NATURAL BARRIERS TO CREATING REAL VALUE IN YOUR BUSINESS

The most common measure for describing and assessing a business is annual revenue.  Plenty of business observers have identified revenue barriers that create significant challenges for businesses that are growing.  Typically these occur at $10, $25, $50 and $100 million.

As a metric, annual revenue describes the size of the business. Unfortunately, it tells us nothing about the quality of the business or the value that’s created. Is a company with $50 million in revenue worth twice as much as a company with $25 million in revenue?

Maybe it was in some industries during the first Internet boom of the late 1990s. But these days, company size doesn’t directly translate to company value. Poorly planned revenue growth can all too frequently destroy value; the business landscape is littered with big companies that have imploded from poorly planned growth.

CEO Skills Must Evolve as Companies Become Larger

As businesses become larger, CEOs and their executive teams have to master a wider range of skills if they’re going to continue building value as their revenue increases. Often these are unnatural skills that they have not developed in the past.  If a CEO does not master these skills they’ll struggle to create value in their expanding company.

Business gurus who preach about growth tend to focus on one mantra: Increase revenue to grow the top line. The passage to building revenue that increases quantifiable value is much narrower. It’s represented by what we call a Value Valve – the narrow and unobstructed passage that allows CEOs to build valuable revenue – value that is tangible and measurable.

Build Value During Growth Through Executive Development

To navigate their company through the Value Valves, CEOs must develop their executive team and guide them through all of the fundamental areas of business management, the areas that directly impact their value as they grow. Good CEOs have some of these areas covered; Professional CEOs have mastered them.