# The Value-Driver Scorecard

Eight things decide what a buyer pays, and none of them is how hard you worked. A buyer reads the business as a stranger will run it after you are gone: how much it needs you, how much of the revenue repeats next month, whether the books tie out. The gap between the number in your head and the number a buyer says out loud is almost always sitting in these eight drivers. Score each one honestly here, then raise the weak ones before you take a meeting.

This page is the qualitative read: what each driver is, how a buyer reads it, and the one move that raises it. The scored version, with a readiness percent, is `sale-readiness-scorecard.xlsx` in this same folder. The actual sale price is not on this page and is not something you compute for yourself. Get that from the free Keystone diagnostic; this is general education, not a valuation of your business.

> Independence is one problem with two payoffs: more freedom now, and a higher price at sale.

## Why the drivers, not the effort

Two businesses with the same $300,000 in owner earnings can sell for very different numbers. Published market ranges (a decade of BizBuySell Insight Reports and IBBA Market Pulse, calibrated against roughly 1.6 million SBA 7(a) loan records) show owner-dependent businesses changing hands near 1.65 times SDE and owner-light ones near 3.5 times, which on $300,000 of SDE is a swing of about $555,000. That range is what the market reports across many deals, not a valuation of your business, and no per-industry table lives on this page. The point is not the exact multiple: it is that the same earnings are worth far more when these eight drivers are strong, and that gap is the work this kit does.

## The eight drivers, and where a 5 sits

| # | Driver | What a buyer is reading | A 1 (marked down) | A 5 (paid up) |
|---|---|---|---|---|
| 1 | Owner dependence | If you leave, does it break | Nothing runs without you | Runs 2 weeks with your phone off |
| 2 | Recurring revenue | How much arrives without re-selling | Every dollar is a fresh bid | Contracts and plans carry the base |
| 3 | Customer concentration | Does one account hold you hostage | One customer is over 30% | No customer over about 20% |
| 4 | Margin quality | Healthy and steady, not one lucky year | Margins swing or trail the trade | Gross and net hold across 3 years |
| 5 | Documented systems | Can a stranger run it from paper | It is all in your head | The core work is in SOPs |
| 6 | Clean financials | Do the books tie out to the tax returns | Commingled, surprises in diligence | 3 years clean and add-back-ready |
| 7 | Growth trend | Is revenue climbing, with a reason | Flat, jagged, or a spike with no story | A steady line a buyer can underwrite |
| 8 | A real team | Does a team run the work, or do you | You are the only manager | A manager and crew run the day |

## The read on each driver, and the move

**1. Owner dependence.** This is the single biggest lever on price, so start here, and a buyer is asking one question: if the owner is gone, what breaks. If the answer is "the pricing, the key accounts, the schedule, and the training," a buyer discounts hard, because they are buying a job, not a business. The move is the 90-day plan in this kit (`owner-dependence-reduction-plan.md`): pull your top 3 interruptions off your desk and prove the business runs 2 weeks without you.

**2. Recurring and repeatable revenue.** A buyer separates the revenue that arrives next month on its own from the revenue you have to win again from a standing start. A service business at 40% recurring reads far safer than one at 5%, because the buyer can see the floor. The move is to convert one-off customers to maintenance agreements and named repeat accounts, one segment at a time, and to show the recurring share as a number.

**3. Customer concentration.** A buyer checks whether any one customer, employee, or supplier can hold the business hostage, what a broker calls the Switzerland structure. When a single account runs past about 30% of revenue, the price tends to come down, because losing that account after the sale is the buyer's nightmare. The move is to grow the base and cap the biggest account's share, so no customer sits above roughly 20% by the time you sell.

**4. Margin quality and stability.** A buyer reads gross and net margin across 3 years, not one good quarter, and compares them to the trade. Margins that swing or trail the market read as a pricing or job-costing problem the buyer will pay less for. The move lives in the financial-control work: know your gross margin per job, fix the pricing that leaks, and show 3 years where the margin holds or climbs.

**5. Documented, transferable systems.** A buyer is asking whether a new owner can run the core work from what is written down, or whether it walks out the door with you. If the process is in your head, that is a discount. The move is to write the 5 SOPs that cover roughly 80% of the work, name a role (not a person) as each one's owner, and keep them where the work happens.

**6. Clean, reviewed financials.** A buyer and their lender read the books to see if they tie out and match the tax returns. Commingled personal and business spending, cash-basis surprises, and accounts that do not reconcile all cost you in diligence, sometimes the whole deal. The move is the `clean-books-checklist.md` in this kit, run with your CPA, so 3 years of statements are clean and add-back-ready before anyone asks.

**7. Growth trend.** A buyer wants revenue climbing over 2 to 3 years with a reason behind it they can underwrite. Flat or jagged revenue, or a one-year spike with no story, reads as risk. The move is to show the trend and its driver plainly: even a steady 6 to 8% a year with a clear cause beats a jagged line that doubled once and fell back.

**8. A real team and management layer.** A buyer checks whether a team runs the work or whether the owner is the operations. A business with a manager and a crew that run the day without you survives the handover, which is worth paying for. The move is the manager layer from the owner-light work: name a manager, hand them the weekly standup and an authority matrix, and let the business run on roles that outlast any one person.

## What to do with this

Score the eight drivers in `sale-readiness-scorecard.xlsx` (1 to 5 each), and read the two lowest rows marked Highest or High priority first. Nine times out of ten those are owner dependence and documented systems, and both start with the same 90-day plan. Do the work, re-score in a quarter, and watch the readiness percent climb.

The number itself, your estimated sale price and your three scores, is not on this page by design. Get it free at https://app.trykeystone.io: 18 questions, three scores, and an estimated sale price in about four minutes. This scorecard is general business education, not a valuation and not accounting, tax, or legal advice. For an actual sale, work with a licensed business broker, CPA, and attorney who know your market.
