Investors in fast-growth software firms track the following key performance metrics, 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 percentage (earnings before depreciation and owners’ pay) and add to that its year-over-year growth.
At our last all-client community event, we highlighted our top five scoring PGI companies from 2023, and we discussed how they got there.
These top five companies achieved a Profit Growth Index between 64 percent and 100 percent:
Barney Naylor, Naylor Landscape, Mich., was No. 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, S.D., was No. 4. (from our “High Achievers” peer group)
He has been a slow, steady riser.
As a member of our community for more than three 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, Mont., was No. 3 (from our “Empire” peer group)
Chris just joined our peer group community, and with that inspiration, he has doubled down on his operations and growth, and it shows.
Matt Bailey, Alpine Landscape Service, Colo., was No. 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, S.C., was No. 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 his own unique path forward that inspires others.
Your Challenge: Identifying your unique path to growth.
To build a valuable business, you can’t focus on just one attribute. You need both.
You must keep one eye peeled on today’s issues (efficiency, capacity utilization, leadership) and the other eye focused on future prospects (growth).
Admittedly, these two factors comingle and influence each other, as these five case studies highlight.
Your challenge is figuring out the biggest obstacles and opportunities that you must embrace to raise your PGI score.
There are two ways to find out your next steps:
1. Join our Financial Masterclass, where you will learn your PGI score, the minimum score we recommend, and how you compare with all other attendees.
Save $200 per ticket if you register before Nov 21.
2. Join our Leader’s Edge peer group community and come in from the cold — meaning, it’s lonely out there, but we can provide you with a warm community and accountability to help you improve your strides in all areas of your business and life.
