There are a handful of numbers and other metrics that will help you know if your business is headed in the right direction - toward sustainable, transferable profitability. The KPIs you need and the ones your competitors are probably ignoring are what drive profitability and business value - the two ways your business can, by design, reward you financially and allow you to make your desired impact in the world. 

Enterprise Value Assessment (EVA)

If KPIs are the compass you use to know if you’re on the right track, then an Enterprise Value Assessment (EVA) lets you accurately draw the map you use to get to your destination. To really know what’s driving value creation and sustainably profitable growth for your business you need to add an EVA to your annual planning. 

Right now, your annual plan demonstrates how you’ve decided to allocate resources to improve year-over-year performance with an emphasis on financial outcomes. The EVA will turn your annual plan into a value acceleration roadmap that ensures you won’t sacrifice long-term value for short-term, short-lived financial gains. An EVA will tell you whether you have a 

• Profit Gap: Is your profit below that of your peers? Beating your previous profit goals is great but what if you are still less profitable compared to your best-in-class competitors? How much money are you leaving on the table and why?
• Value Gap: What tangible and intangible factors are impacting your ability to get a top valuation? If your best-in-class peers at the same level of sales are getting 2, 3, or 4 times higher multiplies than you would if you went to market, then what changes do you have to make to close that gap?
• Wealth Gap: Can your business help you reach your wealth goal, i.e. the amount of money you have decided you need to live a life you love regardless of whether you work? Chances are you’ve sunk lots of money back into your business over the years figuring that investment will eventually pay off and reward you for your sacrifices. Based on your current valuation and profitability will that day ever come?

The EVA will also give you new insight into your personal readiness for a future transition and inform a reasonable timeline for improving your business’ readiness based on its strengths and weaknesses and the prioritization of value driving activities. 

For example, if you’re EVA reveals that your valuation is being dragged down by high owner dependence then the KPIs you monitor might now include 

• Capacity utilization rates to measure how efficiently operations are running without bottlenecks that only you can resolve.
• Employee satisfaction surveys to monitor how intentional career pathing and successor development plans are impacting morale, productivity, and retention.
• Customer satisfaction feedback to determine how successful employees are at building strong relationships with customers without direct involvement from you in the marketing, sales, or fulfillment processes.
• Profitability per job, product, or project to demonstrate the team’s ability to drive profitability under non-owner leadership. 
• Waste and rework metrics to demonstrate how well staff are trained to and comply with standard operating procedures. 
• Successor readiness to assess how prepared the business is to maintain optimal operations in the event of a planned or unplanned change in leadership.

Annual planning with EVA

Adding an EVA to your annual planning process can be done without adding significant time for preparation and the results will add richness and depth to the conversations and analysis you’re already engaged in as part of your annual planning process. 

The EVA starts with you completing two short, one-page assessments of business attractiveness and personal readiness. While you complete those surveys, we 

• Do a financial recast using a trailing 12-month P&L report to determine your real vs. tax number 
• Determine the Range of Multiples for your industry 
• Use your Assessment data to plot your company on the Range of Multiples
• Use industry benchmarks to test your financial forecasting and determine whether you have a Profit and/or Value Gap
• Identify which factors are driving value and the areas where value acceleration strategies can yield the most benefit 
• Work with you to determine if you have a Wealth Gap and how best to align your personal, business, and financial goals into a comprehensive Value Acceleration Plan 

From there we typically engage your leadership team to present the EVA findings and Value Acceleration recommendations. Then we support the integration of this information into your annual growth plan - in strategies, tactics, and KPIs - that can integrate into your current business operating system (like EOS or Growth OS) or through our Value Acceleration accountability framework. The result is a plan that protects the value you’ve already created and focuses on high-value growth activities that get you the most out of your business on your personal timeline. 

Ready to add an EVA to your 2026 planning process? 

Back in February, Dr. Donna Marino and I hosted a LinkedIn Live conversation about the how myths, personal beliefs, and emotions play a significant role in family succession planning.

That conversation became the inspiration for an article we co-authored for Family Business Magazine in which we talk about the need for frequent, candid conversations and the important role trusted advisors play in helping families navigate the complex and often complicated landscape where family relationships and business continuity collide.

My family business

My personal experience with family business succession planning is one of unspoken expectations, avoidance, and a distinct lack of planning. Despite having years during a long illness to talk with me and my siblings, as well as his own brothers, about the current state of the business and what might happen when he was gone, my dad stayed silent on the matter. It wasn't until he died that we found out he left the business to one of his brothers and that my uncle was only willing to accept the bequest if we (his nieces and nephews) used my dad's life insurance to pay off the debt.

What followed was months of conversations about "this is what your father would have wanted" and coming to terms with how my uncle's feelings of entitlement and being 'owed' something collided with the reality that my dad's business was not financially viable and the things my uncle had done to help my dad 'run' the business during his illness prolonged the inevitable need to cease operations.

In hindsight, one might say that my siblings and I could've started the conversations my father wanted to avoid. I even thought that myself - that I had failed to push the issue and force the conversation. Realistically though, as I approached my 40th birthday I was still my dad's child. I knew he would shut down and shut me out if I brought up things he didn't want to talk about or deal with. I knew I couldn't force him to do anything. And I didn't want to fight with him. He wanted to avoid the reality of his illness, his mortality, and a failing business, as well as the emotions and expectations of his children and siblings, so we didn't talk about it. Frankly, no matter how many times I rehearsed my opening line and talking points, when the time came I could never bring myself to address the situation directly.

That saddens me because it meant he dealt with a lot of financial worry by himself when he didn't need to, and he left a lot for us to deal with in his absence. It also saddens me because I know our family's experience is more of the rule than the exception. But it doesn't have to be that way.

"One of the things we often miss in succession planning is that it should be gradual and thoughtful with lots of sharing of information and knowledge and perspective, so it's almost a non-event when it happens." Anne M. Mulcahy, Family Enterprise Foundation

Collaborate and communicate

To be clear, I didn't know how to start these conversations with my family and we didn't have someone like me or Donna Marino to help us figure it out. When it's you and your family, old habits, communication patterns, and decades of relationship baggage make it hard to do this work alone. In fact, it may be an unreasonable expectation. I know first-hand that it's not enough to know what you should do. You need someone who has the experience and emotional distance to initiate and facilitate some of the hardest conversations you may ever have.

With that in mind, I suggest the following for those who want to become more intentional about their relationship to their family business, explore what a 'good' transition might look like, and engage an advisor to help you talk about tough topics and make important decisions.

If you're the business owner:

• Host family meetings to talk about the business and its future.
• Ask your children and other family members whether they want to be involved in the business and in what capacity.
• Ask yourself which family members you think are well-suited to be part of the business and in what capacity.
• Talk with family about how long and in what capacity you want to continue working in the business.
• Discuss what the business means to you and your family, and how you want to use the business to convey and preserve your values in the next generation.
• Meet with potential successors to acknowledge and discuss their readiness and willingness to work toward taking on new roles and responsibilities. Acknowledge knowledge and skill gaps and co-create plans to support their learning and preparation.
• Don't let old hurts, misunderstandings, disappointments, or assumptions go unaddressed - seek resolution to find common ground to move forward.
• Be candid about your fears and worries, as well as your hopes and aspirations.
• Act with and from love.

If your the family member:

• Share your interest in talking about the about the business and its future with the owner.
• Ask yourself whether you want to be involved in the business and in what capacity.
• Reflect on your readiness and willingness to work toward taking on new roles and responsibilities. Acknowledge knowledge and skill gaps and propose a plan for how you will prepare to take on more responsibility.
• Share what the business means to you and what you're committed to doing to preserve it's legacy and values for the next generation.
• Express your interest early and clearly.
• Don't let old hurts, misunderstandings, disappointments, or assumptions go unaddressed - seek resolution to find common ground to move forward.
• Be candid about your fears and worries, as well as your hopes and aspirations.
• Act with and from love.

For more information about how Purpose First Advisors can help you and your family plan for the future, visit our strategic business advisors page or schedule a free consultation.

Sometimes the people who can get you to really think about what's next - how long you want to keep working, what will happen if you suddenly can't work, how much you want to work, what selling could look like - are spouses, children, and employees.

Who in your life wants to know - deserves to know - what your succession plans are?

Even if you're scared, overwhelmed, or intimidated by the prospect of things changing, might the concerns and need for clarity from people you care about be the encouragement you need to prioritize finding someone to talk with about business exits, leadership transitions, and ways to preserve your legacy?

The questions my client's employees were asking her about the future combined with her growing desire to work less got her to make the call.

“I thought I’d work forever and forever is now,” is what she said when I asked her what had changed, and why she was reaching out to talk about selling her business.

She took a sip of her coffee and said, “I’m well past retirement age, my employees want to know what my timeline looks like, and I don’t want to work this hard anymore. At the same time, I’m trying to cut back on my hours but I keep going to the office. I’m freaked out about what I’ll do when I’m not working but also tired and ready to work less.”

“This all makes sense and almost every business owner I talk to can’t imagine not working. Frankly, I’m really glad your employees have been bugging you for a plan and you’re ready to talk.”

“Yeah, it's time. I’d like to start slow, maybe with an with an emergency succession plan and go from there.”

I smiled and said, “That’s a great place to start. That process will open up your thinking about how you run your business, what you might want to keep doing while you scale back your hours, and what legal documents and internal processes you need in place to ensure business continuity in the event you become incapacitated (or fly off for an extended Tahitian vacation.)"

“Oh, I’m the only one who writes proposals, does invoicing, does the banking - there's a lot of things that no one else does,” she said.

I exclaimed, “I know! That’s why your employees want to know what the plan is and I want to help you train them to do these things so a potential buyer will be confident that the business can run profitability without you.”

She smiled, lowered her head and raised her eyes, “I get it. I’ve just never had to train anyone on the things I do and so many little details and nuances live in my head.”

“Yeah, " I said “and it means that you’ve built a $3m business with one hand tied behind your back.”

"My job is to help you think about what will make your business most attractive to potential buyers and create as many of those conditions as possible. High owner dependence makes your business less valuable. So does a lack of standard operating procedures and cross-training.”

I went on to say, “For you to work less, others need to work more or we need to hire other people to take on different roles. You need to train them and let them practice doing new things. You need to teach them all the things you do instinctively that make this business successful.”

She leaned forward and said, “I do have one person I’ve been showing how to do some things and she might even be interested in buying the business.” she said. “It’s important to me to help her do that when we’re both ready.”

I smiled and said, “That’s so good to know. What a wonderful thing to work toward!

I made a note and explained, “that means it’s also important for you to start making financial decisions based on demonstrating consistent, reliable cash flow. If your employee eventually needs a bank loan to make this deal work the bank will want to see the numbers that tell them the business can service the debt.”

“Fortunately, we have time to document, train on, and delegate your responsibilities before we go to market. And we have time to get your financial documents in order in anticipation of due diligence and an underwriting process.”

With a sigh and a smile she said, "It's a good thing I’m not ready to be ‘done, done’ tomorrow. This sounds like a lot of work!”

“It is.” I put down my pen and said, “which is why it's always best to run your business to be exit ready and transferrable regardless of whether you are ready to or interested in selling. Now the most important thing is to get started and make these changes."

“Let’s get focused. I’m ready to do it,” she said, sitting up a little straighter in her chair.

Getting focused helped this owner increase revenue 34% and profit 137% YOY, update her estate plan, review her wealth management strategies, create an emergency succession plan, identify a prospective buyer, and set an asking price 40% higher than initially anticipated.

Even if you think you’re going to work forever, you might change your mind. Let’s talk about integrating succession planning and value acceleration strategies into your annual growth plan to position your business to be as appealing as possible to potential heirs or buyers. That gives you more business exit and transition choices whenever you decide to change your role in the business or sell.