By
Kate Allen, P.E.
Whether a firm is
being valued for internal transition or for external sale, two key drivers of
value are and will always be: growth and
profit (earnings). But even more
important is CONSISTENCY! Year after year growth in profit and revenue
is critical to maximizing the value of your firm.
Which of the
following firms is a better investment?
- FIRM A reporting
23%+ profit, 14%+ staff growth, and 26% revenue growth, OR
- FIRM B with 11%+
profit, less than 3% staff growth, and 8% revenue growth
FIRM A is a
compilation of the median performance of firms included in PSMJ’s 2013 Circle
of Excellence, and FIRM B is a compilation of the median performance of all
firms that participated in PSMJ’s annual Financial Performance Survey for 2013.
At first glance, one might assume that Firm A
is the best choice. However, either of
these firms could be a good investment IF they
sustain or improve their business performance year over year, demonstrating
they’ve developed a successful and sustainable business!
Top firms tend to
benchmark their progress – they know where they are and where they want to go
and they monitor their results consistently.
There’s truth to the old adage: “what gets watched (measured) gets done”
– use this to your advantage to drive year over year results and continuously
improve your firm’s value!
Kate Allen, P.E., is PSMJ’s Director of A/E/C
Industry Surveys. She can be reached at
kallen@psmj.com.
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