How Sales Growth Could Sabotage Your Successful Exit

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.