Major Accounts: Fatten Your EBITDA
“EBITDA: Earnings Before Interest, Taxes, Deductions and Allowances” is why you want to have major accounts as clients.
When I was retained by an early-stage services company, they needed stable, predictable revenue. Friends and family had been promised they would have their investment back within 3 years.Therefore, the company had to be sold for a profit. Their existing client base was in a cyclical, declining industry, which meant that they suffered monthy swings in revenue as their clients dodged threats in their market.
Since this was a services company with no intellectual capital, I had to secure long-term contracts in a stable, growth industry.
My strategy was to pursue high-margin, high-volume service contracts with market leaders in the consumer credit cards. Not only were these open-ended, long-term contracts, but a broad product range represented growth opportunities for my client.
However, be warned: even if they are big, a major account will only fatten your company’s EBITDA if the industry itself is in growth.
