We’re doing something different this week.
Today, we’re diving into a real-life case study that showcases how transformative a valuation can be in steering a struggling business toward exponential growth. This story, shared by one of our xCFO partners, underscores the power of clear metrics and strategic focus in rewriting a company’s trajectory. For confidentiality, the identities of the client and our partner have been anonymized.
Enter the xCFO.. |
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Back in 2022, we took on a new client who was restructuring their business in the midst of the greatest struggle his company had ever been through. After being in operation for 5 years they had lost 90% of their revenue in a very short space of time. The reasons were multifaceted, but the impact was singular: the business was in survival mode. Margins had been slashed, the owner stopped taking a salary, and they had cancelled the business lease to try and survive. When we did the valuation, to assess the damage and understand where the business stood, the result came out at a total equity value of $250,000. As an xCFO, our role was to look strategically at this valuation and identify how we could help rebuild this company to its former glory. After some digging, some of the critical vulnerabilities we identified included the following: |
The business was completely dependent on the owner, rather than on a set of systems and processes. There was significant client concentration risk (as evidenced by the sudden 90% revenue drop). Many of the existing contracts were short-term in nature, casting doubt on how sustainable that revenue actually was. The business was struggling with cash flow due to the payment terms on their overheads and on their debt collection. They were stuck in the weeds, and not using analysis or forecasting to plan a vision for the company into the future. |
These issues, while acute in this case, are emblematic of challenges faced by many small and medium-sized enterprises transitioning from owner-led startups to mature, scalable organizations. The valuation shone a spotlight on these vulnerabilities, creating a framework for change. Over the next three years, we worked alongside the owner to professionalize his business and transform the way it was operating. |
We improved reporting workflow so that he had better information at his disposal. Introduced systems to reduce reliance on him. Diversified the client base. Focused on longer-term contracts with better payment terms. Optimized margins. Implemented sophisticated analysis and forecasting to improve decision-making. |
All of these tweaks were informed by the insights coming up from the valuation as the owner finally had a structure and a framework to think about how he could increase his enterprise value and, in so doing, save his business from the brink. Fast forward to 2025 and the business looks completely different. |
The client has raised substantial growth financing. The owner is working strategically on his business, not in his business. Revenue has increased by 5x. The value of the company has jumped by 10x to be worth $2.5m. |
A valuation increase of 10x in 3 years is incredible and it’s a testament both to the hard work of the owner and also to the measurable targets and framework created by the valuation itself. It helped to focus his attention on the key levers that matter and that has made the world of difference. We’re extremely grateful to bizval for working with us on this and we now use a valuation as a key strategic tool for all our clients, regardless of whether they are looking to sell now or not. As the great Peter Drucker once said: “What gets measured, gets managed…” |
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We’re always so excited to hear stories like this because they show just how transformative a valuation can be for focusing attention and energy on the things that truly matter for growth. It’s extremely difficult to do this without evaluating the key value drivers and that’s why we believe so strongly in what we do.
To tie things up, here are our 3 quick wins to kickstart your SME value growth:
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Operational efficiency: Start by identifying bottlenecks in your operations and implementing systems to streamline processes. Automation tools and clear workflows can reduce reliance on key individuals and improve overall productivity. Regularly reviewing operational metrics ensures you stay ahead of inefficiencies and maintain a scalable foundation for growth.
Recurring revenue: Focus on converting more of your revenue into predictable, long-term streams by offering subscription-based services or retainer agreements. Diversify your client base to avoid over-reliance on a few large customers and emphasize value-driven contracts that encourage repeat business. This approach boosts stability and positions your business for sustainable growth.
Strategic alignment: Develop a forward-looking strategy by aligning your operations, financial goals, and long-term vision. Use data-driven forecasting to prioritize initiatives that maximize enterprise value. With a clear plan, you can make informed decisions that keep your business agile and focused on its most impactful opportunities.
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To learn more, download our free guide: 5 Steps to SME Value Creation.
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If you’re an xCFO or advisor who wants to add valuations to your client solutions, get in touch today – we’d love to help!
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