ASSESSMENT QUESTIONS: POST 2 & CASE STUDY 2 Three Taboos and Jennifer’s $18M Wake-Up Call
MULTIPLE CHOICE QUESTIONS
1. What is “founder’s myopia” according to the post? A) A physical condition affecting business owners B) The inability to see your business objectively due to emotional attachment C) Making too many long-term strategic decisions D) Focusing too much on competitors
2. Which of these is NOT one of the three taboos discussed in the post? A) “My business is different” B) “Industry multiples tell the story” C) “Growth solves all problems” D) “Buyers will see the potential”
3. In the manufacturing company example, why was the “revolutionary proprietary process” worthless? A) The technology was outdated B) Competitors had similar processes C) Only three people in the world understood it, and documentation was in the owner’s head D) The patents had expired
4. What was Jennifer Chang’s initial expected business value for Precision Diagnostics? A) $8 million B) $12 million C) $16.8 million D) $20 million
5. What was Jennifer’s actual preliminary valuation from the broker? A) $2.8 million B) $6.4 million C) $12.5 million D) $16.8 million
6. How many hospital clients did Jennifer have initially, and what percentage of revenue came from her top 5 clients? A) 47 clients, 67% from top 5 B) 134 clients, 31% from top 5 C) 67 clients, 45% from top 5 D) 89 clients, 52% from top 5
7. What did Jennifer do to make her “different” innovation transferable? A) Patented all her processes B) Hired more technicians C) Documented her rapid testing protocol with 200 hours of work, video libraries, and training programs D) Sold the technology to a larger company
8. How long was Jennifer’s sabbatical that proved operational independence? A) 4 weeks B) 8 weeks C) 12 weeks D) 16 weeks
9. What was Jennifer’s final sale price after the 18-month transformation? A) $8.6 million B) $12.4 million C) $16.8 million D) $19.8 million
10. What was the percentage increase in Jennifer’s business value through her transformation? A) 250% B) 407% C) 607% D) 812%
EXPLANATION QUESTIONS
Answer each question in 3-5 sentences, demonstrating your understanding of the concepts.
1. Explain Taboo #1: “My business is different” and why this belief can actually destroy value rather than create it.
2. What is the critical distinction between “being different” and creating transferable value? Use examples to illustrate.
3. Explain Taboo #2: “Industry multiples tell the story.” Why is the average person having “one eye and one ear” analogy appropriate here?
4. Describe the fundamental difference between the restaurant owner in the post who expected 3x revenue and the chain restaurants that actually achieved that multiple.
5. Explain Taboo #3: “Buyers will see the potential” and why unrealized potential represents risk to buyers rather than opportunity.
6. What are the four manifestations of founder’s myopia described in the post? Explain how each prevents objective business assessment.
7. Why is the distinction between strategic buyers and financial buyers critical? What should business owners do with this knowledge?
8. Walk through Jennifer’s transformation in the case study. What were the three main taboos she broke and how did she break each one?
9. Jennifer’s revenue only grew 11% ($8.2M to $9.1M) but her business value increased 607%. Explain how this was possible and what it demonstrates about value creation.
10. The post states “being irreplaceable as a business owner is a liability, not an asset.” Explain this counterintuitive statement and provide evidence from the case study.
SOLUTIONS
