Nowadays, it’s difficult for startups to practice economical responsibility. Investors insist on growth, competitors offer more perks and money is being thrown at you round by round – all this encourages spending, and visibly successful startups crash regularly. BrandYourself stopped burning through $300,000 per month and turned profits with the involvement of their staff and without any layoffs. It is quite the success story.
Some startups experience a meteoric rise only to come crashing down just as fast. Nasty Gal, Zenefits, Theranos, and many others were soaring high before burning through funds in a quest to reach profitability.
Patrick Ambron, CEO of BrandYourself, a company that helps people improve their online reputation, argues that the modern startup culture promotes a lack of financial discipline. “You are successful and have enough money! There will be another round and you’ll get even more cash!” — these messages give startups a false sense of security and most wake up when it’s already too late. BrandYourself fell into that trap but they were able to reverse the trend and become profitable.
When a crisis hits, companies start cutting costs. This usually begins with layoffs. BrandYourself was facing a similar problem. However when their expenses became too cumbersome and the company was on a fast track to bankruptcy, they asked their employees for ideas and adopted the Zero EBITDA approach proposed by management. This approach empowered staff and allowed BrandYourself to cut expenses and stay afloat. All ideas were welcome, the company made their finances transparent and every monthly success was celebrated. In several months, they achieved their common goal of profitability.
A company’s most valuable asset is their employees. Great results can be achieved when everyone is engaged. Employees will help you stay afloat – even if your company is overloaded with financial issues and expectations.