How much value did you add today? – Mark MacLeod

June 14, 2022 - Mark MacLeod

How much value did you add today?

I work with a CEO whose company has daily targets for enterprise value created.

I love this for two reasons:

1. I believe that speed is both the primary strategy and primary tactic for a high growth company. All else being equal, getting somewhere faster tends to be more valuable. Every day counts! Especially when you are burning capital.

2. In order to synthesize your entire business down to a daily EV formula you need a clear understanding of how your business works and how value is created. You must understand how investors will value your business. Again – a great perspective to have if you are burning money and will need to raise more in the future.

Perhaps most importantly, a truly effective daily EV added measure will help you instrument the business so you can identify which functions (and people) are and are not adding value. This is how you run a business in a systematic and scalable way: with a full understanding of how to create enterprise value and plenty of measures so you know if you are on track or not.

While l believe this is a great way to run a business at all times, it is particularly useful in a downturn for two reasons:

1. It creates greater executional discipline and accountability. You can do more with less. You will waste less of your precious funding.

2. In a world of changing/declining valuations, you can simply plug the new valuation multiples into your EV model and know what targets you need to hit to be able to raise more money. You then can plot a daily path to achieve those targets.

Questions to consider:

Am I clear on exactly how enterprise value is created in my company? What do investors value? Strategic buyers?

Do our management systems & KPIs reflect these drivers of value?

Can we brake down HOW enterprise value is created and reflect that in daily targets?

If we had daily targets that directly impact how we create value, what impact will this have on our business?

Photo by Stephen Dawson on Unsplash

Your journey is never done

Sign up to my newsletter and join an inspired community of leaders who realize that the journey to achieving their full potential is never done.

    If you’re curious about my coaching and deal work you can learn more here.

    back to blog

    Latest Blog Feed

    All employee departures should matter

    In the rush to create shareholder value, raise more capital, get to an exit, break even – or whatever the next milestone is for your business, we often get de-sensitized to what is happening – both to ourselves and our […]

    read more

    Sometimes you don’t need an investment bank

    Back when I was an investment banker, I joked regularly that bankers have a well-deserved bad reputation. The fact is, most bankers are useless. Especially in the mid-market (where most VC and PE funded companies are). They charge far too […]

    read more

    Be a time Diva

    OG supermodel Linda Evangelista famously once said “I don’t get out of bed for less than $ 10,000“. She said this many years ago, when $10K was worth a lot more than it is today. At the risk of turning […]

    read more

    Contact

    Email : me@markmacleod.me

    Follow me:

    Mark MacLeod ICF Member

    Send Me A Message