Build business value by examining margins, risks and investment.

01

Distinguish revenue, profitability and cash flow

Sales growth may require more staff, inventory or equipment. Examine what remains after necessary costs and investments, and how long it takes to convert revenue into cash.

Understanding results also means separating exceptional events from performance that can reasonably continue. There is no universal revenue multiple to apply to every business.

Ref. [1], [2]

02

Understand the quality of customer relationships

Recurrence, retention and revenue concentration can affect perceived risk. A strong relationship with one customer differs from a diversified portfolio. Contracts, their duration and their conditions deserve appropriate examination.

• How much revenue depends on a small number of customers?
• Why do customers stay, and how do we know?
• What changes could weaken those relationships?

Ref. [1], [2]

03

Examine people-related dependencies

If knowledge, decisions and relationships are concentrated with the owner, continuity needs examination. Clarifying responsibilities and documenting processes can make the organization more understandable and less dependent on one person.

This work should reflect the team’s skills and needs. It is more than writing a manual.

Ref. [1], [2]

04

Account for future investment needs

Equipment, systems, maintenance and skills support delivery. Deferring useful spending can improve a short-term result while creating future requirements. A plan should make these trade-offs and the resources needed explicit.

Ref. [1], [2]

05

Assign actions and track operating results

Choose the drivers relevant to your business, then assign a responsible person and a progress measure to each. Distinguish an observable operating change from an estimate of its effect on value.

Value Creation Plan connects these priorities with execution. Value Baseline can provide a reference point within an agreed scope; no increase in value is guaranteed.