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Revenue actually is value (a subset of it) delivered to the business's customers. Enterprise value is a different thing. It's an important thing, but it's total
by ethanbond 3y ago
Revenue actually is value (a subset of it) delivered to the business's customers. Enterprise value is a different thing. It's an important thing, but it's totally possible to have a business that delivers immense value to its customers and has very low enterprise value. We generally call these "not great businesses," but that doesn't make them not businesses.
- chiefalchemist 3y agoNot really. You can for example generate $1,000,000 in revenue and not generate value. Perhaps you're not profitable, and therefore perhaps not attractive to being bought. That is, no value. Value is what someone is willing to pay (for the company). It is set by the market. Revenue may or may not be used by the suitor to determine value, that is, how much they're willing to pay to acquire the generated value. Revenue !== Value To clarify, they are all business in the legal sense. But a "solopreneur" who gets hits by a bus, leaves customers high and dry, and can't exit (i.e., have someone else carry on) is not to compared to an entrepreneur who generates value such that an exit is possible, and customers are less likely to get screwed.
- ethanbond 3y agoYou are specifically referring to a concept called “enterprise value.” Notice the modifier. That indicates it is not the only (and to many people, not even the most important) type of value.