Most entrepreneurs believe that bigger is better and bigger creates value. They believe more revenue will solve all problems. That is not the case. More revenue and “bigger” businesses lead to bigger problems and exacerbate underlying business model issues.
When I wrote Breakout Valuation, the goal was to empower you to optimize your business to achieve a life-changing valuation. So, spoiler alert: when we discuss value drivers, growing revenue is not one of them! Rather, the key to success is intentionally designing and strategizing all aspects of the business to be a valuable asset to its owners. In today's business landscape, optimization is critical to achieving breakout valuation. Breakout Valuation is getting people to see the future potential of your business and give you substantial credit for that vision because the vision is fortified with optimized designs.
Entrepreneurs are typically good at managing the day-to-day operations of their businesses, but they often fail to step back and intentionally work on building value in their businesses. The rare few who do manage to step back and optimize their business are the ones who achieve Breakout Valuation.
The goal of optimization is to create a valuable asset that can be sold for a high valuation. When designing your business, keep optimization in mind and focus on the value drivers that will increase the worth of your business.
Focus on other areas that are essential to your business's success and avoid those that are distracting from building value. That focus will help you understand that chasing more “revenue” is likely not the optimal answer for your business today.
What are your views on the drivers of valuation? Share your thoughts in the comments or ping me directly at: patrick (at) hillcapitalcorp (dot) com