In our Four Pillars series we explore the foundational concepts of the Birthing of Giants Fellowship program. These are the main ideas behind the strategies and tools we use that are proven to guide companies through fast growth – transforming small companies into big ones, and their leaders into GIANTS. Have you ever wondered why some companies seem blessed with success, while others (maybe even yours) struggle to find the talent and capital flow that drives wealth? The truth is, they may have made it look easy, but those companies struggled too (a fine reason why getting entrepreneurs together in one room is so instrumental to their success). But there are a few “secrets” to the vast wealth that some companies generate – tools that help to mitigate risk, attract talent, and build the kind of strong foundation that leads to vast wealth. Here’s one. Enterprise Value Amplification It sounds very complex, but enterprise value amplification, our first pillar, can be summed up in one easy phrase: Build your company to sell, even if you have no plans to. Unpacking that pithy phrase admittedly is where the complexity begins. According to Norm Brodsky, serial entrepreneur and a member of our Board of Experts, it means implementing best practices and taking no shortcuts as you grow your company.
“You should build [your company] as if you were going to have it forever and yet, at the same time, build it so that you could sell it tomorrow for as much money as possible, even if you don’t intend to.” – Norm Brodsky
We agree, and tailor breakdown and analysis specifically for fast growth companies who want to continue their growth. You determine the value of your company, and then find ways to amplify it. To give you an idea of what that’s like, consider how you’d answer these questions:
- What’s your company’s valuation and EBITDA today?
- If you sold today, would your personal payout be enough to fund your lifestyle forever?
- How do factors like your current revenue streams and gross margins affect the volatility of your revenue?
- How are you positioned in the company as its leader? Do you spend most of your time working ON your business or IN it?
Adding Value Beyond Just Dollars When you know your numbers, the weak spots in your business operations, and what you want your business to look like in 3 years (5 years, 10 years), you can build your company in ways that constantly add value to it. By added value we mean more than just dollars. Enterprise value amplification encompasses more than just increasing revenue. It’s also about:
- Creating wealth for you, your stakeholders (more on that in a future post) and beyond
- Staying engaged and in love with your business for the life of your time there as leader
- Building a company positioned to outdo itself every year and scale to the stratosphere
“To survive this phase [of transition from a small company to a big one] in a company’s life cycle, entrepreneurs must step away from the day-to-day and subject their businesses to a rigorous, objective analysis.” – Doug Tatum, No Man’s Land
Many companies (too many) don’t survive the transition from small to giant, and we think that’s a shame when there’s a toolbox of proven strategies that entrepreneurs can use to effectively conquer their company’s challenges and build the company of their dreams.