We often hear financial planners who can proudly list off their revenue numbers, insurance revenues, adviser service fees, and other relevant categories. When we ask their profitability though, the answers vary.

In a world that no longer revolves around recurring revenue multiples, and instead considers profitability of a business, revenue is just one aspect to a business valuation.

Tim loves to say that revenue is vanity and profit is reality. It's all well and good to have high revenue, or be growing your revenue, but if you are disproportionately growing your costs as well, you may not realise the benefit of the growth in a business valuation, or sale.

As an example, we have just completed a valuation for a business that grew it's revenue by 10% each year for three years - a terrific feat. However, the business also added two new staff to service the revenue, which led to an overall decrease in their valuation from 4 years ago. The business is no doubt a better, more diversified business, but we have important metrics to resolve for any sale of equity to occur.

To discuss the metrics of your business and how you can understand and improve your business valuation, use the link here to contact our office, or book a call.