Revenue Versus Value

A break-even year?! Norah studied the forecast I built and couldn’t believe it. She and her staff were working way too hard not to realize a profit!

As the owner of a communications training company, Norah has a long, proven track record of working with large companies in the retail, energy, and legal sectors.

That afternoon, as she studied the forecast, Norah talked about her fears around raising prices: that prospects would have sticker shock, and she would lose clients.

She thought her pricing was “fine” and in line with what the market would bear, but she hadn’t changed the structure or level of her pricing in over six years. Does this sound familiar?

The quickest and most effective way to generate more revenue is to raise your prices, as long as you don’t increase expenses. While Norah understood this intellectually, her fears were keeping her frozen in place.

Analyzing issues often provides comfort, and Norah agreed with this approach. We analyzed her current pricing structure and calculated the profitability of each client. Then we rolled up our sleeves and built a pricing model that was better aligned with the needs of her clients, how she helps her clients, and the real value she provides.

Once Norah could see this scary change as an opportunity, we developed a rollout strategy and communication plan for her updated pricing. We grandfathered (what I call grandmothered!) her current clients, giving them six months’ notice.

Norah was thrilled she didn’t lose any clients, and sales increased to make it the most profitable year in the history of her company. Three years later, we raised prices again, and she was actually excited to do so!

Generating more revenue with less stress gave her the freedom to make choices for herself and her staff and the power to create meaningful changes.

-- Excerpt from Patty’s book, Your Hidden Advantage: Unlock the Power to Attract Right-fit Clients and Boost Your Revenue

Today’s Question:

Business owners often think revenue levels are the main measure of business value, but there is so much more to building real business assets.

What business assets have you developed and optimized to build the value of your company?

But Here’s the Twist . . .

For expertise-based businesses, a potential buyer may put a high value on:

• Consistent, predictable revenue
• Long-term client relationships
• Intellectual property like trademarks and copyrights
• A strong management team
• Documented and effective business processes

The key word above is ‘may’. Since you don’t know who your potential buyer will be, you can’t know what they value most.

Believing the things you value will also be valued by an eventual buyer can be a huge pitfall.

For example, it’s a widely held belief that building an operations manual is valuable when you’re ready to sell. While an operations manual is extremely valuable in standardizing your business processes, streamlining staff training, and building trust with clients, your distant buyer may not care at all about your processes. They may be primarily interested in your client list and other business assets.

Now What?

Exit readiness is a strategic and ongoing process that involves setting the stage for a smooth transition, maximizing business value, and ensuring your legacy endures.

This foundational strategy is timeless and positioning your company for your exit will help you generate more revenue, streamline operations, and build real business value.

Women who have successfully exited their business have shared with me that the most successful way forward was having a trusted, knowledgeable business advisor who could be objective and caring.

That’s the role I fill, helping the owner with the practical, emotional, confidential, and logistical puzzles that plague the exit process.

You're not just selling a company; you're transitioning a piece of your identity. Your business is an embodiment of your passion, hard work, and aspirations.

That’s why it’s crucial to have a dynamic roadmap, which is the first step to an Elegant Exit™. Your exit can lead to wealth if you choose to sell your company, but what brought you here won’t get you there.

An Elegant Exit™ requires a new way of thinking, new skills, a simple and elegant design, and an advocate on your side. Contact me to learn more. 

Discover your Exit Readiness Index™ with this assessment: http://she-exits.com/