Not All $ Are the Same

One of the many indicators of an organization's scaling efforts is an increase in revenue.

"Obviously, Whitman..."

The thing is, not all dollars are the same.

Two firms can add $100 million to their revenue in a fiscal year and yet one of them can be much better positioned for long-term growth and sustainability than the other.

And although both firms may produce similar revenue, one could be valued significantly higher.

How can that be? Because some dollars are more profitable than others and some dollars will be stronger indicators of future growth.

As I look to scale organizations and support them on their growth journey, more important than the dollars themselves is WHERE the dollars are coming from.

So, if you want to scale your organization in an intentional, sustainable way that will lead to outsized results for years to come, it's important to understand why all dollars aren't the same—and which ones to prioritize.

Two Types of Dollars

For simplicity, I believe dollars that enter an organization come in two forms:

1. Strategy Aligned Dollars

2. Non-Strategy Aligned Dollars

If you've been around my thinking and belief systems for any length of time you'll know that I believe all roads lead to and from strategy—so you can likely guess which dollars I believe are more valuable (and profitable) to an organization...

The thing is, most leaders treat all the dollars the same.

"Money is money. Let's increase the bottom line any way we can."

It's a shortsighted belief that often limits an organization's upside and ability to scale.

For example, let's say it's the end of the fiscal year and revenue needs a bump to reach growth projections.

So, you decide to start taking on any project that will contribute revenue. You start accepting work outside of your typical client base and maybe that work is outside of the strategic direction of the company.

"But it's still dollars!"

Sure... but here's the thing:

When all dollars are treated the same, your organization likely isn't:

• Building sustainable practices (engines)

• Building scale in an intentional way

• Increasing the valuation of the organization

• Creating synergies or leverage across different business units

Investing time into a one-off project may bring in more revenue in the short term, but you've now missed the opportunity to build effective systems and automation into your core markets or sectors.

You might have made a dollar in the short term, but is it repeatable?

And if so, will repeating the efforts it took to earn that dollar be useful to you in the future? And just because you made a dollar, what did it take to make it? Is that dollar as profitable as others could be?

These questions matter.

By treating all dollars the same, you are ignoring the strategic value of money and limiting your ability to grow and scale.

The Strategic Value of Money

Of course, all money has the same monetary value to it. A dollar is a dollar.

But not all money has the same strategic value. That's what we're talking about in this newsletter.

Money that aligns with and supports strategy has a greater value to an organization (and outside investors) than money that doesn't support strategy.

Why? Because it allows you to continue building scale.

If the revenue you are bringing in is helping you to continue to build scale, increase efficiency, generate the next deal, increase your relevance in a sector or industry, etc...that is more valuable to the organization than revenue generated from activities not aligned to strategy.

If the revenue you are bringing in is at a more profitable rate than other areas of your business, that is more valuable to the organization.

When revenue is generated from opportunities that move the organization forward in alignment with strategy, that is the most valuable form of revenue any organization can generate.

And when that process is identified, repeated, and exploited, that's where real, meaningful scale is built.

Take Action

As an action item this week, I encourage you to set aside time to take a meaningful look at your business (market, sector, book of business, etc.) and assess the types of dollars you are bringing in.

Start with last quarter's revenue.

Instead of looking at your balance sheet and treating all sources of revenue the same, start assessing the strategic value of the different sources of revenue.

Did that revenue source align with your overall strategy?

Did that revenue source help you accomplish something intentional that will allow you to build scale?

Did that revenue source take you one step closer to achieving a strategic objective related to your vision?

If the answer is yes, those are the opportunities you should continue to exploit. How can you double down on those sources of revenue?

By continuing to focus on those opportunities, you are likely to scale at a faster rate.

If the answer is no, then that source of revenue produced dollars in the short term, but don't become overly fixated on it in the future. This is your chance to shift focus toward opportunities that will produce long-term benefits beyond the short-term revenue.

Scale is built on intentional investments of time and resources to the things that will make the most impact.

If this is a conversation that intrigues you, I welcome the opportunity to chat about any friction points you are experiencing and identify opportunities to further your organization's growth.

You can use the link below to book a call.

With intention,
Alan D Whitman