Evaluating a Business: Big Rocks First

By: Kris Fuehr, Paulson Exchange

When you evaluate a business to buy, you don’t have to know everything about it at once. Richard Branson once said he mainly focuses on three measurements to monitor his business:

  1. Butts in seats – or whatever your equivalent for “sales/consumption of capacity”

  2. Customer loyalty and satisfaction

  3. Employee satisfaction

Everything else will just be details that can be ironed out.

As Steven Covey famously said, “The Big Rocks are your most important, so put them first. That way, you make the less important things (gravel) fight their way in.”

Apply this concept to your business evaluation. Your FIRST step is to understand DEAL-BREAKERS. What could KILL your business? What isn’t SUSTAINABLE? Then, determine the details of the expenses to ensure that overruns can be identified.

Below are some examples of LESS effective ways of evaluating a business. This comes from an exchange I had with one prospective buyer after I sent him the P&L for a business. Can you distinguish the big rocks from the pebbles?

“Thanks for the info. I have a few questions: How many estimators in the business? Do they also function as Project Managers? What is the role of the owner in the business? Was the large expense of entertainment the Christmas party? Costs of sales are high. Is there other ways to decrease this? Would they have a current Work in Progress report? What makes up the balance of the office staff? Do they have a breakdown of business by revenue – eg. government contracts vs industrial vs retail/commercial? “

There are some important questions in here, but the Christmas party probably wasn’t a huge priority in this early stage of evaluation.

One effect the All-at-Once approach has is that it discourages you from nearly every business you look at and the whole transaction becomes intimidating or you may walk away from a great opportunity.

Keep a realistic view of what’s important and what’s just sand and pebbles so you keep your eye on what really is going to lead to success or failure in your business.

13 thoughts on “Evaluating a Business: Big Rocks First”

  1. PG SLOT, the most attractive online slots game that is number one in the slot game industry in Thailand Which is very popular among the slot players in Thailand. PGSLOT consumes up to 70% of the slot game market percentage from all slot players in Thailand, which the new PG slots website is hot like COOKIESLOT of We are another website that takes care of and provides a full range of PG slot game camps. You can be confident that your PG slots game will never be the same again. Support for mobile slot games, including a full-featured slot play application fome123

  2. I was extremely pleased to discover this page. I want to to thank you for ones time due to this wonderful read!! I definitely appreciated every part of it and I have you bookmarked to look at new information on your web site.

  3. I don’t need to tell you how important it is to optimize every step in your SEO pipeline. But unfortunately, it’s nearly impossible to cut out time or money when it comes to getting good content. At least that’s what I thought until I came across Article Forge… Built by a team of AI researchers from MIT, Carnegie Mellon, Harvard, Article Forge is an artificial intelligence (AI) powered content writer that uses deep learning models to write entire articles about any topic in less than 60 seconds. Their team trained AI models on millions of articles to teach Article Forge how to draw connections between topics so that each article it writes is relevant, interesting and useful. All their hard work means you just enter a few keywords and Article Forge will write a complete article from scratch making sure every thought flows naturally into the next, resulting in readable, high quality, and unique content. Put simply, this is a secret weapon for anyone who needs content. I get how impossible that sounds so you need to see how Article Forge writes a complete article in less than 60 seconds! order here.

  4. Im excited to discover this web site. I need to to thank you for ones time for this wonderful read!! I definitely savored every bit of it and I have you bookmarked to look at new information in your web site.

Leave a Comment