26 NOVEMBER 2018 • FOGHORN BUSINESSMATTERS JULY 2017 • FOGHORN 37 MEMBERNEWS FLAGSHIP MARINE MARINE 5/3/07 Commercial Marine A/C by Flagship Marine www.flagshipmarine.com Flagship Marine, Inc. sales@flagshipmarine.com Phone: 772-283-1609 Fax: 772-283-4611 Watts: 800-316-6426 Stuart, Florida - USA 30 TON Chiller Variety of Air Handlers including this 12 inch tall 36000 BTU unit Copyright © 2007 Donnelly Advertising & Publishing No expensive proprietary printed circuit boards !!! Lowest Long Term Maintenance Cost in the Industry! 3 TON Self Contained "Since 1995" Lowest Long Term Maintenance Cost in the Industry ! No Expensive proprietary printed circuit boards !! 3 Ton Self Contained 30 Ton Chiller "Since 1995" Variety of Air Handler Units in both chilled water and split systems including this 12" tall 36000 BTU Unit Flagship Marine, Inc www.flagshipmarine.com sales@flagshipmarine.com Phone 772-283-1609 FAX-772-283-4611 800-316-6426 Stuart - FL- USA Commercial Marine HVAC by Flagship Marine do 20 percent of sales for EBITDA; with the same multiple your business would be worth 160 percent of annual sales, a historically robust result. In the past, many operators sold their businesses for 60-80 percent of sales, and those doing 100% were good. Return on Assets This is the most useful rule res- taurant venture capitalists taught me 30 years ago. I had a strong concept if EBITDA divided by Total Fixed Assets (essentially boats) achieved 30 percent. That implies generating $1.8M About the Author Bob Shaw is a veteran industry executive, having led over 100 vessels responsible for over 10 million passengers a year. He can be reached at shawrw@gmail.com. EBITDAon a $6M vessel. I would focus my team on increasing cash-flow (the numerator) while minimizing vessel costs (the denominator) to increase this ratio. I felt this was my personal scorecard as a CEO. Intangibles That said, there is a new standard that only the biggest and the best in our industry can aspire to. For the largest publicly traded companies, the S&P 500 non-tangible assets in 2015 represented 84 percent of the value. A friend’s software company is valued at 10x annual sales in its fourth round of funding. Certainly, asset-based and cash flow-based formulas are not in the same ballpark of this valuation. Instead, this implies super-fast growth, large margins, and the ability to scale (adding more revenue much faster than adding more costs). But the real value is based on the “intangible assets:” customers, data, disruptive technol- ogy and non-physical assets. Can you figure out a way to transform your business by capitalizing on your data and unique customer relationships? Industry leaders doing so will dramati- cally transform their valuations. While this might be foreign, you can learn quickly: speak to your banker, accountant, lawyer, other business owners and friends, and then trian- gulate the three to four simple rules that apply to your situation. Despite what the wolves of Wall Street profess, finance isn’t rocket science. The best course is to operate as if you were to run the business forever. Take care of your boats, respect your crew, provide superior customer service, think long term, don’t borrow too much, and you will be ready for that day that rewards all your hard work. n