One of the greatest things you can do for your employees is to ensure that your business is sustainable. Employees tend to take it for granted, but small startups know this is not the case.
There is a story about a business-school professor who was very frustrated with his class one day. Their assignment was simple - to identify “what is wrong with this business?” The students had pored over the company documents - balance sheets, mission statements, annual reports, and come up with tons of ideas, but none of them seemed to satisfy the professor. “No! No! No!” he shouted to every idea they came up with.
Finally one student raised her hand and said “I don’t know if this is what you’re after, but they are about to run out of cash in 4 weeks.”
“Yes!” replied the professor, who then proceeding to write C-A-S-H in huge letters on the board and underline them. “They are about to run out of cash. Without cash, the business is dead.”
That line has become a truism in business:
If there’s no margin, then there’s no mission.
Loosely translated - cash (or sales) is what ultimately makes a company viable.
Very often in software engineering companies, employees are too enamored of “culture” related things:
- How can we make this the best place to work?
- How can we ensure a true 40-hour work week?
- How can we encourage people to follow their passions?
- How can we build more trust among our employees?
- Are we customer-focused?
- How can we be more strongly aligned with our core values?
I’m not saying the things above are unimportant. You can’t run a sustainable business nor retain talented employees without paying attention to them. But they all come secondary to your cashflow and bank balance. If you can’t pay the bills and salaries, nothing else matters.
At a fundamental level, it’s a restatement of Maslow’s hierarchy of needs.
My challenge to all employees: how well do you know your company’s financial situation? Do you understand how your activities contribute to improving or worsening that situation?
My challenge to all employers: always keep your people informed of how the company is doing financially. Encourage financial responsibility in every employee.