Lane on … Grow Revenue Faster Than Costs

Here’s an acid test for whether a business is getting stronger or weaker.  Take earnings before interest, taxes, depreciation, and amortization EBITDA and divide it by revenue.  This gives you EBITDA margin for the business.  Do this for the most recent fiscal year completed and do it for the prior fiscal year.  If that number is getting smaller, the business is being eroded away.  The owner(s) and employees are literally working harder for less money.  If that number is getting bigger, even if revenue is stagnant, the business is getting stronger.