Hidden Value Killers: Part 1 Study Questions

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POST 1 COMPREHENSION QUIZ

The Hidden Value Killers Destroying Your Business Exit

Part 1 of 3: Where Value Is Found Series

Instructions: This quiz tests your understanding of the key concepts from Post 1. Complete all questions before checking the answer key at the end. For multiple choice questions, select the single best answer. For explanation questions, write 2-3 sentences demonstrating your understanding of the concept.

SECTION 1: MULTIPLE CHOICE QUESTIONS

Select the single best answer for each question.

Question 1: According to Post 1, where do most small business owners lose corporate value and marketability?

a) In marketing and sales strategies

b) In operational and technical execution

c) In administrative, financial, and corporate structure

d) In customer service and retention

Question 2: What critical role reversal must business owners make as their companies grow?

e) From seller to marketer

f) From operator to administrator

g) From generalist to specialist

h) From employee to entrepreneur

Question 3: In the case studies, Jimi Hendrix’s electrical contracting company had $840K EBITDA and sold for $2.3M (2.7x multiple). John Lee Hooker’s HVAC company had $820K EBITDA and sold for $6.7M (8.2x multiple). What explains the $4.4M difference in exit value?

i) John Lee had higher revenue and better client satisfaction

j) Jimi operated in a less profitable industry segment

k) John Lee built comprehensive structural foundations while Jimi focused only on operations

l) John Lee had more years in business and stronger brand recognition

Question 4: According to Post 1, what does Bill Gates stopping coding in the 1980s demonstrate?

m) Technical skills become obsolete quickly in technology

n) Successful founders must hire superior talent and step aside from operations

o) CEOs should focus exclusively on sales and marketing

p) Coding is less important than business strategy

Question 5: What is the primary reason buyers pay premium multiples for owner-independent businesses?

q) They have larger market share and better brand recognition

r) They generate higher revenue and profit margins

s) They offer predictability and reduced risk through documented, transferable systems

t) They have stronger relationships with key customers and suppliers

SECTION 2: EXPLANATION QUESTIONS

Answer each question in 2-3 complete sentences demonstrating your understanding of the concept.

Question 6: Explain why standardization is described as “the bridge between one-man shows and marketable enterprises.” What specific business functions does standardization create?

Question 7: Post 1 states: “If your intellectual property, operational knowledge, client lists, and contracts live only in your head or on one person’s laptop, you don’t own a business. You own a job.” Explain what this means and why it matters for business valuation.

Question 8: Describe the psychological trap that sabotages business value when owners “confuse control with competence.” How does this trap prevent owners from building transferable value?

Question 9: Using the case studies as examples, explain how Jimi Hendrix left $2.7M to $4.6M on the table despite having excellent operational performance. What specific structural deficiencies cost him this money?

Question 10: Post 1 emphasizes that “being replaceable isn’t a weakness. It’s an asset.” Explain this paradox and describe how John Lee Hooker proved his replaceability created value rather than destroying it.

ANSWER KEY

Check your answers against this key. For explanation questions, your answers should demonstrate similar understanding even if worded differently.

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