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
We are grateful to the New Paradigm Advisors team for the education and ongoing support!
Operating systems are the heart and soul of whatever they power. The drivetrain for your car. The OS in your computer. The processes and procedures by which you run your company.