The Beautiful Dance Between Enterprise Value and Owner Wealth

 By Cheryl Powers

There's an untold story in the bustling alleys of entrepreneurship, a tale of owner wealth. Often overshadowed by giant corporations and tech unicorns, these owners occupy a golden space. 

They're neither too small to be overwhelmed nor too big to be impersonal. And if you ever want to witness the art of growth and personal wealth generation, this is where the magic happens.

When I work with entrepreneurs and business owners, there's a notion I have always emphasized: the enterprise value of a company is not just a financial number. It's a reflection of the dreams, aspirations, and legacy of the owner. 

As your company’s value grows, so does your personal wealth. But there's more to it than mere economics.

Understanding Enterprise Value and Personal Wealth

In the simplest terms, the enterprise value is the total worth of your business. It's what someone would pay to buy your company. 

If you’re anything like our clients, this number is personal. It represents years of sacrifices, days and nights of hard work, missed family dinners and vacations postponed. 

As this value grows, so does your wealth - both today and the day you decide to sell your company. 

In addition to that number, you’ll likely calculate your wealth in terms of your achievements, legacy, and potential for further growth.

The Interplay

Now, here's the interesting part. When you focus on increasing your company’s enterprise value, you are necessarily focusing on several underlying factors:

• Product or service excellence
• Customer satisfaction
• Employee well-being
• Differentiation
• Long-term sustainable growth
• Management acumen
• Financial performance

These are the exact pillars that ensure that your owner's wealth increases along with the value of your company.

Each time your company takes a step forward and levels up, your personal financial situation becomes more stable, and your personal wealth sees an uptick.

It's not just about the money in the bank today. It's about building a resilient and valuable entity that can withstand economic downturns, industry disruptions, and market volatility. It’s about building beyond success to creating a significant company that has transferable value.

Each time your company survives a challenge, you take the next step in safeguarding your personal assets.

The Synergy of Growth

A beautiful synergy exists here. As your business’s value grows, it often translates into better salaries for employees, more job opportunities, happier customers, and a strengthened brand image. This cyclical process then propels further enterprise growth and, in turn, adds to your personal wealth.

Let’s imagine an example. 

Imagine an owner of a company that introduces a revolutionary product in the market. The product becomes a hit, leading to increased sales, a recurring stream of revenue, and a boost in enterprise value. As a result, the owner's wealth increases. Now, the owner has decided to reinvest a portion of this wealth into research and development, leading to the creation of even more innovative products. This creates a virtuous cycle where growth begets more growth.

The Path to Owner Wealth

The path to owner wealth looks simple but it’s not easy. In fact, the vast majority of business owners never achieve their full wealth potential. Often it’s because their companies never achieve their true growth potential. And equally as often it’s because the owner doesn’t know how to leverage their largest asset. 

Every successful client I have had the privilege to work with on their road to becoming a significant company owner knows that their growing wealth is a testament to their business acumen and hard work. But it is also a tool – a means to an end.

This wealth can be used to create a family trust, to give back to the community, to invest in new ventures, to create scholarships, or even to take that well-deserved vacation. The point is, as your company's enterprise value grows and enhances your wealth, it also broadens the spectrum of what you can achieve, both for yourself and for the larger society.

The Dance of Significance

For owners on the path from success to significance, there's a beautiful dance taking place every day. A dance between your growth and your personal wealth. It's a dance of hard work, vision, challenges, and rewards. And in this dance, every forward step you and your team take is a leap for your personal dreams and aspirations.

To all the owners and entrepreneurs out there, I want to say this: Cherish this journey. Relish the growth of your enterprise value, and let it remind you of the wealth you're creating, not just for yourself but for everyone associated with your company.

Because at the end of the day, the numbers will fade, but the legacy of what you built and how you used your wealth will remain. And that, my friends, is the true mark of significance.

Ready to know exactly what your company's potential is? See how you score on the pillars of value and understand how you rate against your industry competitors.