Into The Lender's Mind #10 How to engineer your EBITDA

A business is a pure strategy game. Your profit can be engineered.

Engineer your business lendability

Where engineering means applying the same mindset you’d use to design a machine:

• Measure precisely – what are the inputs, outputs, and bottlenecks?

• Test repeatability – is the improvement sustainable, or a one-off?

• Document the evidence – because underwriters don’t believe stories, only data.

• Think in systems – pricing, waste, labour, procurement, overheads, cash. Each gear matters.

When lenders or investors review your business, they’re not asking: “Does this company feel stronger?”
They’re asking: “Can this company generate repeatable cash, backed by evidence?”

That’s where EBITDA engineering comes in.

EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortisation

It’s the universal language of profitability.
It strips out noise and shows the core earning power of your business.

Why engineer it?
Because raw EBITDA rarely tells the whole story.
Margins get clouded by one-offs, inefficiencies, or bad structures. By deliberately mapping what’s real, repeatable, and structural, you can:

• Show with proof how your profits really improved

• Make banks, investors, and decision-makers trust your numbers

• Get higher business value, bigger loans, and quicker approvals

The most powerful tool to show this?
An EBITDA bridge.

A clear, forensic map of how profitability has changed and why those changes can be trusted.

The Engineering Mindset

When you approach EBITDA like an engineer, you stop hoping for better numbers and start constructing them.

Let me show you how I engineered the EBITDA for a real client I worked with over the summer. This is a Canadian toys manufacturer I have been consulting on their strategy from the beginning of the year. They were looking to bring some more automation into the business but not able to get a bank loan.

Example: £380k of Engineered Lendability (numbers have been slightly altered for confidentiality and converted in GBP)

• Baseline: £400k EBITDA (5.7% margin on £7M T/O)

• Run-rate (8 months later): £780k EBITDA (11.1% margin)

• Engineered EBITDA uplift: +£380k

Here’s where the £380k came from:

• Better pricing & sales mix (+£130k)
  Raised prices slightly on key products and sold more high-margin ones backed by signed orders.

• Less waste (+£85k)
  Cut scrap and improved QA processes, saving material and rework costs.

• More efficient labour (+£75k)
  Restructured shifts, reduced downtime and overtime, improving output per employee.

• Smarter buying (+£55k)
  Negotiated new supplier contracts and logistics terms, driving cost reductions.

• Lower overheads (+£25k)
  Trimmed non-essential admin spend, e.g. software and insurance costs.

• One-off clean-up (+£10k)
  Excluded exceptional, one-time costs to reveal the true ongoing picture.

This isn’t storytelling.
It’s forensic, cause-and-effect proof.

What lenders will believe (and what they won’t)

They usually accept:

• Fair salaries – if owners are paying themselves far too much or too little, lenders adjust the numbers to what a normal manager in that role would earn.

• One-off costs – things that happened only once, like a legal dispute or shutting down an unprofitable product line.

• Proven improvements – savings or efficiency gains that have already shown up in the accounts for at least 3 months.

They usually reject:

• Delayed spending – pausing maintenance or marketing isn’t a real saving, it just pushes the cost into the future.

• Future price rises – saying you plan to raise prices doesn’t count unless you already have signed customer orders.

• Hoped-for savings from new equipment – if the machine isn’t bought and working yet, the lender won’t include the benefit.

The line is clear: lendability is engineered through action, not aspiration.

What you need to show in your pack for the bank or board

The essentials:

Profit bridge chart – a simple before-and-after picture showing how profits changed and by how much.

Proof folder – the backup documents (like contracts, reports, invoices) that prove those changes are real.

Cash flow test – show clearly how much money is left after tax, bills, and upkeep to cover loan repayments.

Risks and safety nets – explain what could go wrong and how you’re already protecting against it.

Together, these components elevate the business from “management narrative” to “lender-ready proposition.”

Finally

Just showing a higher EBITDA isn’t enough to get funding.
What matters is real, proven improvements that flow into cash flow (CFADS) and meet the repayment test (DSCR).

In simple terms:
Getting funding doesn’t happen by chance.
It’s something you build on purpose, you engineer it.

Visit my website www.ellcadofinance.com