What is my exit going to look like?
Transitional planning takes sensible outlining and forecasting. From the start, you need to decide if you are selling, transitioning, or closing up shop
What motivates you? Is it to retire and play golf in a sunny, warm climate? Does your children’s future motivate you? A secure financial future? No matter what drives you, transitional planning needs to be the first process. Be definitive. Do what works for you. If a vision board helps, create one.
Transitions can be varied i.e.; to relatives, non-relatives, could be a buy-out, or a combination of both. It has been my experience that successful transitions are of the buy-in/buy-out nature.
Projections
Focus on things that can be actualized.
Set goals in different increments as needed within your specific time frame. For example, set 1-, 2-, 5- and 10-year goals. A good financial plan is guided by your financial goals; whether planning for next year or 5 to 10 years from now.
Projecting 5 years out and working backward is a good formula. What is something you want to accomplish in 5 years, and how do I get to the goal? Go back and when you get within the closest, which I would say is 12-24 months – what are you doing monthly? Now it becomes a realistic budget. This way you know you’re taking every step to get there. Use the budget as metrics and identifiers for making short term decisions in strategic plans that leads to long term success.
You can have a down month, and, you can have a great up month the following. Know the peaks and valleys of your business. If you have a goal of $1 million a year in a certain segment of the business, and your hit rate is a typical 30%, you have to divide 30% into the million-dollar goal you want, and know how much you need to present on a regular basis to get you to a $1million, to get to hit that actual 30% of actual closing. Then break it down on a monthly basis and if you know you can average it know the peaks and valleys of your business and apply that to each month – if you look at a month where you don’t have any meetings scheduled, then you know you are going to be behind in getting in front of people and meet that budget.
Developing the metrics, sticking to the budget, will get you to the projections; which will get you to the end result.
EBITDA – What is it?
Let’s talk about EBITDA. It is a business evaluation concerning Earnings Before Interest Taxes Depreciations and Amortization.
What is the different between gross profit and EBITDA?
Gross profit appears on a company's income statement and is the profit a company makes after subtracting the costs associated with making its products, or providing its services.
EBITDA is a measure of a company's profitability that shows earnings before interest, taxes, depreciation, and amortization.