Despite prospects for stronger economic growth in 2015, many low mid-market companies are still recovering from the recession. Usually focused on year-over-year top line growth, owners should recognize that not all revenue is equal. Revenue can be the cheapest form of capital but not if it comes with hidden risks, precludes the potential of new technologies, fails to inspire needed talent to join the company or prevents locking in recurring revenue commitments. Getting the operating engine running efficiently is as important as chasing revenue for revenue’s sake.
Data from more than two thousand companies shows that many are still struggling with the operational effectiveness necessary for sustained growth in enterprise value. Note that 84% of companies are capturing less than 70% of their potential.