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

Ten Tips to Improve Your Online Meetings

Due to the COVID-19 health emergency and shelter-in-place orders, there have been huge impacts to the way we all do business. One of those is the way we meet: these days it is more than likely via video conferencing. I’m guessing in the last few weeks you’ve had at least one, if not several, virtual meetings. It’s time to make these meetings productive.  It’s time to make them great!

In Stephen Covey’s best-selling book, “The 7 Habits of Highly Effective People”, one of the principles is “begin with the end in mind”.  With this, the purpose of any meeting is very simple: get things done. You meet to:

  • Solve problems.
  • Get everyone on the same page.
  • Make sure the team is on track.
  • Move forward.

Based upon these objectives, are your meetings productive?

One report found American businesses hold more than 3 billion meetings per year and 11 million meetings per day. That’s a lot of meetings so they should be worth it.   To make the best use of your time, here are a list of 10 tips to make your online meetings as productive as possible and use everyone’s time effectively.

Watch this funny video and then read our list to avoid these common issues.

  1. Have good, reliable internet. Your video should not sputter and/or skip. It’s incredibly distracting, and it’s not acceptable.
  2. Sit on a chair at a table or desk. Don’t sit or lie on a bed or sofa. This is a business meeting. This is the challenge with working from home—it’s hard to transition into work mode. This will help.
  3. Be aware of your background.  Avoid busy or distracting backgrounds, including virtual backgrounds. If you can, use the feature to blur your background, pick a neutral area or hang a sheet to keep focus on you.
  4. Stay in front of camera and keep it at eye level. It’s important that no one goes off-screen to do something else.   Make sure you are in the center of the screen at a distance of 2 to 3 feet.  This will prevent people from leaning in and you will better keep the attention of your audience when speaking.
  5. Test your lighting. Make sure there are no lights behind you and have a light on your face. People need to clearly see you.  Lighting is important.
  6. Make sure your microphone works well. Use a good microphone or buy a headset, if needed. When people can’t hear you, they struggle to pay attention.
  7. No looking at your phone. Have your phone silenced or out of your view.  Be considerate of others and treat this just like any “in-person” meeting.
  8. Don’t mute. What happens is that someone starts talking, not realizing that they forgot to un-mute. By the time everyone lets them know (with hands waving, you are on mute!) and they finally figure it out, you’ve lost valuable time.
  9. Minimize background noise. Make sure you’re in a quiet room with the door closed… no dogs barking and no family interruptions (tell your family you are at the office).
  10. Use gallery mode. Make sure that you can see all of the faces participating in the meeting, at a glance.  Most video conferencing platforms have this function.   This helps everyone stay connectedBe safe and productive!

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.

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)

The Opposite of Servant Leadership: Power Leadership

We’ve discussed servant leadership at length, showed you examples and introduced you to experts.  But to truly understand the concept, we should really discuss the opposite of this leadership concept.

Meet power leadership.

Leaders who use power as their main motivator, usually rely on negativism, fear and misdirection to guide or direct an organization the way they see fit.  They typically are not collaborators or team players.

Power leaders tear down.  They thrive in economic downturns because cutting, not adding, is what they do to shape an organization. By cutting budgets, costs and employees, they destroy morale, drain resources and reduce organizations to shells of themselves.  They typically are short-term thinkers.

“Leadership is about vision and responsibility, not power.”—Seth Berkley

In the mirror, opposite the power leader, is a servant leader.  Servant leaders build up, see downturns as opportunities, and do things up front and in a transparent fashion.  To them, power is in the organization and its people and ideals, not in them.

The four elements of servant leadership are in direct opposition to power leadership:

  1. Servant leaders put service before leadership and are focused outwardly; power leaders are focused inwardly.
  2. Collaboration is central to servant leaders and relies on consideration of what others think; power leaders believe there is an “I” in team—them.
  3. Mentorship is important to servant leaders as it helps grow the team and the organization; power leaders believe all starts and ends with them.
  4. To be a servant leader, you must have foresight and that comes from listening; power leaders only listen to themselves.

Where do you begin to develop and build a culture of servant leadership? Start by looking within and taking stock of what you already have.  And then consider enlisting the aid of a partner.  We are here to help with skills assessments, systems and programs as well as one-on-one advice.

Call or contact us for more information on servant leadership.

The New Paradigm Advisors Team

Words of Wisdom from Live2Lead

Now that some time has passed, we can reflect on the mountain of content from the speakers at Live2Lead.  Let’s take a moment and recap the highlights and the lessons from the day.

This list of guiding statements, tidbits and fresh ideas is actually quite helpful when put into the  context of our daily lives.  Gleaned from the speakers’ (John C. Maxwell, Chris Hogan, Rachel Hollis, Angela Ahrendts, and Marcus Buckingham) speeches that day, here are a number of memorable phrases:

  • Nobody cares how much you know until they know how much you care.
  • Hope is not a strategy.
  • Use the ACT approach—what will you Apply, Change or Teach—from new things you learn?
  • Connection with others is absolutely vital for success.
  • Old hurt brings new harm to a new day.
  • Trust, loyalty and unity are each a two-way street.
  • Work hard and have fun at the same time.
  • A culture is a living, breathing thing.
  • Mentor someone every day.
  • Turn off your head and turn on your heart.
  • Big isn’t good unless big does good.
  • Give 60, take 40 in everything.
  • Look for yourself last in the photo.
  • A leader doesn’t have two good days in a row.
  • Be authentic.
  • Show up.
  • Give people the tools to change their lives.
  • Focus on your self-awareness.
  • Study failure then invert it.
  • Love is space making.
  • Culture eats strategy for lunch.
  • Satisfaction creates energy.
  • If there is mist in the pulpit, there will be fog in the pews—be clear.
  • Measure what you manage.

This is quite a list to digest.  No worries—over the next few months, New Paradigm Advisors will bring light and substance to many of these homilies and help you put them to good, substantial use.

And please plan on joining us for Live2Lead 2020 on October 20, 2020.

The New Paradigm Advisors’ Team

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

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.

Freedom and the Business Owner

The image of Mel Gibson as Scottish patriot William Wallace in “Braveheart” running around shouting “freedom” might be a little over the top, but maybe not too farfetched.

Especially if you are a business owner and feeling chained to that business.  Then you might want to scream every now and then about wanting to be free.

In all seriousness, being free of your company doesn’t really mean running off and abandoning the enterprise.  It is more about wanting to be free of certain aspects of your business so you can be free to work on the business rather than in the business.

In so many examples with our clients, we have encountered and worked with business owners in just such a set of straits.  The engineering services company owner who is really the only guy in charge. The 60-ish architect wanting an exit plan when he doesn’t know where to start. The automotive parts company who is seeking direction at a critical time in the lives of the owners.

In each case, these owners were so wrapped up in their companies that they couldn’t break free from the day-to-day operation to take the next step—building value in their companies.  And, beyond that, envisioning a future for themselves, their family, and their company.

Starting with freedom, business owners find themselves at a moment that causes them to make decisions.  It gets them focused on taking action and not falling back on the mundane and the comfortable.  Truly, to make the most of your hard work—and the enterprise you’ve built—you need to step out of your comfort zone and take action.

In this case, take the action of seeing how you can free yourself of your business in a way that will be, long term, productive and about meeting specific goals and milestone.

Are you ready to break those chains and step into that space called freedom from your business?  Call us. You’ll get the results you’ve been searching for.

#freedom #value #future

*photos courtesy of Upsplash and Kristina V; and IMDB

Are You Dressed Appropriately to Go to the Dance?

In a recent post, I talked about asking your favorite managers or leaders about their interest in having ownership in your company.

Have you followed up on that?

Your current management leaders are definitely legitimate future buyers of your company, so don’t leave them out of your planning.

Who else should you be looking at and where are you going to find them?  Are you dressed appropriately to “go to the dance?”

What’s It Worth?

Well let’s back up (again) and let’s start with the question of, “What’s it worth?”

We’re not going to launch into a long treatise about valuations and market analysis. This is going to be far more simple. It’s all based on a simple truth:  your company is only worth what a buyer is willing to pay for it.

Well duh!

Overly simplistic, I know, but let’s peel this apart before you discount such a simple basis.

You can do all the research about EBITDA and multiples you want.  However, if you don’t have a qualified buyer with a high interest in your company, nothing matters. It doesn’t matter that your bank loves you. It doesn’t matter that your industry typically sells for 3 or 4 or 10 times multiple. You’ve got to find a buyer who has the money and the interest to stay engaged with you all the way to signing an agreement and giving you a check.

What About Your Formation Agreements?

Now before you think this is way too simple and obvious, let me ask you a question: When was the last time you took a look at your formation documents? Your Buy Sell Agreement? Last year? Five years ago? Maybe not even since you formed the company? You might want to pull that out and look at it.

In two cases recently, we’ve observed owners shocked at the glaring hole in their desired transition plan caused by the limits set forth in their formation agreement. In one case with two owners, the retiring owner would receive nothing upon retirement except his pro-rata share of any projects that were invoiced as of the date of his retirement. In the other case, it was assumed that the owner who was remaining in the business would simply either write a personal check for a percentage of a recent official valuation or he would finance it either personally or through the company. Nothing in the formation documents required this. And in both cases, the hard discussion with both groups started with, “No one owes anyone anything.”

Be Sure and Value the Relationship

In both cases, there are long-term, very close and meaningful relationships that would be ruined if this was really the end result. But, it drives home the point, that your expected buyer may not be under any obligation to pay you what you think you deserve. So, what do you do?

Are You Ready to Start the Buyout Process?

First, begin working on your buyout as early as possible. If you’re thinking of retiring or your partner is going to retire in the next five or so years, now is the time to pull out all of your documentation and find out what, if any, legal obligation everyone has. If it’s like the first case above: you’ll have time to write up an exit plan or buyout for everyone that is equitable and doable over the coming years. This also sets up the remaining partner to understand what he or she is going to want to explain and demand of any future owner he brings on board.

Do You Need to Look Outside the Organization?

Second, if you’re looking outside of your organization for a buyer, you’ve got to get a haircut, shave, take a shower, shine your shoes, buy a new suit and really dress yourself up so you will be the best looking person at the dance. The dance called “the acquisition dance.” What do I mean by that? I bet you already know. If you don’t, well, you at least know you can call us and we’ll help you do that. It’s going to take a lot of effort and a good deal of time. But if you want to be the winner at the acquisition dance, you can’t go looking like you have for the last several years. It’s time to make some changes.

Even if you’re more than five or ten years away from transitioning to your third act, by getting ready now, you’ll be making more money in the interim period and you’ll be worth far more in the end.

Call us. Let us help get you dressed up.

Dave

First thing to do to make sure you’re dressed for the dance, take a look in the mirror: Click here to see what you look like.

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