Strategy & Competition
The 5 Bridges of Scaling Enterprise Value
How an owner-run business becomes worth more by defending six cash flows in turn, each to a stricter buyer, across the five crossings between them.
The Bridge from Traction to SDE
How a business that is still a story becomes one owner's earnings a stranger would pay for, what moves its value on the way, and who should stop there.
Customer Spread
Why earnings carried by a few relationships are priced as earnings that can leave with the seller, and the customer list, contracts and two-year history that show a buyer the year will repeat.
Demand Engine
Why growth in a small business is worth nothing to a buyer until it is evidenced, the four records that evidence it, and what each one tells a lender about the future.
Forecast Model
Why a buyer who models will build its own forecast unless the seller's reproduces the history, reaches cash and survives review, and why the value the model's cash flows produce should govern, with the market multiple kept beside it as a test of the price.
From Cash Flow Available for Debt Service to Debt Capacity
Why a lender sizes debt on the bad year instead of the expected one, why a business should borrow less than it is offered, and how a forecast with an honest downside, a facility tested with more than one lender and a structure that keeps funding growth set how much debt the cash flow should carry.
From First Revenue to Gross Profit
Why making sales does not yet show that a business makes money on them, and how pricing, cost capture and evidence of demand turn revenue into gross profit a buyer will believe and expect to grow.
From NOPAT to Free Cash Flow to the Firm
Why the last span of the third bridge is about the business's future, and how a budget with a record, a model that reproduces its own history and a register of what reinvestment earned turn a seller's forecast into one a buyer will start from.
From Traction to First Revenue
Why the first measure on the first bridge is revenue in a narrow sense, cash from customers a buyer can trace and believe, and the two pieces of work that produce it.
Growth Capacity
Why the first casualty of debt is usually growth, why that makes it the most expensive mistake on the bridge, and how a reinvestment plan funded below debt service, baskets that let it run without asking, an undrawn line sized to the downside and a record of growth continued keep a borrowing business growing.
Levered Forecast
Why a credit committee sizes debt on the stressed case and builds its own if the business does not, and how a thirty-six-month forecast with a downside fixed in advance, a record of hitting it and a stated rate policy let the business's own evidence set the size of the debt.
Margin of Safety
Why an owner paid from profit still needs to know how much room the profit leaves and which lines produce it, and the rule that keeps the draw from outrunning the business that pays it.
Paying Customers
Why the first customers a buyer will believe in are strangers who paid full price, and how a young business wins them in a way that can be repeated and proven years later.
Pricing
Why the most valuable piece of work in a young business is usually the price sheet, how a price built from cost differs from one copied from a competitor, and what keeps a good price from eroding.
Reinvestment Return
Why growth is worth paying for only where the cash reinvested to produce it earns more than it costs, and how a register of every growth project, a measured return and a forecast whose growth is derived from them turn a seller's growth rate into one a buyer will credit.
Relationship Transfer
Why revenue that runs on the owner's handshake is priced as revenue that leaves with the seller, and how contracts in the company's name, a new working contact and a review of change-of-control clauses move it to the company.
Retained Growth
Why a payout that grows because last year's did is a promise nobody has priced, and how a stated growth stance, the return on retained cash reported against the owners' required return, and a written year for growth to settle let a yield buyer capitalize growth the business has actually earned.
Sales Engine
Why a buyer assumes growth stops the day the owner leaves unless a sales function shows otherwise, and the five records, from customer cohorts to a quota hit without the owner, that let growth be priced.
Traction
What a business with a product and a few customers but no settled earnings is worth, why that value is a bet and not growth, and the low bar a business clears to start the first bridge.
What Adjusted EBITDA Is Worth
What a business that earns the same with nobody indispensable in it is worth to a buyer who will not run it, why the same cash flow is worth more to that buyer, and how the valuation keeps the multiple from deciding the answer.
What Free Cash Flow to the Firm Is Worth
What a business whose cash is measured and whose future can be forecast is worth to a buyer who models rather than multiplies, why the discounted cash flow governs here for the first time, and how the file keeps the rate, the growth and the price from deciding one another.
What SDE Is Worth
What one owner's earnings are worth to the next owner, why a multiple of SDE is a price and not a value, and why many businesses at this anchor are worth little more than what it would cost to rebuild them.
Business Model & Business Plan
Business plans and business models are two terms that are often used interchangeably, but they are actually quite different.
Business Strategy
Every business, large or small, exists in a competitive market.
KPIs & OKRs
How do you know if you are staying on target or if you have drifted off course?
Mission, Vision, Values, & USP
A business needs to have a clear sense of purpose if it is to succeed.
Preparation for Growth: Sell or Scale
When your business is running smoothly, you have an important decision to make: whether to sell the business or scale it up.
Sales Management System
In business, everything starts with sales.
Strategic Marketing System
Marketing is an essential part of any business.