By Mark Klein
Many small business owners are quite successful. They came up with a great idea and grew it into a thriving business. As a result, they have enjoyed the fruits of their labor, while employing loyal and productive employees. In many cases, these businesses have excellent financials… their gross margin and EBITDA numbers are often very solid, even robust.
However, there are always storm clouds. And those clouds come in the form of business downturns, loss of a large customer, price erosion, quality or service problems, or the unknown – like COVID-19. The question is: Where are the storm clouds? Are they on the horizon or over your head? Is there room to be a visionary for your business? Is there a need to have a little more urgency about the state of things?
During these uncertain times of COVID-19, that sense of urgency has likely crept back into the conversation for most of these business owners. The storm clouds have moved closer! So, the question becomes, is your business ready for this? Or, is your business already on the “edge” and this virus pushes you over it? Tough stuff for sure.
A common problem for leaders is to take performance and results for granted and then to get complacent. For example, “if my EBITDA is 19% of revenue, what’s the big deal if it drops to 18% or 17%? It’s still great!” This is true, but it is still the first red flag.
19% EBITDA for most businesses is strong. Learn to fight for every point. Hang on to 19% and if it slips to 18%, treat it like an urgent problem. Keep those storm clouds as far out on the horizon as you can.
In the meantime, keep up the good work!
NOTE: COVID-19 is presenting all of us with new challenges. I don’t pretend for a moment that we necessarily know how to react. We are learning day by day. But I do believe we will learn, and we will come out of this stronger and better than ever.