The 4 ways to Create Shareholder Value

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Source: The Dialogue That Rarely Happens | Frank Cespedes | LinkedIn

Love this list…great to keep in mind. The graphic is from a different source, but provides a nice comparison to the list below, taken from the source.





“There are basically four ways to create value for shareholders and daily sales activities are crucial to each:

  1. Invest in projects that earn more than their cost of capital. Most projects are driven by revenue-seeking activities with customers. Hence, customer selection criteria and sales call patterns materially impact which projects the firm invests in and its capital expenditures.
  2. Increase profits from existing capital investments. Here, key determinants are the interactions that ensue once a sale has been made and that accrete costs, time, and asset utilization patterns in the firm.
  3. Reduce assets devoted to activities that earn less than their cost of capital. This requires understanding cost-to-serve different customer groups and how performance metrics affect selling behaviors and deals closed.
  4. Reduce the firm’s cost of capital. Financing needs are mainly driven by the cash on hand and the working capital required for conducting and growing the business. Most often, the biggest driver of cash-out and cash-in is the selling cycle. Accounts payables are accumulated during selling, and accounts receivables are largely determined by what’s sold, how fast, and at what price. That’s why increasing close rates and accelerating selling cycles is a strategic and financial issue, not only a sales task.”
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