4 ms·
If I have a company with good cash flow, all employees (including me) are compensated well, and I'm spending a chunk of that cash flow on R&D and growth but hav
by fencepost 4y ago
If I have a company with good cash flow, all employees (including me) are compensated well, and I'm spending a chunk of that cash flow on R&D and growth but have only marginal profits if any am I doing something wrong? Should I cut R&D to pay dividends? How about if the company is privately held?
There's a difference between 'not profitable' and 'losing money.'
- papito 4y agoI worked for a company that rented a new expensive floor in the heart of NYC to show "growth" to other investors. We were supposed to spread out for the optics, when potential investors did a walk-through.
- PheonixPharts 4y agoIf "profitable" is a switch you can flip, then what you're describing makes sense. The issue is that many of these companies have never demonstrated that if they want to they can be profitable. The big assumption in these growth models is that there is a point where you can just magically flip that profit switch. For example if I run a lemonade stand where I spend $3 to make a $1 glass of lemonade, even if I am able to use investor capital to keep growing my lemonade stand to be the only lemonade stand in town, or even the world, it's not clear that I can survive if I'm forced to make a profit.