Growth vs. Value: Not All Revenue is Equal
As you plan to grow your business in the year ahead, consider where your growth will come from—will you be selling more to your existing customers or finding new ones for your current products and services? This choice can have a major impact on the future of your business.
A recent analysis of over 5,000 businesses revealed that companies growing at 20% or more were valued significantly higher (received higher offers) compared to their slower-growing counterparts. However, the businesses with the greatest success were those that had carved out a unique niche, providing something their competitors couldn’t easily replicate. These businesses stood out by offering products or services that made them indispensable in the market.
The Power of Focusing on Your Niche
Growing too quickly by offering a wide range of products and services can dilute your business. It’s easy to fall into the trap of trying to meet every customer need, but this often leads to inefficiencies and a lack of focus. Instead, businesses that concentrate on what they do best—focusing on their niche—are typically more resilient and competitive.
By staying true to your core offerings, you can streamline operations, reduce waste, and ensure that your team stays focused on delivering quality. A strong niche also gives you a clearer value proposition, which helps you stand out to customers. In the long run, narrowing your focus allows you to build a reputation for excellence in a specific area, making your business more valuable and easier to scale.
Balancing Short-term Profit with Long-term Value
While it might be tempting to avoid investments in areas like technology or staffing to maximise short-term profit, these are often the very things that drive long-term business improvement. Investing in your core strengths—whether through innovation or strategic hiring—can position your business for sustainable growth.
To see how your business performs in key areas of improvement, consider taking our Value Builder survey. It provides a benchmark for how you compare across essential drivers of growth and value.
If you have any questions about this article or would like to speak to one of our advisors about how you can improve the value of your business, please do not hesitate to contact us or call our office on (08) 6212 7200.
