What is EBITDA and why should you care? (Part 1)


Hi, Reader,

This one is going to be a two-parter because it's an important money thing that I want to make sure we're wrapping our heads around.

Most independent consultants are not sitting around wondering, “How much did my business earn?”

We’re asking:

Did the invoice clear?
Can I pay myself?
Did I save enough for taxes?
Is there enough left for my actual life?

So when someone says we should know how much the business earned, the reasonable response might be:

Who cares? I made money.

Here’s why it matters.

Paying yourself supports your life.

Having money left after fairly paying yourself gives the business breathing room.

It allows the business to keep moving when:

• A client pays 30 days late
• You need to take a month off
• You lose a major contract
• You want to hire help before the next payment arrives
• You need to invest in marketing, systems or a new offer

If every dollar left after expenses has to come home with you, you may still have a successful consulting practice.

But every interruption in your ability to work can interrupt your income. And every investment in the business has to compete with your mortgage, groceries, childcare and other personal needs.

You do not have to want a large agency or a seven-figure firm to care about this.

You may simply want more stability. More time. More choices. The ability to breathe when something changes. (You know by now that more freedom is always my end goal for us)

Owner compensation supports your life today.

Business profit creates options for what happens next.

And options are part of freedom.

That is why EBITDA matters.

(Btw, EBITDA stands for earnings before interest, taxes, depreciation and amortization.)

I'll share part 2 tomorrow and I’ll show you how to calculate it in a way that gives your own labor a real value.

You got this.

Kamilah

PO Box 195604, Winter Springs, FL 32719
Unsubscribe · Preferences

Katalyst

I help high-impact women step out of broken systems and build businesses that work—for them. My newsletter is where social sector consultants, entrepreneurs, and principled professionals come for sharp strategy, deep clarity, and the real talk it takes to lead, earn, and live well on their own terms.

Read more from Katalyst

Hey Reader, Well, this was a fun surprise.I discovered today that theGrio recently featured Katalyst and my work in a story about why Black women are rethinking what success is supposed to feel like. Outlets publishing things about us without me even knowing is definitely a new business (and life!) level unlocked.I’ve been talking about this for years.For so many women I work with who have pivoted to independent consulting or are considering it, the question isn’t simply, “How do I become...

Hey Reader, Something dropped yesterday that I think every nonprofit consultant needs to know about. And I want to give you my honest take before the panic sets in. On August 31, Candid made its AI fundraising assistant broadly available to Candid Search users. It can now help organizations find aligned funders, evaluate eligibility, analyze award history, recommend an ask amount, build prospect pipelines, and draft initial letters of inquiry. In plain terms: the tool does a significant...

Hey, Reader, This is Part 2 on yesterday's email. Let’s calculate EBITDA. EBITDA stands for earnings before interest, taxes, depreciation and amortization. For a small consulting practice, think of it as an operating health check: How much did the business produce after covering the normal costs of delivering the work and running the business? The calculation changes slightly depending on how you pay yourself. Let’s use a $150,000 consulting practice. If you pay yourself through payroll:...