When there’s a discussion or list of small business value drivers, rarely is growth mentioned as a value driver. But growth is an important driver because it shows the business has implemented and capitalized on the other drivers.
Growth can be mysterious, just look at what happened during and after the pandemic. Covid or not, a sudden one- or two-year acceleration of growth usually (or should) brings out the question, “Is it a spike or a trend?” It’s a tricky one because it:
- Affects the price when a business is selling.
- Can play havoc with planning, managing inventory, hiring, etc.
- May alter the structure of any buy-sell deal
The buy-sell aspect comes down to the buyer’s feelings about what drove the accelerated growth and if he or she can capitalize on it.
The uncertainness causes stress. A client recently shared about his consternation because of massive shifts in material costs (up and down), the fear of not wanting to run short of finished goods, and how to adjust pricing with all the price changes.
Recent times have been confusing given all the covid head and tail winds. Controlled and manageable growth truly leads to increased value.
“Action speaks louder than words, but not nearly as often.” Mark Twain