This week's tip - to give only what you can afford to give - is critical for entrepreneurs who, like me, are more "social enterprise" than "enterprise"; who measure the success of each day not by what is gained but by what is given; who relentlessly and in almost comical kamikaze fashion, de-prioritise the bottom line in favour of "passion", "impact" and "making a difference".
Mark Zuckerberg is famous for saying, "If you just work on stuff that you like and you’re passionate about, you don’t have to have a master plan with how things will play out.”
But Mark stumbled upon a unicorn at university - in a safe environment, without any of the financial concerns or dependencies that plague most working adults. Mark Zuckerberg was free to work on stuff that he liked without a master plan, to pursue his passions without regard for more material concerns.
You are not Mark Zuckerberg.
TIP 4 - GIVE ONLY WHAT YOU CAN AFFORD TO GIVE
"Give only what you can afford to give" applies to four key things - the same four things to which the European Union applies the principle of freedom of movement: (1) goods, (2) services (/time), (3) money and (4) people. These four things are critical to the success of any business because they directly impact the bottom line.
Let's assume that a successful business is one where, on average, monthly revenue exceeds business expenditure, i.e. the business is profitable. This profitability is directly impacted by the margin associated with the goods you sell and the services you provide. You cannot persistently sell goods below cost to "good" causes; nor can you assign people to "charitable" projects where the project day rate is less than their loaded cost and that loaded cost is not covered by revenue generated elsewhere. Sure, the company mission is important and doing business ethically matters. But do you really think it's "charitable" to lay people off without notice because you can't afford to pay their salaries? Is making promises to partners that you can't keep and retracting them at the last moment "good"?
About three months into starting my first services business, where far too much of what we did was done "for good" (read: "for free"), I realised something was seriously wrong when I calculated that the business was earning less per day with four salaried team members than I was able to earn by myself. So I changed the business model, refined our service offerings, reduced the size of the team, and the business is still alive today because of it (and only because of it).
Once you've achieved profitability, you can start to consider some of the other features that are commonly used to define a successful business - a growing customer base and market share, customer and employee satisfaction, owner satisfaction - but you cannot subvert profitability to any of these. It doesn't matter how vibrant your digital presence is, how many followers you have on social media, or how many Fortune 500 companies you've partnered with if you don't make enough money, day by day, to pay your team and your suppliers.
<a slight tangent> There's a huge amount of pressure on technology startups these days to become the next "unicorn" - fuelled by the success of the likes of Mark Zuckerberg, and the unicorn-hunting fervour that has gripped Silicon Valley. Indeed, many venture capital firms with pots of $100 million or more will not invest in startups unless they have a Total Addressable Market (TAM) size of $1 billion or more. How this is meant to encourage innovation in areas that are not "in" at a particular point in time (think: Augmented Reality (AR), Virtual Reality (VR) and DigiHealth), I just don't know. </a slight tangent>
So before you think about becoming the next Microsoft and setting up your own Bill and Melinda Gates Foundation, remember this: the first and foremost indicator of a successful business is profitability. If you struggle with the concept of making money - Money should be the means to an end, not an end in itself! I want to make the world a better place! I started my business to HELP people! - just think: without money, your business will not survive - your employees will not have jobs, your customers will not have access to your goods or services, you will have no Corporate Social Responsibility (CSR) budget. You are doing no favours to anyone by hiring out people or taking on work you cannot afford. As a business owner, you need to survive - you and your business - otherwise your luck, like the EU's, will run out.