Scaling to Grow vs Scaling to Exit: Why Growth Doesn't Always Build Value
Have you ever watched a business grow revenue year after year, but never grow in value?
That was the question Nick Olsen opened with when I joined him on the M&A Mastermind podcast, presented by Cornerstone International Alliance. It's a question I see play out again and again. Over the last six years I've coached more than 30 CEOs and leadership teams, and the same pattern shows up: a business can grow strongly and still not be worth what the owner expects.
It's easy to think scaling to grow and scaling to exit are the same thing. I certainly did as a founder. They're not.
Listen to the full episode on Spotify → https://open.spotify.com/episode/0DUsY7fyM7UDZAl6IAtYRN
Creating value vs building transferable value
Here's the simplest way I can explain it.
Scaling to grow is about creating value: for your customers.
Scaling to exit is about building transferable value. Value that holds up when the business passes to someone else.
Even if you're not thinking about selling, as Scott Bushkie reminds us, we all exit one day. It might be a sale, private equity, or handing over to family. Whatever the path, the business needs to be transferable, and a buyer will look hard at the risk.
Investors invest to get a reward and want to minimise risk. It really is that simple.
Four warning signs I look for
1. Slim margins and tight cash. Growth sucks cash. That cash either comes from your own profit or from outside funding, and slim margins make a business harder to fund and less attractive to a buyer. Profit is sanity, but cash is king.
2. Over-reliance on the Owner, Founder or CEO. If it's the founder and maybe one other person, with everyone else executing, there's a transferability problem. I still see founders negotiating supply agreements, making pricing decisions and holding the biggest customer relationships. Unless your buyer wants to buy themselves a job, that's risk. And if the founder is also the main salesperson, they can't take a holiday without sales stopping.
3. No written growth story. Buyers buy future growth potential. If you're approached tomorrow, can you clearly articulate the opportunity, and how you'll defend it when competitors come knocking? Product differentiation gets you started. But when competitors follow you into a valuable space, and they will, only a differentiated strategy keeps you ahead. We capture this on one page, front and back: the One-Page Strategic Plan, aligned with your whole leadership team.
4. No strategic process. Without a leadership team meeting every quarter to ask where the real opportunity is and what to stop doing, activities that aren't delivering hang around far too long. Culture dilutes too as you hire, unless you're deliberate about the behaviours you expect.
Where to start: the first order constraint
Scaling Up works across four decisions: People, Strategy, Execution and Cash. We usually start with the 32 question Scaling Up Assessment across the whole leadership team, then look for the first order constraint.
When I ask a CEO what the priority is, they often say growth. But sometimes the real issue isn't strategy at all. It's people: not having the right people in the right seats to create that strategy in the first place.
For the founder who's wearing every hat, we use the Functional Accountability Chart to map every seat the business should have and who's actually sitting in it. The founder is often in four seats, some seats are empty and an intern is covering another. That awareness alone is powerful. Then we decide which hat to hand over next, and what that role must deliver in the next 12 months to be worth the investment.
The Power of One: small moves, big results
This is one of my favourite tools, and Nick picked up on it straight away.
The Power of One looks at seven levers that drive profit and cash flow: price, cost of goods, overheads, how quickly you get paid, how quickly you pay, inventory, and how fast you move through work in progress. A 1% improvement in the right lever can have a massive impact in a very short time.
Every business has a different fingerprint. A government regulated provider can't touch price. A commission based business has fixed margins. But for most of the businesses I work with, price is where we look first. Not across the board increases, but which SKUs, which customers and which segments will pay more. Many haven't reviewed pricing in years while their cost of goods quietly crept up, eating six percentage points of margin without anyone deciding it should.
Inventory is the other big one. At one client, we discovered 67% of their inventory hadn't moved in 12 months. The question became: do we rent another warehouse, or do we make a plan for that stock?
With another client, working the Power of One every quarter lifted cash flow by more than 40% within about six months. Put that through a valuation multiple and the difference to the final number is enormous.
Can you grow, build value and keep your options open all at once?
Yes, with one caveat. Time.
With three to five years, we can work across all four decisions in parallel and get you exit ready without a scramble. With 18 months, there are trade-offs. Do you spend a million dollars replatforming now, taking cash off the bottom line, or is that something a buyer will even pay for?
And you don't want to go to market tired and burnt out. The businesses I've seen achieve above industry multiples have a growth operating system in place. The next layer of leadership knows how to run the business, so the founder can take three weeks off and nothing breaks.
The best time to exit is when you don't have to. The best time to start preparing is now.
Take the next step
If you'd like to go deeper on building a business that is valuable, transferable and ready when you are, join me at Scaling Up to Finish Strong:
In-person, Sydney: Thursday 22 October 2026, 8:30am for a 9:00am start, 180 George Street
Virtual, Exit Readiness: Thursday 5 November 2026, 12:00pm AEDT
See workshops and register → https://www.madeforscale.net/workshops
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