Getting an order feels great. Getting dozens or hundreds feels even
better. This is especially true if you
are a business owner who came up through the sales ranks. There is nothing more gratifying than
watching the dogs gobble up the dog food.
So how could selling more become too much of a good thing?
And how could sales growth sabotage your exit plans?
As your business grows, the top line is the headline. It is the most obvious measure of progress. Tracking sales growth is both easy, and very
satisfying. In fact, it can be addictive, especially if the product or service
is a one of your own creation.
And it drives the behavior of every employee, including
you. As the hunt for revenue accelerates,
you may devout hours to customer or marketing activities. And to fulfill all those customer orders, you
may dive deep into operations. And to
determine how all this activity will hit the bank account, you may sit
alongside your financial officer calculating and projecting future cash needs.
These are all legitimate activities, and in fact are the
signs of a dedicated, hardworking owner.
Your guidance in these areas makes the enterprise run more smoothly, but
it also means you are in a hands-on role.
As a conscientious operator, you
probably:
- Concentrate on: Sales and customers
- Measure success by: Revenue
- Worry about: Losing a sale
But are you just an operator? Of course not. You are the owner, the primary, if not sole
shareholder, of the business.
Time to Make a Shift
As you approach exit, you need to make a shift, because
focusing just on sales and operations could keep you from seeing what is really
important at exit: value.
The shift every owner needs to make is to view their
business as an investor. As a
shareholder, you should:- Concentrate on: Equity growth
- Measure success by: Return on investment and profitability
- Worry about: Risk and unpredictability
See the difference?
The operator list is sales-centric.
The shareholder list is value-centric.
Why Make the Shift?
Buyers are value-centric. If you are within 5 years of
exit, you need to begin thinking like a buyer, which means looking at your
company as an investment, not just a business which generates revenue.
If you don’t make this shift, you risk building just a
revenue stream, and not a enterprise investors want to own: an operation which produces profits, with minimal risk, year after year.
How to Make the Shift
Today
Draft a shareholder dashboard with key metrics you will
monitor in 2015 to gauge the progress of increasing value in your
investment. Trouble deciding? Start with the bottom line: profits.
Every public company measures earnings per share (EPS) as an indication
of value appreciation. As a shareholder,
this type of metric should be on your investment yardstick too.
An investor mindset versus just an operator mindset, will help
you manage, lead and make decisions differently. And as a shareholder, you will benefit
greatly from the results.
