, assessing its uniqueness to the company on a scale of 1 to 5.
    1. Store and protect IP with off-site backups to ensure continuity and security.
  3. Establish legal contracts and NDA agreements:
    1. Ensure that appropriate legal contracts are in place with employees, agents, consultants, contractors, vendors, and anyone who creates or has access to IP.
    1. Execute non-disclosure agreements (NDAs) with vendors, customers, consultants, and external developers who may have access to internal data.
    1. Regularly update access credentials and change passwords for IP that cannot be tied to active directory credentials.
    1. Communicate IP to the team and measure its relevance:
      1. Implement a program to regularly communicate IP to the team and ensure its understanding and utilization.
      1. Continuously measure the value and relevance of IP, identifying any outdated or obsolete assets.
      1. Present outdated IP to potential buyers if it no longer holds value for the company.
  • Implement an IP staircase:
    • Follow the IP staircase model as proposed by CloudSpeed:
      • First, labeled bundles as the skeleton of IP offerings.
      • Second, packaged extensions or addons to enhance the IP offerings.
      • Third, functional solutions that are highly repeatable.
      • Fourth, vertical solutions tailored specifically to a particular industry or vertical.

By following this checklist, you can effectively manage and protect intellectual property, ensuring its value and relevance to the company. Establishing legal agreements, implementing IP management processes, and leveraging the IP staircase model will help maximize the potential of intellectual property assets and drive sustainable growth.

The ‘8 Pillars of Business’ is a comprehensive guide that every entrepreneur, whether a newbie or a veteran, should reference. It reminds us that financial dexterity goes beyond profits—it’s about immaculate bookkeeping. Revenue isn’t just about making sales but ensuring they are predictable and recurring. A company’s strength is not just in its product but in its management, culture, and the depth of its connection in the industry. Retaining customers, ensuring they’re satisfied, and using that satisfaction as a testament is pivotal. Sustainable success means having backups and redundancy, not just in your team, but across all stakeholders. Meanwhile, your growth strategy in sales and marketing should not only be effective but documented. Lastly, a business’s value is also in its intellectual assets. In a nutshell, a business isn’t about one thing—it’s a combination of all these pillars, and this post sheds light on how to solidify each one for optimal success. Whether you’re looking to grow, scale, or prepare for a grand exit, these pillars are the blueprint to guide your journey.

Download the PDF version of this checklist here.