Profit Secrets of the 10% EBITDA Distributors
Very few wholesale distributors have entered the rarified air of 10% EBITDA (Earnings before interest, taxes, depreciation and amortization). It is superior territory, and less than 1% of distributors make it to that level. Top management needs to absorb and drive performance in all areas to reach 10% EBITDA. So you can't just be good at sales, marketing, operations or asset management. You need to excel on all fronts because they work together like an offensive line, quarterback and receivers. Fail to excel with any of these and you won't even come close.
There's a very important thing I need to tell you about EBITDA. It's NOT the end all be all measure. That measure is return on investment. In this article, I'm going to start with the most important "secret" of them all.