There are a handful of numbers and other metrics that will help you know if your business is headed in the right direction - toward sustainable, transferable profitability. The KPIs you need and the ones your competitors are probably ignoring are what drive profitability and business value - the two ways your business can, by design, reward you financially and allow you to make your desired impact in the world.
Enterprise Value Assessment (EVA)
If KPIs are the compass you use to know if you’re on the right track, then an Enterprise Value Assessment (EVA) lets you accurately draw the map you use to get to your destination. To really know what’s driving value creation and sustainably profitable growth for your business you need to add an EVA to your annual planning.
Right now, your annual plan demonstrates how you’ve decided to allocate resources to improve year-over-year performance with an emphasis on financial outcomes. The EVA will turn your annual plan into a value acceleration roadmap that ensures you won’t sacrifice long-term value for short-term, short-lived financial gains. An EVA will tell you whether you have a
- Profit Gap: Is your profit below that of your peers? Beating your previous profit goals is great but what if you are still less profitable compared to your best-in-class competitors? How much money are you leaving on the table and why?
- Value Gap: What tangible and intangible factors are impacting your ability to get a top valuation? If your best-in-class peers at the same level of sales are getting 2, 3, or 4 times higher multiplies than you would if you went to market, then what changes do you have to make to close that gap?
- Wealth Gap: Can your business help you reach your wealth goal, i.e. the amount of money you have decided you need to live a life you love regardless of whether you work? Chances are you’ve sunk lots of money back into your business over the years figuring that investment will eventually pay off and reward you for your sacrifices. Based on your current valuation and profitability will that day ever come?
The EVA will also give you new insight into your personal readiness for a future transition and inform a reasonable timeline for improving your business’ readiness based on its strengths and weaknesses and the prioritization of value driving activities.
For example, if you’re EVA reveals that your valuation is being dragged down by high owner dependence then the KPIs you monitor might now include
- Capacity utilization rates to measure how efficiently operations are running without bottlenecks that only you can resolve.
- Employee satisfaction surveys to monitor how intentional career pathing and successor development plans are impacting morale, productivity, and retention.
- Customer satisfaction feedback to determine how successful employees are at building strong relationships with customers without direct involvement from you in the marketing, sales, or fulfillment processes.
- Profitability per job, product, or project to demonstrate the team’s ability to drive profitability under non-owner leadership.
- Waste and rework metrics to demonstrate how well staff are trained to and comply with standard operating procedures.
- Successor readiness to assess how prepared the business is to maintain optimal operations in the event of a planned or unplanned change in leadership.
Annual planning with EVA
Adding an EVA to your annual planning process can be done without adding significant time for preparation and the results will add richness and depth to the conversations and analysis you’re already engaged in as part of your annual planning process.
The EVA starts with you completing two short, one-page assessments of business attractiveness and personal readiness. While you complete those surveys, we
- Do a financial recast using a trailing 12-month P&L report to determine your real vs. tax number
- Determine the Range of Multiples for your industry
- Use your Assessment data to plot your company on the Range of Multiples
- Use industry benchmarks to test your financial forecasting and determine whether you have a Profit and/or Value Gap
- Identify which factors are driving value and the areas where value acceleration strategies can yield the most benefit
- Work with you to determine if you have a Wealth Gap and how best to align your personal, business, and financial goals into a comprehensive Value Acceleration Plan
From there we typically engage your leadership team to present the EVA findings and Value Acceleration recommendations. Then we support the integration of this information into your annual growth plan - in strategies, tactics, and KPIs - that can integrate into your current business operating system (like EOS or Growth OS) or through our Value Acceleration accountability framework. The result is a plan that protects the value you’ve already created and focuses on high-value growth activities that get you the most out of your business on your personal timeline.
Ready to add an EVA to your 2026 planning process?
