3 ms·
I'll add this real quick: A decade later I found myself having to face hiring sales people for my business. I had, up to that point, done that job myself but
by robomartin 5y ago
I'll add this real quick:
A decade later I found myself having to face hiring sales people for my business. I had, up to that point, done that job myself but it was seriously getting in the way of my need to focus on engineering.
There is nothing that focuses your mind on the importance of profit than the agony that it can be to find and hire competent sales people. I sought advice from other business owners at the time. Took people out to lunch/dinner to have this conversation. I cannot remember a single person rolling their eyes and then telling me horror stories when I opened with: How do you hire good sales people?
I experienced months of financial and emotional pain as I hired and paid sales people seriously good salaries and they did not even deliver enough sales to cover their own salaries, much less provide for the other employees. I spent hundreds of thousands of dollars --burned, really-- on them. It was brutal.
This is why one of my favorite quotes is:
"A man holding a cat by the tail learns something he can learn in no other way" -Mark Twain
This is so true. Nothing focuses the mind better than grabbing on to that tail and not letting go. Entrepreneurship, business, is brutal in this way. It can be almost impossible to understand from the outside. It can even be impossible to understand from the inside. The engineer and warehouse worker are not generally aware of what it takes to hold on to that tail and what the business has to produce in order for them to have a job.
How much profit does a company have to make in order to be able to hire someone making x? Say x = $100K.
$100K profit? No. That formula is not sustainable.
$200K? Maybe. It depends on the nature of the business.
Restaurant, maybe. Web software engineering operation? Possibly. Hardware engineering/manufacturing operation? No way.
It is hard to nail this number down because it depends on the nature of the business, industry, etc. In a manufacturing business you need a tremendous amount of cash parked in a warehouse in the form of components, inventory, equipment, etc. If we are talking about a web SaaS, the costs structure is different and varies significantly with scale. Netflix vs. a dating app, for example. In other words, this question can only be answered with the benefit of context.
It could very well be that a company has to be able to produce a million dollars in profit in order to justify hiring someone for $150K (which, after benefits and other costs, actually means about $200K. Few people understand this reality when they get a paycheck. I can see how, without this insight, it could look like the guy focusing on making that million in profits can look like a greedy bastard to the guy who costs the company $200K. I can see how it could look almost criminal to someone looking at it without any context at all from the outside.
You have to hold the cat by the tail to understand.