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EBIT Killers and Rainmakers – Triage to Profitability

When you have the experience of a few turn-arounds under your belt, you pick up a few habits that serve you well in running your business, no matter what.

I look at the businesses I run along the bell curve of profitability.:

The left side of the curve contains my EBIT Killers. These are the programs, products, countries, customers that are loss-generating. They are dragging my performance down. Significant focus and execution is required here to either eliminate them from the portfolio or restructure/renegotiate to turn them to profitability. The key here is decisive action and pragmatism around turnaround potential. We always want to turn them around but reality dictates that often shedding ourselves from EBIT killers is absolutely the right move, and fast.

Even when your business does not have any significant EBIT Killers, raise the bar. Draw the line at operations that are at the bottom of your profitability curve and act to improve. Always have the mindset.

The right side of the curve are the Rainmakers. These are the jewels in the crown. They are humming, delivering good profit. Continue to invest in them. Work with your team to understand how you can scale these rainmakers, replicate them, find adjacent opportunities around them. Take the mindset that investing in and focusing on these operations and customers allows you to get more profitability.

Implement action plans with desired outcomes and make that a core part of how you manage and measure your business.

Meanwhile, the middle of the curve, that 60-70% of your business that does not fall into these categories, it is your core – it is the mainstay of your business, how your product and operations are defined. By addressing the EBIT Killers (free up cash) and the Rainmakers (make more cash), you find the means towards investing in the core…

And bringing home more profit

Ellipsis AdvisorEBIT Killers and Rainmakers – Triage to Profitability