Investors in fast growth software firms track the following key performance metric, and so should you.
They keep tabs on the combined metric of “growth + ebitda”, to determine the health of their investment.
We have modified this metric for our industry. We call it the Profit Growth Index “PGI”. We take:
- a company’s net-to-owner profit % (earnings before depreciation and owners pay),
- and we add to that their year-over-year growth.
At our last all-client community event, we highlighted our top 5 scoring PGI companies from 2023, and we discussed how they got there.
These top five companies achieved a Profit Growth Index between 64% and 100%.
Barney Naylor, Naylor Landscape, Michigan, was #5 on our list. (from our “Showcase” Peer Group)
Barney is a long time peer group member.
We helped him upgrade his leadership team, bring on a solid COO, and double down on efficiency and maximizing capacity – all in one year.
Both his revenues and his profits jumped quickly – everyone was blown away by the quick, sustainable improvements he achieved.
Lincoln Anderson, Aspen Ridge, South Dakota was #4. (from our “High Achievers” peer group)
He has been steady riser.
As a member of our community for 3+ years, he has focused on improving seemingly everything in his business all at once.
He has been relentlessly hiring and then mentoring leaders, implementing financial KPIs, fine tuning his systems, and improving marketing and cross selling across his divisions.
Lincoln is the ultimate contractor, “Walk softly and carry a big harry audacious goal”.
Chris Webb, Webby Landscape, Montana was #3 (from our “Empire” peer group)
Chris recently joined our peer group community, and with that inspiration has doubled down on his operations and growth, and it shows.
He is very ambitious.
Matt Bailey, Alpine Landscape Service, Colorado was #2 (from our “Rocky Mtn Leaders” peer group)
Matt is a long time member of our peer groups, one of the originals.
He runs a niche business high up in a ski resort area, and has consistently grown his margins year over year, from good to great (to stellar, if I am being honest).
With top line also growing slow and steady, he has done well for himself.
Nate Moses, Precision Landscape, South Carolina was #1 (from our Wolverines peer group).
Nate has combined gutsy acquisitions with steady gains in efficiency.
He has been both a learner and a leader in our community.
He is the best kind of member, willing to be humble and learn from everyone, while also forging a unique path forward that inspires others.
Your Challenge: Identify your next steps to increase your Profit Growth Index
To build a valuable business you can’t focus on just one attribute. You need both.
- Keep one eye peeled on today’s issues (efficiency, capacity utilization, leadership) and
- Keep the other eye focused on future prospects (growth).
Admittedly, these two factors commingle and influence each other, as the five case studies highlight.
Your challenge is figuring out your biggest obstacles and opportunities that you can embrace to raise your PGI score.
There are two ways to find out your next steps – which I highlight below in the postscript.
Have a great week. Carpe Diem!
Regards, Jeffrey Scott!
P.S.
1. If you join our Financial Masterclass, you will learn your PGI score, the minimum score we recommend you achieve, and we show you how you compare with all other attendees.
Save 200 per ticket when you register before Nov 21.
2. Join our Leader’s Edge peer group community and come in from the cold — meaning, its lonely out there, but we can provide you with a warm community and tangible accountability to help you improve your strides in all areas of your business, and life. Go here to set up an appointment with us.
Register for our Financial Masterclass before Nov 21 and save 200 per ticket
