Category Archives: business strategy

Discussion on how to improve your business and take it to the next level

Exit Strategy – Right Time to Think About It is Now

exit strategy on door

There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction. – John F. Kennedy

They say that every business should be started with an exit strategy in mind. It applies to any kind of business, not just the laboratory businesses.

There may come a day when you may want to retire, or running the lab become very stressful, or your health isn’t what it used to be. Do you have an exit strategy for such a day?

Exit strategy could be having a succession plan – turning over your lab to a family member whom you have been mentoring, or selling the lab to an outside company, or selling within to your employees.

It is never too early or too late to start thinking about your exit strategy. After-all, you never know when you think you will need it. Kind of like a Will or an Insurance Policy. You never know when you will need it.

Real Life Stories

Recently, in the span of a few months, we were unfortunately involved in emergency sale / liquidation of two labs that had to be sold off at a significant discount.

Sometime ago, I received an email from a lab-owner that we should talk. We set up a time to talk and he described his situation, which was really sad. He told me that his young, two-year old lab was doing well, he had found some unique niches, and the business was growing by 25-30% a year and future looked great. He was thinking of hiring more people. And then he got shocking news from his doctor about a terminal disease. But he said he was still feeling good and he had at least some time – perhaps couple of years- to plan for the future.

We tossed around a few options. Since he was feeling well at the time, and the lab was still growing well, it seemed like it might be a good idea for him to take in a minority partner, train him or her, grow the business and when the time came, the partner would buy him out. This way, the business will grow in size and value, the partner would be ready to run it and he would get much better value for his lab. We decided to talk again in a few weeks. Next month I sent him an email and received a shock when I learnt from his wife that he was no more. I can never forget that email and the shock and disbelief that someone whom you spoke to was suddenly no more.

Well, life throws you such curve balls, and in these kinds of cases, there is not much we can do. I must say, that his wife, somewhat involved in the business, was very brave under the circumstances, and was fortunate that the lab did get bought by one of its customers. I still at times think of my conversation with the lab owner and what could have been.

Another incident happened more recently. A lab-owner became too sick to carry on and his business. His business was once spread across continents, with offices in Europe. But it had to be liquidated to salvage whatever little value one could get out of it. I am sure it must have broken his heart to see something that was so dear to his him, and his pride and joy, had to be almost given away – and even then, it was not that easy.

Time to Act is Now

So what can you do starting Today, so that when the time comes, you can hand over the baton to the next captain?

I think the number one thing that every one of the business owners should be thinking about is to increase the valuation of the business. Something you should be thinking about everyday you are at work. But how can you do that?

Well, I will leave that to the another post.

Thank you and so long till later!


Exit Planning

As we Exit 2016, Time to think of Exit Planning

Contrary to common belief, you have to start thinking of planning exiting your business several years in advance. And even if you do not want to exit the business for many years to come, we strongly advise business owners to think about exit planning.


One of the reasons you do this is to improve the way you run the business so that you can improve the value of your business. Even if you have no intention of selling, the steps that you take in running your business better have other benefits – It helps improve your cash flow, allows you to have more money in your pocket, and most importantly, it will give you more time for you and your family and decrease the stress of running the business.


Value Builder Platform identified eight factors that influence the value of the business. One of the important factors is that you do not run your business using “Hub and Spoke” model. This model is very common in the airline industry where all the flights of an airline converge at one hub before going to their destinations. Whereas there is value for this in the airline industry, many entrepreneurs, and small business owners run their businesses so that they become the “hub”. Everyone comes to them for advice and sign-offs and all decisions, big and small, are made by them. By promoting other people in your organization to take up most of these responsibilities and building a management team. you become less important and you have less stress and more time.

For more on how Value Builder Platform can help you run your business better, please visit this page and take a 13-minute survey to get your Free Value Builder score.

Here is to a less stressful and more productive 2017!

Talk to you soon.

Yatin B. Thakore


Your Company’s Worth

Do You know How Much Your Company is Worth?


We usually keep tab of money in the bank, how much our stocks, bonds, and other investments are worth and how much our home and real estate investments are worth. And we know how much debt we are in – either from a mortgage, student loans, car loans or other loans. We use these numbers to calculate our net worth, and it helps us build a nest egg for retirement. However, strangely, many entrepreneurs have no idea of how much their business might be worth. Your business could be one of the biggest assets that you may have. It is an investment of time, labor, and your financial investments. Shouldn’t you know the value of your business and try to protect and grow its value just like your other assets?

You can hire a valuation expert or an M&A advisor/business broker to get some idea about the value of your business, or you can run some back of the envelope type of calculations to get a rough idea based on your financial performance. Very often, for small businesses with gross revenues under $5 million, you will see that the value is often 2-3 times discretionary earnings (DE, also known as seller’s discretionary cash flow) or 2.5-4 times adjusted EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization). In many industries rules of thumb also calculate valuation based on a multiple of gross revenue (e.g. dentist practice is often said to be worth between 0.5-0.7 times revenue). However, for me,  cash flow, either as DE or EBITDA is a better measure because a substantial revenue without profits does not do much.

Couple for valuation

Couple for valuation

If you are like entrepreneurs shown in this cartoon, who can go on a world cruise for a year, then I would say that you have probably done well – both from profiting from your business and running the business. You have put your business on auto-pilot so that you have a management team who can run the business with minimum involvement from you. As a business owner, you want to take yourself out of a situation where the business cannot run without you. As we teach in our Value Builder advisory practice, this is one of the eight key drivers for driving the value of your business (see here for the other seven).


As 2017 is just around the corner, I hope you too will more attention to your business and see how you can grow your investment in it by taking small steps to build value. Our Value Builder score is a quick way to know in 13 minutes of where you are in terms of improving your valuation.

From all of us at, cheers for the new year!

Yatin Thakore


Don’t be a Juggler!


A common occurrence in many small businesses is that the owner makes all of the important decisions. After starting and building the business, owners are afraid to relinquish control. They do not feel that the others are capable of running the business like they can. So you are constantly juggling various tasks and making every decision.

This is what we describe in the Value Builder System as “Hub and Spoke” system. You as the owner are the Hub and everyone else is the spoke. This can also happen if you are not the owner but a manager where you are making all the decisions.

But what happens when you, the Hub, are away? Things don’t get done. And as a result you have a hard time to get away from work. You may not have taken a vacation in years.

Not only this is stressful to you, it is also very inefficient and demoralizing for your employees (or those who work under you). And more importantly, this will drag your value down value. Research by the Value-Builder team has shown that businesses following the Hub-and-Spoke model, where owners are in control of most of the decisions, sell on an average of 2.92 times their pre-tax profit. However, the businesses where the owner is not significantly involved in day to day operation and has management team and employees empowered to make decisions and running day-to day operations, sell on an average of 4.54 times the  pre-tax profit.

By making your business much less dependent on you, you can increase the value of your business by 55%! Not only that, you will have happier employees and less stress for you. You can now afford to take vacation.

But how do you do this? To start with, create operating manuals for your company. Write detailed procedures for everything that needs to be done. For each job function, you have a system or operating manual describing what needs to be done. Once you have these ready, train your employees to follow the processes and systems and give them the right tools. To quote Michael Gerber in E-Myth Revisited: “Organize around business functions, not people. Build systems within each business function. Let systems run the business and people run the systems. People come and go but the systems remain constant“. How does McDonald’s delivers the same burgers and same experience across thousands of outlets – they have the system and procedures nailed down.

Making yourself as a business owner (or manager) less important and having a system in place is just one of the eight value drivers that improves the overall valuation of your company. If you are curious about what is your score on this ValueBuilder scale, take this 13 minute survey.

So long for now.






Getting Your Business Ready to Sell


Whereas most of you might have had experience selling your home, you may not have had an experience in selling a business.

Whether you are selling a home or your business, your goals are the same: Sell it quickly and get the best price. To do this, in the case of your home, typically you want to clean up the home, remove all clutter, fix up things that are broken, and stage it to look attractive.

In some ways, selling a business involves similar things – fix areas that may need fixing, keep clean books and easy to understand financials, and make sure that the business runs smoothly and your place of business looks attractive and presentable.

But in contrast to selling a home,  making a business sellable and being able to get top dollars, often can take a year or several years of preparation. The best strategy is to run the business so that it can  be easily sold even if you are not planning to sell it. This will only make your business stronger and more profitable, easier to run,  and if it becomes necessary for you to sell your business, you are prepared.

So what makes your business attractive to buyers? What we see from our experience is that the buyers are in general looking for following qualities:

  1. Healthy Business.  Most of the buyers are looking for a business that is healthy, making money, and can provide for good income for them. Exceptions are start-up businesses which have good potential for a strategic buyer, or someone who loves a challenge of turning a business around and is looking to buy such a business for cheap. (Somewhat similar to home buyers who are looking for move-in ready homes versus fixer-uppers). Most of the time, we find that it is very hard to find buyers who want to buy a business making little or no money. The value of the business also improves significantly if it generates healthy profits.
  2. Business is on Auto-Pilot. Which means that there is an excellent management team in place, with good processes and standard operating procedures. It requires very little input of the owner in day to day running of the business. This also increases the value of the business significantly because the buyer does not have to bring in expensive management team.
  3. “Sticky” Customers. Customers are heart and soul of the business and nothing pleases a buyer more than to see that these customers are ‘sticky’ and ideally are  tied to the business via long-term contracts, providing consistent revenues every year.  Getting new customers is not easy – one of the main reason people buy a business rather than starting from scratch. Sticky customers will improve the value of your business.
  4. Diversified Customer Base. Buying a business where a high percentage of business is dependent on a few customers is risky for the buyer. If that customer leaves, the business will suffer. Ideally, no single customer should be responsible for more than 5-10% of the revenue, unless that customer does have a long-term contract.
  5. Happy and Competent Employees and Management Team. If the employees have a high morale and management team is doing a great job, the transition to the new owner becomes seamless.
  6. No Legal Issues.  No one wants this headache.
  7. Clean Financials. Buyers don’t like “fuzzy” financials and mingling of personal and business expenses. Keep your books clean. Whereas some personal finances are easier to explain (e.g. certain management perks such as car allowances, Life insurance payments), others cannot be and you will unnecessarily create distrust for the buyer. You maybe save some on taxes, but lose out on the value and attractiveness of your company.
  8. Keep it Lean and Trim. Always try and curtail unnecessary or extravagant expenses and keep your margins high. This does not mean paying too little to your employees or not giving them good benefits (these are short term savings that does not help you long-term), but it does mean investing in tools and processes that help you run your business efficiently, improving productivity, focusing on the profitable segments of your business and cutting down on frivolous expenses.
  9. Stand-out from your Competition. Buyers would love a business that is somewhat different. This could be due to some unique technology or product, could be from particular branding, or could be from niche business focus. A stand-out business would attract strategic buyers and almost certainly bring you good value.
  10. Business Reputation. Finally, does your business enjoy a good reputaion in the marketplace? Are your customers happy or fanatic about your service? Are employees talking good things about your company? Is there any regulatory or legal trouble? Buyers would love such businesses.

Knowing what most buyers are looking for will help you make your company more attractive to buyers and also will help you get top dollar for your business.

You can also read an excellent book by John Warrillow, called Built To Sell. He also runs very interesting podcasts on the subject. Another great book, that emphasizes “Work on your business and not in your business”, called E-Myth Revisited by Michael Gerber is also a classic, that is a great read, and will help you run the business smoother and in turn make is more sellable.

Coming up  next … How much is my business worth?

So Long Friends,


Are You Ready to Receive ‘Divine’ Help?



How did we end up in this business and why did we choose a few niche marketplaces – laboratories, imaging centers / medical businesses and IT? We are often asked this question from our clients, customers, and prospects.

I wish we could say that it was part of our well thought out strategy, but in reality it was was a combination of serendipity and in terms of start-up lingo, ‘pivoting’ or course-correcting, to take advantage of new opportunities.

Years ago, I read the book called The Alchemist – an international best-seller by Paulo Coelho of Brazil. Although, the book is a fiction, I thought it provided some of the most interesting business lessons. Its central themes has always resonated with me. One of the message is that when you want something bad enough, the universe conspires in helping you achieve it. And it also goes on to illustrate how the hero in the book, Santiago, gets a number of signals or dreams guiding him.

I personally have experienced many situations where some voice has guided me or helped me – whether it is an intuition, a dream, an inner voice or just a seemingly unlikely coincidence which solved some intractable problems. And I have spoken to many people who seem to have had similar experiences.

In Alchemist, our hero also has these dreams or signals, which provided a guidance or help, seemingly out of no-where. And the message is to accept such help that will allow you to reach your goal.

You should be open enough to receive these signals and courageous enough to act on these signals, even if it may need you to change your course.

In my case, as a research scientist for a start-up, we were trying to solve a particularly tricky problem of getting pure plasma out of a drop of blood using a membrane ( a super-fine filter). At the time, in the early 1990s, this was a big deal. and no-one except one large company was able to do this. They used glass fibers and the process was patented. It worked but not particularly well. If we succeeded, this could allow a large number of other blood tests to use a simple way to extract plasma for a quick 1 or 2 minute tests.

As a lead scientist, I had probably tried every type of membrane that I could lay my hands on and nothing worked. However, the way things were going, I was confident that somehow we will solve it as there was a feeling within me that this was destined to succeed. One day, I was sitting in my lab, kind of stuck, thinking of what else I could do. And then the “signal” came. Someone came to the lab and delivered me a small fed-ex package containing some other type of membranes from that I had ordered a while ago. I had forgotten all about it since I had ordered so many. It was nitrocellulose membrane from a company called Gelman. Thinking that I had nothing to lose by trying out this membrane, I quickly put it over my test strip and put a drop of blood and I could not believe it – within a second, I got pure plasma coming out on the other side. I was amazed as I had tried similar nitrocellulose membranes from other companies and they did not work! So we thought we had the problem solved!

But what happened next was even more amazing. We soon were running out of this membrane and we ordered some more from the same company. But when we got it, we found that this time, these new membranes, which were from a different manufacturing lot, did not work. So we ordered several different lots. It turned out that only the first lot from this company worked!

In other words, I was just lucky enough to get the right lot from this company at the right time. If I would have gotten a sample from one of the the “bad” lots, I might have easily given up! We eventually figured out how to convert the “bad” lots of this company’s membranes into good lots. We went to file patents and license this technology.

But it just proves to me that often there is a “divine” intervention. I wanted this to work badly, and the universe intervened to make it happen for me.

And over the years, there have been a number of situations where when I or when our company was stuck, there was always some event, or signal or guidance, that helped us at the crucial moments. Or when there was a fork in the road, somehow we had a guidance of which road to take.

I have spoken to a number of people who have had similar experiences. In fact there are dozens of inventions and ideas (including nobel prize winning ideas), that originally came to the inventors or creators in dreams. Example include, the sewing machine, discovery of benzene, and many more. And I think that is one reason The Alchemist has resonated with so many people and sold over 65 million copies in 56 languages.

Even Steve Jobs, in his famous Stanford University commencement address of 2005 talked about connecting the dots : “So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

For me the book represents – If you want something badly enough, work very hard to achieve your goal, have faith that you will succeed, and when help appears out of nowhere, whether it is in a concrete form or through intuition, dream or a signal, be ready to accept and act on it.

So long friends.


Time to Tune-up Your Business

spark plug

time to tune up

New year is a good time to take stock of your business. Like your car, business needs periodic tune-ups to make it run smoothly.

Car needs oil change to reduce friction and wear and tear on the engine, new spark plugs for for it to accelerate smoothly, and replacing worn out parts  so that it will not break down on you and leave you stranded. Your business deserves the same care.


Here are some quick thoughts on tuning up your business this year:

Streamline Your Processes and Systems (Oil Change)

Every business has systems and processes – in how you handle new and existing customers, how you handle your products and services, manage your people, etc. In a young, growing, organization, these constantly change. Dig deeper into your  systems, talk to your people who use these systems and see if you can change some of the steps or processes to make these more efficient. Identify a few flaws in your system and fix some of the easier ones right away. This will help your company run smoothly.

For example, in our company, to keep track of our inquiries and status of each inquiry, we have switched to a master spreadsheet which tracks new inquiries and their progress. This master spreadsheet as a google doc, accessible to all of the relevant staff members – so everyone sees the same copy, and can make edits. This now allows us to see the progress on each project and makes us more efficient.

Accelerate Your Growth (Change Your Spark Plugs)

When you look at increasing value of your business, nothing beats the bottom line – revenues and profits. Always think of how you can push the business. This could be offering more products or services, improving or upgrading your products or services, gaining more customers by better sales and marketing or a combination of all of these. Or it could be acquiring another company to gain new products or market share.

For example, in our company we are implementing a few changes this year. A simple thing is just making the whole process more efficient – from the time we get the listing to the time we put it to market and the way we approach prospects and follow up with them. And trying to Another thing we have already started doing is offering our customers additional products and services by expanding our marketplace. We have already invested in software that will allow us to offer directory and classified services as well as way to sell their own products or services. Over a period of time, we see this as an important extension of our marketplace.

Make Your Business Sturdier (Replace Worn out Parts)

Just like you don’t want to be stranded somewhere because the car won’t start due to an old battery or broken fan-belt, you certainly do not want to be to have your business suffer due to breakdown in your critical systems or equipment.  Time to examine your critical systems and see if  you need to invest in new equipment, software or hardware and how to ensure that your business will not suffer down-time.

One of the important steps that we have undertaken is to put all of our important documents and data in the cloud. We use ShareFile , Dropox, Mailchimp and Evernote software so that our whole team has access to the important files from anywhere in the world. We also use cloud-based email systems (Google appliance) and use software as a service whenever possible (for example for accounting and tax, ) so that we always have access to these services. We are also going to invest in a smart scanner such as Fujitsu that can digitize and file all your documents and has an ability to take different sizes of papers and scan them very fast.

You can think of what your business needs and upgrade or replace the critical systems that you cannot afford to be without.

Vacation – Prescription for Getting Unstuck

view from room_jamaica_2014xmas

Magnificent Jamaica – Ocho RIos Jewel’s Dunn River Resort


Are you feeling stuck in your business or career? If you feel that your life is a never-ending ride in a Ferris Wheel, looking at the same scenery, then vacation maybe your perfect prescription. Even if you are happy and moving ahead in your work, a good vacation may help you reach the next level.

Think you are too busy to take time off? Think again. If our President of the USA can find some time to take off for couple of vacations in a year, surely you can too. It is just how you look at it. Think of vacation as not running away from work. But think of it as time for a tune-up and for recharging your batteries. You will come back with a fresh dose of enthusiasm, and ideas that will energize you.

And vacation does not have to be expensive. If you cannot afford an expensive trip, you can go to a soothing place nearby or even have a ‘staycation’. You may stay at home but do something different. If you can afford it, however, then perhaps go to a different country, experience a different culture. You will learn something new from that culture and gain a broader perspective. About a week or so maybe enough for you to get re-energized.
I truly feel that in order to develop the big ideas, you have to step out from your conventional settings and get away from the daily routine. This is why many companies have their meeting in retreats.

We have a tradition now of taking a family vacation in December during Christmas Break. It allows us to connect together as a family and talk to our twin sons (who are now in college) without distractions from their friends and our work and do things together as a family. It allows me to reflect on the year, see what excites me and my colleagues, and what new initiatives and projects we should be doing in the coming year, and what we can learn from our past mistakes.

More Importantly, it allows me time to read a lot of different books and learn from other people’s experiences.

This Christmas vacation, we spent a few days in Jamaica. Spending the time by the Ocean and enjoying company of my family and the hospitality of the resort and the Jamaican people was invigorating.

But I also spent quite a bit of time reading a number of books which were both inspirational and provided practical tips on how I can improve myself and my business.

I am happy with the progress we have achieved last year in our business, excited about new possibilities in the coming year and can hardly wait for implementing our new ideas this coming year. I wish all of you the very best for 2015 and urge all of you to make vacations and time off as important tools in your arsenal on how to take your business or career to the next level.

Build or Buy – That is the Question!

carpenter toosWhen you are looking to get into the laboratory business – should you go out and try and buy a lab or should you build it from scratch? Well it depends.

It depends a lot on the type of lab (whether it is in highly regulated industry, such as a clinical lab and where someone else, such as insurance companies decide on what you can charge), whether you can find the type of lab that you are looking for in your preferred geographic area, and last but not the least, your own personality, skill sets and knowledge.

Case for Buying a Lab

More buyers seem to prefer going this route as it seems like a safer route to take. Particularly, if you are not experienced in this industry. For a healthy laboratory, you avoid the steep learning curve, you get a business that is generating a positive cash flow from day one. You inherit a working system and a trained staff. You also are more likely to get a loan from the bank to fund your dreams. You can bring your own skills and capabilities to grow the company. As they say, it is much easier to make the second million than the first million.

And in some industries, it may be perhaps the only preferred choice. For clinical labs in certain states such as NY, it takes 12-18 months or longer to get CLIA-accreditation. and in certain states, small independent labs have a hard time getting accepted by the insurance companies. It would make sense than to buy an existing lab with CLIA-accreditation and existing insurance contracts if such  a lab was available.

But expect to pay a price for this – the labs are typically (but not always), valued by a multiple of EBITDA. EBITDA is a metric defined as Earnings before Interest, Taxes, Depreciation and Amortization. We’ll discuss lab valuation in an upcoming post, but expect to pay about 3-5x of EBITDA for a healthy lab. So if an EBITDA for a lab is say $300K, expect to pay on an average about $1.2 million.  Can you afford it? Is it worth the price? Are you better off building on your own? Exception to this maybe if you find a good lab which is doing poorly but you see great potential in it and are confident that you can turn it around. Such “turn-around” labs can sometimes be had at a bargain.

 Case for Building Your Lab

If you (or someone in your team) is great at sales and marketing, have rich contacts in your industry, and are confident that you can bring the business to your new lab, or you are buying a lab for internal research, perhaps you should build your own lab (as long as regulatory hurdles are not too high). The advantages include cost savings (you could save as much as 50-75% over buying a healthy lab), you can have it at a location you prefer, equip it as you want it, and build your own culture in your business. And if you are unsure about how to go about setting one up, there are companies and consultants who can help you set it up.


Buy a lab if:

a. You are looking for a “turn-key” lab with ready cash-flow and which may perhaps need only a few tweaks

b. Regulatory and insurance constraints makes this a much more practical solution

c. You are flexible as to the exact location

d. You are looking to grow your market share via acquisitions

 Build a lab if: 

a. You can bring in business or have captive internal business

b. Want to work on a shoestring budget without taking in a lot of debt

c. Want to have it on your terms – building your own culture, your preferred location, and choosing your own equipment

d. You enjoy creating business from scratch

e. You can survive for some time without an income or salary