Growth First, Profits Second
The Impact of Revenue Multipliers on Business Growth and the Shift to a Market Share Mentality
In the digital era, revenue multipliers play a significant role in driving the rapid expansion of enterprise value. This blog post will explore how this focus on revenue multipliers influences the mindset and strategies of digital businesses, allowing them to be more aggressive in the marketplace and outpace their traditional competitors.
The Power of Revenue Multipliers
Revenue multipliers often lead to a much faster expansion of enterprise value than profit multipliers, prompting digital investors to push company leadership to prioritize revenue expansion over profit. This shift in focus enables digital businesses to outperform their traditional competitors by adopting a more aggressive approach to market expansion.
The ‘Market Share at All Costs’ Mentality
High-growth digital companies are often valued at upwards of 10 times revenue, which fuels a ‘market share at all costs’ mentality. This mindset drives digital companies to invest heavily in R&D and innovation to create new markets and establish themselves as market leaders quickly.
Investing in R&D to Create New Markets
By investing more in R&D than their traditional competitors, digital companies can explore untapped markets and develop innovative products and services that cater to evolving consumer needs. This proactive approach allows them to stay ahead of the curve and outpace their competitors in terms of market share and revenue growth.
The emphasis on revenue multipliers in the digital landscape encourages businesses to prioritize aggressive market expansion and invest heavily in R&D to create new markets. This approach sets digital companies apart from their traditional counterparts, enabling them to grow rapidly and secure their position as market leaders in an ever-evolving digital world.
[i] “The Revenue Multiplier Effect,” Deloitte Insights, www.Deloitte.com/insights.