![]() ![]() For example, a roof truss manufacturer booking $6 million a year, cranking out standard 8/12 16-foot-long gables with no customization, is of no comparative value to a diversified production/custom shop with automated saws and laser-guided layout tables. There is a way to compare one company to another, even when they are dissimilar in sales revenue, with the caveat that the companies involved should be roughly equal in terms of their scale, technology, and equipment in use. Differing regions bring different challenges (labor, trucking, material costs, distribution strategy, access to roadways, etc.). ![]() But this approach doesn’t get an “apples-to-apples” comparison either, even if the CM had roughly the same sales revenues. How about if a CM calls another CM outside of their region? This happens quite a bit amongst companies who actively participate in SBCA and don’t compete with each other. If that CM could find another nearby component manufacturer with the same equipment, also doing $20 million in business (and that wouldn’t mind opening their books), the two companies could talk and get a clear idea of how they are each doing.īut the chances of that really happening hover somewhere near zero. Let’s take a hypothetical CM with a $20 million revenue operation. The challenge in making this kind of comparison with another company is clear: How do you find another business like yours in size and product mix in your market to make the comparison meaningful? You are probably well aware if you are currently profitable or not, but are you as profitable as you could be, and what areas could stand improvement? Are you as profitable as the other component manufacturers in your market? How does your degree of profitability (profit as a percent of top-line revenues) affect your company’s value in the event you were to seek an acquisition, recapitalization, or employee or family buy-out?Ī key term used in this article is “EBITDA.” EBITDA is a Generally Accepted Accounting Principles (GAAP) term for the company’s Earnings Before Interest, Taxes, Depreciation, and Amortization. It establishes a vocabulary of financial terms and methods that will be used in future articles and seeks to ensure everyone has the same foundation of knowledge.Īs a component manufacturer (CM) owner or manager, it is only human nature to want to know how you stack up against your competitors in terms of performance and profitability. It means the back end processes are moving forward.įor help with SBA’s Disaster Loan Assistance website please contact the disaster assistance customer service center at 1-80 (TTY: 1-80) or by e- mail at an “acquirer’s view” of your company to understand its valueĮditor’s note: This article is intended to be an introduction to a forthcoming series of articles by the author. Some SBDC clients have recently received letters that their applications are being processed and that additional documentation will be requested. We understand this is not especially comforting as bills continue to grow. Our own resources tell us that if you have applied already, that it is a waiting game. Update: as of 4-21-20, news media is reporting that a ~$450B supplemental appropriation bill will pass soon, and SBA EIDL and PPP loan applications and approvals can resume. ![]()
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