Six checks, twelve questions
Would your business pass a real tune-up?
You take the car to the mechanic even when it seems fine. Your business, almost never. Here you give it a tune-up: how many months of cash you have, how much your biggest client weighs, what your hour is really worth. I declare the thresholds up front, so you know when an answer is bad news. At the end you take away the weakest check, the number to move and the first move of the week.
The six checks
Six numbers tell you whether the business holds.
"How is work going?" "Fine, I guess." Generic questions produce comfortable answers, and comfortable answers are useless. Here every check has a number and a threshold, declared up front, with the sources at the bottom of the page. If you are below it, I tell you plainly. Better bad news today than a surprise at the end of the year.
Under 3 months is red alert. Between 3 and 6, the healthy minimum. Over 6, you breathe.
Over 25% the risk is established, over 40% the business is organized around him. Over 50% that is an employer, without the protections.
Zero recurring means starting from scratch every month. A single contract that covers the base costs changes the nature of everything else.
The rule: open deals worth at least 3 times the target for the period, because on average you close one in three. If you close fewer, you need more.
Revenue divided by all the hours, including sales and admin. People who work alone bill 50-60% of their time on average: the real rate is often half the declared one.
If revenue drops you have a job, not an asset: businesses that depend on the owner are worth 30 to 50% less when they sell.
Cards on the table: this is a tune-up, not a due diligence. The thresholds are declared, the sources sit at the bottom of the page and the numbers come from you. For certified ones there is your accountant. It is the same check-up I open Decision Lab with, built on more than ten years of operations and on the 5D Method. It tells you where to look first, and that alone changes a lot.
The tune-up
Answer with the real numbers, not with hopes.
Nobody reads your answers, so cheating pays little. The only one who loses is you. If you don't know a number, pick "I don't know": that is an answer too, and it says a lot.
The tune-up
Here is the weakest check.
A move without a day and a time stays a good intention, and we all know good intentions. Choose when you'll do it and write down the excuse that might stop you. Deciding now costs little. At the right moment it is worth everything.
How to read the scores: from 8 to 10 the check breathes, from 5 to 7 it needs fixing, from 2 to 4 it is an alarm.
If the business is less than a year old, red marks on deals and recurring revenue are normal: read them as a list of things to build, not as a crisis.
That was the appetizer.
The full check-up, with your real numbers on the table, is the first phase of Decision Lab. There I don't leave you alone with the diagnosis: it stays you and me until the business walks in the right direction. First the data, then the direction, then the decisions. It is the 5D Method applied to your case. See how Decision Lab works.
Prefer to start slower? Let's have a thirty-minute coffee: bring me your scores and we read them together, no strings attached.
Done with the tune-up?
Let's reread it together.
30 minutes, free, over a virtual coffee. You tell me your scores and we think through the first move, no strings attached and no sales script. In English, Italian or German.
The sources
Where the thresholds come from.
- Cash reserve: the reserve of 3 to 6 months of costs is the standard recommendation for small businesses, you find it for example in the guides by SCORE. And the JPMorgan Chase Institute measured that the median small business holds 27 days of reserve: the 3-month threshold is already ambitious, and that is exactly why it matters.
- Client concentration: the 25, 40 and 50% thresholds I calibrated myself for a business of one, where revenue depends on a single person. People who do due diligence for a living are even stricter: in the materials by Wall Street Prep a single client above 10% of revenue is already a red flag, and the Corporate Finance Institute also looks at the top five clients together, with attention already above 25% and serious risk above 50%.
- Billable hours: people who work alone bill 50-60% of their time on average, consulting firms aim for 70-80. Above 85% the benchmarks speak of burnout risk, not efficiency: there is no room left to sell, learn, breathe. The numbers are in the utilization benchmarks by Runn.
- Deal coverage (in sales jargon: pipeline): the rule of open deals worth at least 3 times the target for the period is established practice in managing sales teams, calibrated on a close rate of one deal in three. If your rate is lower, the threshold goes up.
- Dependence on the owner: the 30 to 50% discount on the value of businesses that don't walk without their founder is documented by the people who buy and sell them, M&A advisors and brokers first. The Exit Planning Institute adds the hardest fact: only 2 or 3 out of 10 companies brought to market find a buyer, and owner dependence is among the top causes.
One honest thing: this remains a tune-up, not a due diligence. The thresholds are declared and the numbers come from you. Before decisions that weigh, redo the math with your accountant. The rest comes from more than ten years in operations, where my job is spotting quickly where a system loses pieces, and from the 5D Method. First the data, then the direction, then the decisions.
No email to leave, no PDF held hostage: the tune-up is yours and so is the result. If it helped, have a look at the English home, browse the book Stay or Leave?, or the full site in Italian, and we can talk over a coffee.