Good to Great: How Securing Your Business’ Future Can Skyrocket Its Value
The following article was provided by Whittlesey. It is posted here with permission.
As a business owner, it’s natural to take pride in past successes and achievements.
However, the value of your business relies heavily on its future potential, which is why your company’s potential for growth and development is one of the most critical factors determining its value in the eyes of investors and potential buyers.
In today’s rapidly evolving business landscape, companies must stay ahead of the curve and continually innovate to remain competitive.
Investors and buyers are acutely aware of this fact and place a premium on businesses that demonstrate a strong track record of growth and potential for future success.
One of the primary ways that potential acquirers evaluate a company’s growth potential is by examining its revenue per employee.
This metric measures the amount of revenue generated by each employee and is a good indicator of the efficiency and scalability of a business.
For instance, Alphabet (Google’s parent company) generates an impressive $1.3 million in revenue per employee, while the advertising agency WPP Group generates only $100,000 per employee.
This stark contrast highlights the importance of building a lean and efficient team that can generate maximum revenue with minimal resources.
Beyond revenue per employee, many other factors influence a company’s potential for growth and success.
These include market conditions, industry trends, and the overall economic climate.
Adapt and Overcome
Businesses that can adapt to changing circumstances and anticipate future challenges are more likely to thrive in the long run.
Consider the example of Skyward, a company that developed software for managing drone traffic.
Founded in 2012 by Jonathan Evans, a former air ambulance helicopter pilot, Skyward quickly gained traction in industries such as construction, media, and utilities.
Recognizing the potential for growth in the industrial drone market, Verizon acquired Skyward to expand its data services and position itself as a leader in the emerging drone industry.
Investors in Skyward enjoyed returns of up to five times their original investment, highlighting the value of a business with strong growth potential.
Ultimately, the future of your business is critical to its overall value. Whether you’re looking to attract investors, sell your business, or simply maintain a competitive edge in your industry, you must focus on innovation, adaptability, and scalability to ensure long-term success.
By staying ahead of the curve and anticipating future challenges, you can build a company poised for growth and success in the years to come.
About the author: Brian Kerrigan is the head of advisory services at Whittlesey. In addition to his two decades of big four firm experience, he has provided consulting services for large public and privately held companies throughout New England. He specializes in strategies to grow the value of his clients’ companies and maximize the sales price on exit has extensive experience with mergers and acquisitions of both private and publicly held companies.
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