"I created Profit Acceleration Software™ so you can BOOST bottom-line profits using the power of compounding growth without spending more on marketing."- Karl Bryan
Day 1268: EBITDA. Baloney. Profits.
Last week we covered a lot of ground, including the effect alcohol can have on wonderful celebrations as well as what Dave said to the Whino when we walked by, and the guy was eating grapes.
Speaking of Dave saying, “Dude you gotta wait”…
My Drunk Aunt and I were watching fireworks when we had a conversation about money and here’s how it went:
Me: Do you actively work to minimize your tax position?
My Drunk Aunt: Yes.
Me: How so?
My Drunk Aunt: I’m actively looking for an accountant that’s not afraid of prison.
Me:
In other news from my BCS podcast…
A pair of shoes that don’t fit aren’t a great deal at any price.
Anyhoo…
Your one PROFIT ACCELERATION THING today is:
‘EBITDA’
Some insanely smart business minds will tell you that when you hear EBITDA, just replace it with ‘baloney.’
Can’t say I agree but I understand the point and I’ll explain both sides of the argument for you here.
EBITDA is an alternative way to measure profitability and stands for:
Earnings Before Interest Taxes Depreciation and Amortization.
To determine a company’s EBITDA you simply take their net income (earnings / profits) and add back Amortization, Depreciation, Taxes and Interest.
Why EBITDA?
Companies:
1. Use leverage (debt) to grow.
2. Use interest and depreciation / amortization to lower their tax position (pay less tax).
Debt / leverage / interest / depreciation / amortization lower the businesses profits which is bad for the company’s valuation / optics but good for calculating the amount of tax they owe.
EBITDA is encouraging the market to concentrate on CASHFLOW rather than profits / net income / earnings.
That can make a lot of sense in the right context.
My personal opinion?
I think EBITDA is a good metric to understand where a company is at and the value I’d attach to it but I also think (know) you need more information to make an informed decision on valuation.
Translation: EBITDA can overstate the value of a company by not calculating:
Capital Expenditures (Capex)
Working capital required
Debt obligations and interest costs
Taxes that’ll impact cash flow
Depreciation which should reflect real asset wear and tear
Lacks standardization and can easily be manipulated with accounting (less than accurate valuation which is the whole point)
* Seldom are things black and white in our wonderful world of business and the solution is, ‘education’ so you and your clients don’t get duped.
You heard it here first.
Now, pick up the phone and go help someone.
Obsessed with your business coaching success,
Karl Bryan
Founder, Focused.com
PS. Winner’s win… losers lose.
PPS. If this helps and you want it to really sink in… GO TEACH IT to someone, cause that’s the best way for you to learn it. A friend, your spouse, a prospect, a client etc…
*Don’t plagiarize my work like a lame arse.
PPPS. Marriages break up from lack of money… over lack of love X 100. Business failures lead to destruction, addiction, depression, anxiety, suicides, and unfortunately, far more.
As good business coaches, we save marriages, save families, save kids from self-destruction… we save lives!
A true life of purpose.
PPPPS. If you’re looking for a proven system to follow for your coaching…. I created Profit Acceleration Software™ and high-end step-by-step training to support it…
We did a training that will teach you A strategy that can DOUBLE your clients’ bottom-line profits using exponential growth without spending more on marketing.
Imagine finding your high-ticket coaching fees BEFORE you start coaching your new clients?! And a proven coaching system created for you to follow with your new coaching client.
Access the free training here
PPPPPS. Forward this to someone that needs to subscribe to my daily emails and get a limited-time, complimentary subscription to my business coaching magazine go here:
https://thesixfigurecoach.com/
PPPPPPS. They tell me my Podcast is Ric Flair style, Money Makin, Client Getten, Joint Venture Landing, Event Fillin, High-End Coaching Client Findin Gold For Business Coaches.
Karl Bryan, Creator of Profit Acceleration Software™
Karl Bryan gets clients for Business Coaches...period. He is the Founder of The Six-Figure Coach Magazine and creator of Profit Acceleration Software™ that shows you how you can BOOST bottom-line profits of any business using the power of compounding growth without spending more on marketing. His goal is straightforward… to help coaches and consultants get more clients.
Get a demo of Profit Acceleration Software™ at focused.com.
