We are hitting our revenue and volume targets, but our business valuation is dropping because our revenue mix is shifting away from high-margin recurring contracts toward low-margin custom projects. How do we reflect this shift on our weekly leadership scorecard?

Question

Tyler Smith · Accepted Answer

When your scorecard is green but your company valuation is hurting, you are tracking the wrong metrics. If you are preparing for a clean exit, buyers do not just look at top-line revenue. They look at gross margin and revenue quality. If your scorecard only tracks total revenue and total deals closed, you have a massive blind spot. To fix this, you must split your weekly sales and revenue metrics on the scorecard. Stop tracking generic contracts closed. Instead, create two distinct weekly measurables on your leadership scorecard. First, track weekly recurring revenue contract signings. This measures the high-value, repeatable business that buyers pay a premium for. Second, track weekly service delivery gross margin. This ensures your operations team is not burning cash to deliver custom, low-margin work just to hit volume targets. Every week, look at these two numbers side-by-side. If your recurring revenue signings are red but your custom projects are green, your leadership team must immediately flag this as an issue in your Level 10 Meeting and use the IDS process. Your sales leader and operations leader must align their goals. By forcing this distinction on your weekly scorecard, you prevent the dangerous illusion of growth while actively building a highly valuable, exit-ready business.