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

Never Waste a Crisis

I once worked for a CEO who would say, “never waste a crisis.”  I knew what he meant, but it did not really hit home until more recently with the COVID-19 crisis we are all facing.  Whether you are looking for business or have more business than you can handle, you need to adjust now to the “new normal.”  What does the world look like post pandemic and how does your business respond?  You need to prepare now and be thinking ahead to address next steps and not be caught “flat footed” in the new normal.

I recently read a study done by BCG about the 2007-09 Great Recession and the common traits (five factors) global S&P 500 businesses employed to recover.  While this pandemic is different, it is still a valid study to obtain insight into planning for your next steps to thrive and not just survive as you move forward.

The five factors:

  1. Act proactively.  Business that weathered the recession and came out stronger, owned the situation and were forward-looking in their thinking, planning and actions.  No matter what position you find yourself in, there will be a recovery and you have to be ready.  In Stephen Covey’s book “The 7 Habits of Effective People”, Be Proactive is the first habit.  It is about taking responsibility for you and your company. Do not blame the pandemic, the economy or the government. Proactive people recognize that they are “response-able.”  They know they choose their behavior and course of action.
  2. Stick to a clear vision. Top performers did not change their vision based on circumstances.  To put it in simple terms… your destination stays the same, but how you get there may change.  In the Entrepreneurial Operating System (EOS), vision is the process of getting everyone in your organization 100% on the same page with where you’re going.  As an EOS Implementer, I help companies craft a vision the does not change with the circumstances but is timeless and also for flexibility to adapt.  If you don’t have a clear vision, how do you know where you are going?
  3. Increase demand vitality. Successful companies addressed changes in the marketplace and adjusted accordingly. With the COVID-19 and decreased physical foot traffic, you need to look online and how to adapt to and adjust your model for increased online presence with the ability to market, sell, and service online.  Where are trends and what is best option for you to capture the demand?  How will you best respond to these demand changes?  Assess and then go.
  4. Create supply agility. Businesses that thrived, were able to quickly assess impacts to their supply chains and respond with alternatives.  Too much reliance on one vendor can greatly hamper or impact your business.  You must build adaptation and agility into supply base and supply chain. Fortunately, new supply chain technologies are emerging that dramatically improve visibility across the end-to-end supply chain, and support companies’ ability to resist huge disruptions. The traditional linear supply chain model is transforming into digital supply networks (DSNs).
  5. Build resilience. The top performers knew that they couldn’t avoid future disruptions, so they worked towards a future that could withstand future shocks and, more importantly, anticipate them.  Some questions to ask… did you build a culture of trust and accountability? Did you have enough cash on hand to weather the initial storm?  Were you able to cut cost to “race and not chase” the drop-in revenue? Did you have an IT disaster recovery plan in place?  As a leader, you must anticipate and plan for these.

These five steps will increase the likelihood you will survive and thrive in the future.  Take inventory of where you are now and face reality.  Consider your company’s position.  Once you know where you are, and you start planning for the futures, ensure that what you are doing today will bring about the end of the crisis tomorrow. How must you transform your business to thrive and succeed in the future?

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

What Now?

You are facing a downturn in the economy and business. What do you need to be doing right now?

Do you keep people or let them go?

What about your vendors and suppliers?

And what about your customers?

Consider the airline oxygen mask concept. Put your mask on first so you can ensure you’ll be able to help someone else get theirs on. You know this drill.

Your highest priority as a business owner is to protect the life and health of the company. Do everything you ethically can to keep the company alive. It’s like the federal government whose number one priority is to defend the country. It doesn’t matter how the economy and other parts of society are doing. If a foreign adversary attacks us and the government isn’t ready to defend us, then we all lose! Defend your company first!

Not your salary. Not your assets. And, unfortunately, not your employees.

Once you’re committed to this first priority, the decisions on everything else become clear. Notice I didn’t say easier. It’s clear what you must do to keep the company alive. Also be clear on the benefits of this commitment to all concerned once the crisis has passed:

  • Employees have an opportunity to find another job or to file for unemployment.
  • Vendors have someone they can collaborate with and possibly provide some temporary relief to in hopes of saving a valued and long-term customer.
  • Your best customers will be much more understanding than you think and quite possibly be willing to help.

Once the downturn is over and the company has survived, you can:

  • Hire back the people you laid off or new people.
  • Perhaps earn a favored customer status with your vendors.
  • Have customers who have a new respect for you and the company.

The real secret sauce here is to communicate with each of these groups. Go beyond just communicating. You must implement what we call the Three C’s:

  • Communicate
  • Collaborate
  • Cooperate

These are part  of our Core Values here at New Paradigm Advisors. If you apply these three C’s to the situation, we can assure you that your stress level will go down. It won’t go away.  However, it will go down. Apply the three C’s with your people, your customers, your advisors, and your vendors. You will be shocked, yet pleased,  with the results.

Call or email us and let us know your experience. Let’s learn together.

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

Finish Strong: Our Next Workshop

While our theme through the end of the year in this space is finishing strong, we do have a real-time event coming up this week that builds on that theme and could be of real value to you.

Beside, hearing from a real, live person and interacting with others with similar challenges with their businesses might be a good use of your time, right?

On Wednesday, November 20, our team will assemble to present a 2-hour workshop on how to finish the year strong.  Taking pages from their experiences with EOS (the Entrepreneurial Operating System) and Strengths, Michael Visentine and Nancy Canada will walk attendees through a program that will result in a tangible plan.

In this session you will learn:

  • How to set goals that are both measurable and achievable.
  • What to assign to whom on your team once the goals are set.
  • Who on your team is going to be asked to do what.
  • How to determine the schedule of events and activities.
  • How to get buy-in from your team.

At the end of the session you will have a working set of tools that will allow you to set and manage your goals for the end of the year so you can finish strong.  And that in itself will make 2020 all that much brighter.

The workshop details:

For more information about how to finish the year strong, please reach out to us.  We’d love to hear from you.

The New Paradigm Advisors team

Finish Strong: Being Aware of Time

Finishing the year in a strong fashion is a noble goal.  Yet, don’t forget about the element of time.

For example today is November 11.  That’s just about 7 weeks until the end of the year.  That’s 33 business days or 50 calendar days (including holidays).

OK, so now you have the schedule, a framework.  A few questions:

  • Are you going to work nights and weekends to get this done?
  • What are your major milestones and when do they fall?
  • What do you expect from your team by when?
  • What’s the end result look like and when should it be finished?
  • Who is participating?
  • Why are you doing this and for whom?

Knowing the schedule will help you build the other elements of a great plan:

  • The scope—what needs to be done and a description of what you are tryi ng to accomplish.
  • The budget and monetary component of this work—what are the costs to get it done and what are the sales goals (revenue expectations).

In upcoming posts we will delve into the details of how and why to finish the year strong.  Remember, it is about the health and welfare of your business.

For more information about how to finish the year strong, please reach out to us.  We’d love to hear from you.

The New Paradigm Advisors team

 

The One Liner

One of the hardest things a business can do is define itself.  And defining oneself in the context of the future can be quite another exercise.

So it was with setting the direction of New Paradigm Advisors. It was a bit of “physician heal thyself.”

Given that we are in the business of helping companies clearly define themselves and then succeed within that framework, it was only fitting that we have to go through the same exercise.

The human brain is drawn to CLARITY and away from confusion. If customers are confused about what you offer, they’ll look past you for somebody who can say it clearly. Once you clarify your message, your company will begin to grow. Companies that clarify their messaging win in the marketplace. Nobody will know how much they need your product or service until you tell them in the right way.

To get there we had to get some noted outside help.  Donald Miller’s “Building a Story Brand,” was the mechanism we used to get us to both understand our business as well as be able to tell clarify our story. This framework was revolutionary because it taught us to stop playing the hero in the story, and instead, invited customers INTO a story.

The process involves Miller’s application of a screenwriter’s technique of mapping out characters in the drama that is your business.  Once you’ve determined each of those characters and their role, the shaping key words and phrases follows.  Like any strategic or branding exercise, you need to paint the larger picture to get to your corner of the frame.

In our case, it broke down into a simple concise, compelling phrase that gets people interested in how we can help them.  This is known as our one-liner:

“Many business leaders are chained to their business.  We break those chains, increase their company value, and help them build a fabulous future.”

There it was right in front of us: a painting of what our business looked like and a roadmap of how we would be conducting business.

  • There was the freedom by breaking the chains that kept us from growing.
  • Followed by the ability to drive value.
  • And leading to a fabulous future with a road map on where we were going.

If you need to clarify your company’s vision and need a roadmap to move to the next level, we’re available to talk.  And guide you through the freedom, value, future tangle.

Selling Strategically

At some point in all of our lives we have to sell something.  A glass of lemonade from the stand in the front yard. A car that has outlived its life with you.  Or yourself to that prospective date.

Most of us know what to sell.  Yet few of us consider how to sell. Selling strategically is how business is developed.  Ben knows how to do this and do it well.

Ben Buono will tell you that sales and marketing are intertwined.  And so are operations, finance and just about every aspect of your company.

“Everyone in your company is involved in sales,” Ben is known to say. And in his experience, it is true.

“Whether it is a Fortune 100 or a smaller local business, everyone in the company plays a role in sales,” Ben said.

Ben is responsible for new business development for New Paradigm Advisors. Yet his role goes beyond that of finding business for his fellow consultants at New Paradigm Advisors.  He is also available to our clients to help them set appropriate sales strategies, goals, and targets.

“Unless your enterprise has an effective sales strategy tied to an integrated marketing plan that is part of your business plan,” Ben said, ”your company can stagnate.”

When he worked for Arrow Electronics, Ben nurtured relationships and grew business for clients that included Microsoft, Intel, McAfee, Advantech, Kontron and SuperMicro, to name a few.

“At the end of the day it was about trust,” Ben said.  “Trust, not only in the solutions I brought to a need they had, but trust in me and my company to deliver and support the products.”

This philosophy is also at the heart of how New Paradigm Advisors does business.  Trust comes first with us, we believe, and the sales will follow.  Not only for us, but for our clients.

To take the next steps in shaping your business, please contact Ben or our team.

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

Follow the Money

Years ago, a friend was asked how he ended up with a million-dollar business.  The reply:

“Start with two million!”

Seriously, the financial aspects of your business are so critical to your success of your company.  While they aren’t the only aspect of the business to keep an eye on or be concerned with, they are critical.

Just ask Michael Visentine.  Michael is New Paradigm Advisors resident financial expert.

“From the time you do your first market analysis to setting up your books to making payroll the first time, you really can’t ever know enough about your company’s finances,” Michael said.

Michael should know.  He’s been a financial analyst, strategic planner and COO for several significant businesses.  He’s worked in the telecommunications, printing and food service industries.

“The biggest mistake most small business owners make is trying to do it yourself,” Michael continued. “Some things are just better left to those skilled in the craft.”

If you aren’t trained in bookkeeping, you can easily overlook entries and not understand tax deductions.  You could get your company–and yourself– in big trouble. And you might not set the whole system up right in the first place.

“Those two issues are probably the first things to consider right up there with mixing personal and business spending.  That’s a common problem with many family-owned businesses.

Then there is not backing up your data.

“Not having an adequate IT system and having it archive thing for you can lead to bigger issues,” Michael said.

Your financial systems are key to understanding your business as well as serving as the underpinnings of the company.

For more information on how to set up your company’s financial systems or have your current system evaluated, give us a call.  Not calling might add up to the wrong answer.

 

*photos courtesy of rawpixel on Upsplash