Dear Reader,
It’s been 190 days since I last wore colours to work. I’ve expanded my definition of ‘black’ to include various shades of grey, and it turns out there’s quite a few. Charcoal, basically black. Iron, smoke, pebble, graphite, and slate are all acceptable. Cloud grey not so much.
This many days in and it’s starting to feel like a uniform, but the real point of it is to act as a sort of chastity belt to keep me from losing sight of the task at hand.
Growth, profitability and cash flow are the priorities of every CEO. We’ve excelled at one of the three over the past few years, though it appears that our growth has flattened. Revenue and payroll (inclusive of contractor fees) were both near identical year-over-year.
The trouble is our focus, my focus, was not sufficiently on profitability. I’ve enjoyed creating new things and trying to include as many people as possible along the way, but I’ve avoided addressing the discipline needed to create the necessary margins for survival.
It’s my hope that better use of budgets, improved business development and production processes, and smarter compensation will improve our profitability.
Each of our senior leaders has a budget, and over the next couple weeks we’ll be working to review our Q3 and Q4 projections. This will help us have a more accurate prediction of the year ahead. It’s an absolute must for us to be profitable after depreciation, a first in the Benifactor era (in year one we were profitable before depreciation).
Francis and I highlighted business development as an area requiring significant improvement. We will be working with Frontier’s client success team (and I’ll be working with Sarah regarding BKeeper) to better secure the growth that our entire organization has planned for.
Production-wise, even though we have a significantly larger team of digitally savvy Frontier folk, the efficiency and effectiveness that make for happy clients and generous donors has been below-par. We also haven’t been entrusted with as much advertising spending as hoped and need to take a small step back from having a full-time ads and awareness coordinator.
Due to a rough start to the year, we’re offside our original budget. I trust the work of our senior leaders to guide Benifactor into the era of profitability. Which brings me to an important thought. Smarter compensation.
On occasion, Benifactor employees have received commissions for sales, and I hated it. The reward was front-loaded, based on revenue (v. profit margin) and directly proportioned to the employee performing the sale and none to anyone performing the actual work.
We’ve moved on from commissions, and now have every employee earning a straight salary, much of them receiving raises after several quarters.
While our revenue fluctuates, it’s hard for our compensation to fluctuate aside from management taking salary cuts (of which I’m tired of), or layoffs (of which we’ve averaged two per year), or cutting non-essential expenses (of which we have little).
So how about a bonus system that tracks with growth? Once we’re in the black and I’m wearing colours (that is, once we have retained earnings) Benifactor will institute a savings program to create a bonus pool of 1% of revenue.
If we were using 2019 numbers that would equate to approximately $27,000 to be divided among our team. I’ll leave the details of our bonus system to Benifactor’s HR manual, but in short, our culture and compensation should take our need to focus on our client's growth seriously.
If our charities spend more on the Benifactor team, it means they are growing. That’s why we exist. And it’s on that note I want to make a final comment on better business development and being smarter with our priorities.
I’ve asked Francis to devise a means of rewarding clients when they do something mutually beneficial, such as paying on-time and avoiding unnecessary cash flow issues, or signing their contract earlier rather than later. What’s more, I want our clients to know how determined we are to hit our targets, particularly around acquisition. Our growth is their growth.
What should emerge is a process whereby if we miss our targets, we contribute to next fall’s efforts to acquire new donors. And, if they act like our best client and save us wasted time and money, we put those savings towards their acquisition.
If Benifactor grows, everybody benefits.
Finally, I wanted to say thanks to Innes Purdue for two years of growth and a sense of unparalleled ownership. Last year I described my time with him as “Insights with Innes”. Now I get to see him grow each day as Charity Electric’s lead consultant and an outstanding member of our leadership team. Thanks for being part of this wild journey Innes!
I always welcome feedback and questions. Email me at ben@benifactor.com if anything struck you.
Sincerely,
Benjamin Johnson, CEO