I bring up this topic because, in the midst of such an avalanche of financial information, the real question is rarely “what exists”… but rather:
what do you actually choose to look at when you have to make a decision.
For me, the first one is EBITDA.
What is EBITDA (and why it matters so much)
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) represents the percentage of revenue that a company retains as operating profit, before interest, taxes, depreciation, and amortization.
In other words, it is an indicator that isolates one essential thing: the efficiency of your business at its core operating level.
Here is the important point.
By excluding depreciation, amortization, interest, and taxes, EBITDA places you in a position prior to investment decisions you have made and prior to tax-related decisions.
In simple terms, it answers a straightforward question:
Does your business, on its own, generate enough margin to exist? Or is it better to close the doors?
So, if EBITDA is positive, it means that:
- your revenue is covering your operating costs
- your business is sustaining its own activity
- there is a foundation to grow in a structured way
There is enough internal flow for the system to work.
And when it is negative?
In the early stage of a business, this can be normal.
However, the critical point is not the starting phase. It is the direction.
Because what is expected over time is simple:
- operations become consistent
- margins become sustainable
- the business stops depending on constant effort just to survive
This is the detail many people ignore: EBITDA is a lens.
A lens that determines whether you move forward or stop.
The question that remains
If you removed everything else from the equation (taxes, financing, depreciations) would your business still sustain itself?
And you…
What is your company’s EBITDA at this very moment?
See you later,
Ana Coelho
