EBITDA Failure

We had just finished our annual budgeting cycle. Hours of analysis. Alignment across departments. Savings initiatives layered in. A realistic and responsible plan built to drive performance and protect the operation. Then the CEO walked in and said one sentence that wiped all the effort away - “Increase EBITDA by 10%.” We had already planned an increase of 7%. This was an additional 10%. No discussion. No rationale. No connection to volume, cost structure, or market conditions. Just an arbitrary number.

The directives that followed? “Cut the expense lines again. Take another look at labor. What contracts are up for renewal? Where can we cut service?"

That moment was eye-opening because leaders push their teams. But great leaders push with purpose, not with random percentages that ignore operational reality.

What that request told me was simple. He wasn’t connected to the work. He didn’t understand the levers that truly drive profitability. And he was more focused on optics than building a sustainable plan.

The best CEOs I’ve worked with roll up their sleeves. They ask questions. They understand the business drivers and work with the team to find opportunities. They don’t chase numbers. They build operations that produce numbers.

The experience taught me a valuable leadership lesson - you can’t manage a P&L from the country club. You manage it by understanding the people, the processes, and the reality of the business.

Pressure is healthy. Arbitrary demands are not.

Did we hit his EBITDA number? Nope! And do you know why? Because after we went through the exercise again - he changed his percentage again. If we were a football team - we could block and tackle. We had good coaching. But what we had was an owner that changed the game plan on game day.