EBITDA or EBITDAC?

The term EBITDA is common practice in the financial world. The term is also frequently used by business owners, without a financial background, but do we really know what it stands for?  EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization.

The term is used as the standard for the operational cash-flow a business generates over a certain period, without taking into account the financial result, taxes, exceptional income or expenses. As we talk about cash-flow the non-cash costs as depreciations and amortizations are also excluded.

But what about EBITDAC… Earnings Before Interest, Taxes, Depreciation, Amortization and Coronavirus?

How has the Coronavirus affected you, your employees, vendors, and customers?  It is safe to say that at some level COVID-19 has impacted every business owner and their bottom line.  As restrictions ease and we return to some level of normalcy, it’s important to look back and reflect on what learnings we can glean from this and how to prepare for the future.

As an EOS Implementer, I help companies focus on three timeless principles regardless of the circumstances. EOS, the Entrepreneurial Operating System, is a complete set of simple concepts and practical tools that has helped thousands of entrepreneurs get what they want from their businesses. Implementing EOS will help you and your team get better at three things:

  • Vision—getting everyone in your organization 100% on the same page with where you’re going, and how you plan to get there.  Does everyone in the organization know where you are going and how to get there?  Is it clearly stated and communicated?  You and your leadership team should articulate or refine your vision to reflect who you are, why you exist, what you do and where you are going.  It gives you (and your company) a road map to follow.
  • Traction®—instilling focus, discipline, and accountability throughout the company so that everyone executes on that vision—every day.  This is where he “rubber meets the road” and your strategy becomes actionable.   Your people must focus on what needs to be done, you must have the necessary processes in place to act and then you should manage outcomes to get results.
  • Healthy—helping you (and your leaders) become a more cohesive, functional, healthy team.  In the book, “The Advantage” by Patrick Lecioni, to be successful, you need to be both “smart” with strategy, marketing, finance and technology AND “healthy” with minimal politics and confusion, high morale and productivity, and low turnover.  Are you building a culture that is healthy and helping you thrive?

In the midst of this pandemic, your problems and issues only get magnified.  Don’t ignore them, recognize and address them.  Once we are on the other side of this and you report EDITDAC, let us help you build a business that is ready for both the good times and bad times.  A business that allows you the freedom to balance both work life and family life, increasing in value, and gives you a future to accomplish your dreams.

New Paradigm Advisors believes you deserve to enjoy the benefits of a profitable, growing and well-run business. We help you break out of the old way of doing things and attack the new economy with a renewed passion and focus. For more information about transitioning your business, please reach out to us.  We’d love to hear from you.

Michael Visentine and The New Paradigm Advisors team

Sharpen Your Tools

Is your calendar this week like mine? Loaded up with all kinds of webinars and on-line meetings. All of them seeming to be valuable and important. But how many of them will really help me? Why am I watching and participating in all of them?

This line of questioning causes me to reflect on a very important principle: “Take the time to sharpen your ax,” as the saying goes.

Or, in my case, my chisels. Let me explain.

Our History Sometimes Defines Us

I grew up working with my Dad and brother in my Dad’s woodworking shop. We had a lot of tools in that shop and, as you can imagine, most of them had to have sharp edges. None were sharper than our chisels. No tool required the sharpness of the chisel and the hand plane. The reason was simple: these were, generally, the last tools to touch the wood. They had to be sharp enough to do the job without a lot of force and they couldn’t leave any extraneous marks.

The Satisfaction of Sharp Tools

To this day, when I do any woodworking, there is nothing more satisfying, I’d even say spiritual, than using a sharp chisel or plane across a beautiful piece of wood. As the tool cuts there is a clean shaving and a sweet sound as that shaving comes off the wood. This can only happen with an extremely sharp and perfectly honed tool.

We learned how to properly sharpen our tools through a series of finer and finer grit stones and then through a stropping process that created super sharp edges. This, however, was not a one-time procedure. Every time we pulled a chisel out to use, we examined the blade, stropped it, and made sure it was ready for use. We never assumed that it was ready right out of the drawer. We were always testing the blades before they were used.

The Right Tool, Constantly Sharpened

You can’t do a job worthy of true craftsmanship if you don’t, first of all, use the right tool, and, second of all, make sure it’s sharp enough to use. Our leadership skills, our management skills, and our technical skills all have to be constantly sharpened. We can’t assume that they are as sharp today as when we first learned them or pulled them out of the box. All of these – let me correct that – some of these webinars and online training sessions offer us the opportunity to do that.

How About Now?

Right now is a great time to be honing your chisels, your skills. You can’t do everything that’s being offered. However, I’m willing to bet, just like me, you’ve been wanting to get better at something and just have never found the time or dedicated the time to learn that new skill. Well, since you’re not spending two hours a day commuting, how about spending that time getting sharp?

Consider All of Your “Tools”

Take the time to do it. As an extra benefit, you’ll be setting an example for your team. By your example, your team will see the benefits of learning something new and you’ll have a company full of sharp chisels ready to do their best.

Dave

(Updated from a blog post that initially appeared on January 13, 2018)

Exit Planning: Discovery

As you begin the voyage of discovering the value of your company, you need to start right there: in the mode of discovery.

This phase takes two paths:

  • Business valuation
  • Assessment of your personal financials

By taking each of these components separately a clear evaluation of both “halves” of the equation can be dealt with realistically.

Truly, until you understand the value of your company viewed along with your personal financial picture, neither evaluation will be complete nor clear.  A chicken-or-the-egg scenario at its best.

Once those two evaluations are made, they dovetail nicely into a prioritized action plan.  And by plan we mean a step-by-step set of actions intended to reach a goal.

That’s our next segment: preparation.

Each phase or step leads to the next and a final decision.  Drop us a line or give us a call should you be in a similar situation.  We all need someone to talk with–try talking with us..

 The New Paradigm Advisors team

Summarizing the Four Drivers

We’ve talked in this space individually about the four drivers of a successful transition.  Let’s finish this series up by putting the four all in one place and tying them together.

As you recall from earlier blogs and a recent workshop, the four drivers are:

  1. Creating a future vision for your company and you.
  2. Building a structured environment that is flexible.
  3. Detaching yourself from the organization and affirming that position.
  4. Fashioning a team environment.

The order is significant as well: create a vision, build an environment, detach yourself, and put the team in charge.  While there is some overlap and some of the work you do in each of these areas is concurrent, the outcomes should be the same if you pay attention to the specific sections and concentrate on the end result.

In fact, the vision is most likely an on-going refinement exercise, once you get the key elements down and in place.

Truthfully, the structured environment is most likely there, it just has to incorporate flexibility.  And, as we noted in that specific post, is an organic process that relies heavily on teamwork and simplicity.

The detachment piece is probably the hardest element of this process for the founder-owner-entrepreneur.  Letting go and watching “your baby” thrive without you usually takes some getting used to.  But countless business owners have done it and do it well.

And, finally, having the team in place to keep everything moving forward and into the future.  Remember the team includes not just your internal team (employees and staff), it includes your suppliers and partners and your customers.  The well-oiled machine has many moving parts.

Good luck with your transition.  Should you have any questions or would like to explore this topic further, contact us.

 

What is a Healthy Organization?

Health is defined in many ways. Fit. Physically sound. All right. Fine. In good shape.

When it comes to an organization, an enterprise, or a business, variations of these terms can be applied and still make sense.  Patrick Lencioni summed it up best when he wrote:

“Once organizational health is properly understood and placed in the right context, it will surpass all other disciplines in business as the greatest opportunity for improvement and competitive advantage. Really.”

With this said, a healthy organization starts with leadership.

Simply put, an organization needs to have a leadership team who is:

  • Cohesive in their leadership approach.
  • Aligned, both behaviorally and intellectually.
  • Able to over communicate the company vision and values.
  • Talented enough to have systems in place to reinforce the approach, alignment and values.

From our work with the Entrepreneurial Operating System (EOS®), we know that a healthy business relies upon:

  • Creating a healthy, consistent leadership
  • Instilling a vision organization wide.
  • Giving a focus to every day for the entire team.

This is about getting basic aspects of your business under control.  These concepts fit with the philosophy of New Paradigm Advisors:

  • Freedom. Companies are free and prosper when given guidance by, rather than being controlled by, their founders.
  • Value. Having cohesive leadership helps companies increase their value.
  • Future. Everyone (including the company) has a future if leadership is in place and consistent.

The structure of a business is not solely the brick and mortar of the facility or even the people working in that building or even the products you produce.  Without a clear, guiding force in the form of consistent, healthy, understanding leadership, the building won’t stand, the people won’t function, and the products aren’t going anywhere.

Contact us to get your organization started on the right path to long-term success.

The Most Important Resource

“People are our most important product,” the old advertising campaign extolled.

But how many really believe that statement?  And it was made long before entrepreneur Richard Branson said that it was most important to treat your employees as if they were your number one customer.

Platitudes aside, being able to boast about your company’s employees as a key resource has to be more than just words.

Just ask Nancy Canada.

“Saying your people are your most important resource has to be more than words if you want to have a successful enterprise of any size,” Nancy said. “Your people really are your business.”

Nancy should know.  She is an accredited human resources professional and knows how to evaluate and place talent. During her 20-plus years at GuideStone Financial Resources she not only found the talent (as a recruiter), she trained and developed key staff. And because it was a financial services company, she earned her Series 6 and 63 licenses along the way.

In addition, Nancy is certified with John Maxwell and CliftonStrengths (formerly Strengths Finder) as a coach.

“Taking stock and evaluating your human resource will help you not only keep people, but advance them and grow your company,” Nancy said. “That’s why tools like CliftonStrengths are so critical to the management and growth of a company.”

What’s this mean to you as a business owner?  It means that human resource management is more than hiring and firing people.  It is about curating the talent you do have and keeping up with trends affecting your business.

And just like your finances, maybe you should turn over your human resources function to a professional who does this for a living.  It might save you time and money and maybe lead to an increase in your company’s value.

“Finding talent is one thing,” Nancy said. “Keeping it, is quite another thing.”

If you truly want to understand and build value in your company, contact us.  We can help you develop that resource that is already under your roof the right way.

 

*photos courtesy of Upsplash, rawpixel and Dylan Nolte

Why Do I Need a Consultant?

Business can be complicated.  Sure, you know the core offering of your company—you either invented it, bought it or offer services you created.  At any rate, you do know your business.

But not all of it.  Maybe not its value or future. And can you be free from it?

That’s where a consultant comes in.  An outside set of eyes and ears that give you the perspective you need to help shape and sort out your business. And beyond the extra eyes, it’s the extra manpower—the people power with the specialized skills to get something done on time.

A Distinct Advantage

Whatever the reason, hiring a consultant gives you a distinct advantage, I usually tell clients. And that is to be able to work on your business rather than in your business.

“On?” “In?” What are we talking about?

Most business owners are so focused on the day-to-day operation of their enterprises that they forget to step back and see the bigger picture.

Freedom,Value, Future

That’s the principal that we founded New Paradigm Advisors on.  It is about freedom, value and, ultimately, future.  Our company was founded on the simple belief that many business leaders are chained to their business.  We break those chains, increase company value, and help them build a fabulous future.

Break What Chains?

As a business owner, many times you are chained to the business because you ARE the business.  We help free you to work “on” the business by setting up systems, checks and balances and opportunities for growth and expansion of your business.  We use tools like EOS to help you shape your organization and find ways to do things like “you-proofing” you company.  You can then take that next step into the value.

 Why Value?

You need to be able to establish the value of your business.  Knowing the value of your company makes subsequent assessment that much easier.  Whether that is hard assets or intangible assets, every company has a value.  In our case, we use the Value Builders System to assess a company’s value and help you maximize that value.

Whose Future?

Yes, the future. Once you’re set free from unnecessary restraints, have a handle on the value of your company, it comes down to building a future—not just for the company, but you, the founder and primary owner.

That future means continuing to build and grow a company for the next owner or generation and giving you options for your “third act.”

Why New Paradigm Advisors?

So, why hire a consultant?  Just as you would hire a specialist to paint your house or manage your finances, so you should hire professionals that know this pathway.

That’s where we come in. We’ve been through this before we a seasoned team and proven systems, like Value Builders. Why not start there. All that is at stake is the future.

Dave

*photos courtesy of Upsplash contributing photographers Ryoji Iwata and rawpixel

Being Customer Centric with the Right Customers

In every business, success comes down to understanding and satisfying the customers’ needs and wants. Name me one where this is not true.

Ok, the government.  But I asked for a business.

In today’s business jargon, we call this being customer centric. We hear tag lines like “the customer is always right” and “we put our customers first.” These slogans are just one of the ways we use to try and to get everyone, both inside and outside of our organization, to believe we treat our customer like royalty.

What if you thought differently about who your customer really is?

While this is somewhat counter intuitive, by looking in a different direction, you might win more business and build up an important internal resource.

Your employees. They are really your first customer.

The better you treat your employees, the better they will treat your customers. If you want your customers to love you, then love your employees. Show your employees how you want them to treat your customers by how you treat them.

And, truthfully, it helps your staff understand that if the company is successful, they will be successful.  Make them feel like owners and they will treat the customer that much better.

We recently discovered this unrecognized problem with a client.  It was the primary limiting factor for the company’s growth. Communicating with the customer was a very undeveloped skill. You would think this would be the death knell to the company.  Yet, surprisingly, this was an accepted behavior throughout their industry. This meant the customers really couldn’t get better treatment anywhere else. At this company, the customer could at least expect superior technical performance and results.

By treating their employees better, their business increased through better customer service.  And it was a differentiator for the company in their industry and made them, almost automatically, an industry leader.

We spend a lot of time, money and effort getting better at our technical proficiency, but we spend very little time learning how to treat our customer better.

By taking the time to focus on your internal customer, the end customer will be treated well and you will have wins all the way around.

Dave

*photo courtesy of rawpixel

How to Increase the Value of Your Business by 71%

How much did your home increase in value last year?  Depending on where you live, it may have gone up by 5% to 10% or more.

How much did your stock portfolio increase over the last 12 months? By way of a benchmark, according to Market Watch, the Dow Jones Industrial Average has increased by around 16% in the last year. Did your portfolio do as well?

Now consider what portion of your wealth is tied to the stock or housing market, and compare that to the equity you have tied up in your business. If you’re like most owners, the majority of your wealth is tied up in your company. Increasing the value of your largest asset can have a much faster impact on your overall financial picture than a bump in the stock market or the value of your home.

I’m fond of asking my clients, “Where do you want to be in 20 years?” I’m always interested in the answer and I’m always surprised at the questions I get back in response. The point I’m driving at is that no matter where you want to be, the value of your business is the asset that will most likely fund that dream.

Let me introduce you to a statistically proven way to increase the value of your company by as much as 71%.  Through an analysis of 6,955 businesses, we’ve discovered that companies that achieve a Value Builder Score of 80+ out of a possible 100 offers received to buy their business that are 71% higher than what the average company receives.

How long would it take your stock portfolio or home to go up by 71%? Years, maybe even decades. Get your Value Builder Score now and you will be able to track your overall score along with your performance on the eight key drivers of company value. Like a pilot working his instrument panel, you can quickly zero in on which of the eight drivers is dragging down your value the most and then take corrective action.

Your overall Value Builder Score is derived from your performance on the eight attributes that drive the value of your company.

  1. Financial performance: your history of producing revenue and profit combined with the professionalism of your record keeping.
  2. Growth potential: your likelihood to grow your business in the future and at what rate.
  3. The Switzerland Structure: how dependent your business is on any one employee, customer or supplier.
  4. The Valuation Teeter Totter: whether your business is a cash suck or a cash spigot.
  5. The Hierarchy of Recurring Revenue: the proportion and quality of automatic, annuity-based revenue you collect each month.
  6. The monopoly control: how well differentiated your business is from competitors in your industry.
  7. Customer satisfaction: the likelihood that your customers will re-purchase and also refer you.
  8. Hub and spoke: how your business would perform if you were unexpectedly unable to work for a period of three months.

To find out how you’re performing on the eight key drivers of company value and start your journey to increasing the value of your largest asset, get your Value Builder Score now:    SCORE-MY-BUSINESS

I’m always interested in where you’ve been as much as I’m interested in where you’re going. So, contact me and let me hear your story. Let’s see what we can do together.

Blessings,

Dave

Just What Do I Want?

Many of us in business are working hard to shape and grow our business.  We’ve built up this thing we call a company and hope to see it through to…to what?

Just what do you want?  Is it “how much?” Or is it a legacy?

These are the questions Bruce Bernbaum asked himself not long ago.  Bruce is a co-founder and partner in Bernbaum-Magadini Architects in Dallas.  At his age and where he is in his career, Bruce has some decisions to make.  But where to start?

“The New Paradigm Advisors team gave me this Value Builder’s ‘quiz’ that allowed me to assess my business,” Bruce recounted. “And it caused me to stop and think long and hard about the value of our company.”

New Paradigm Advisors (NPA) is a business consulting firm that helps determine a company’s value.  Dave Sykes of NPA met with Bruce informally to ask some critical questions.  It was the Value Builder’s Assessment that really got Bruce’s attention, particularly with one question.

“When I got the score back I had a zero on one point,” Bruce recounted. “’That can’t be,’ I thought.  But it was enough to stimulate a discussion with Dave to help me set some goals.

Between the assessment and the ongoing discussion, Bruce has used his time with the New Paradigm team to be better at planning and forecasting.

“The team got me working on my business rather than in it.”

New Paradigm Advisors is a value-assessment and consulting firm based in Dallas, Texas.