Meaning ● Economic Value Added (EVA), in the context of SMB growth strategies, represents a financial performance metric that quantifies the true economic profit generated by a business after accounting for the cost of capital. For SMBs pursuing automation, EVA can serve as a key performance indicator (KPI) to assess whether investments in technology and process optimization are generating returns above the cost of capital. ● By implementing EVA, SMBs can gain insight into whether they are truly creating value for their stakeholders or merely generating accounting profits. An increasing EVA typically signals improved profitability, efficient capital allocation, and the successful execution of growth initiatives. ● Measuring EVA requires careful consideration of an SMB’s weighted average cost of capital (WACC) and its net operating profit after taxes (NOPAT). This assessment helps SMB leaders to prioritize investments and operational improvements that have the greatest impact on EVA. For SMBs focused on scalability, automation and integration strategies are often deployed with the explicit goal of improving EVA by increasing operational efficiency and reducing costs. Furthermore, monitoring EVA helps SMBs evaluate the effectiveness of various automation implementation efforts. Ultimately, Economic Value Added serves as a compass for making better investment decisions.
