Guest Blog from a Former Client
We’re pleased to share this guest blog from a former client. Read on to hear her experience with payroll and profit.
During my many years as a CFO of a small business, I would look at our tiny bottom line and become constantly frustrated that we just couldn’t seem to make any REAL money. Many months, we broke even or felt a loss. I remember looking at our employee wages and expenses and thinking “Wow, $1.2 million a year, you’d think with that kind of output we could spare just $100,000 of net profit.” Sure, we were taking home a comfortable $150,000 per year between the two of us as owners of our small corporation, plus some perks.
We felt jazzed about growth, were proud of our employees and continuously tried to build our sense of teamwork. None of our employees were overpaid and some were not paid what they deserved, but we had great camaraderie. Every leftover dime went back into our business. It was just frustrating that we were stuck in small-business mode.
Then we sold. Our big corporate LA buyer made big promises to our employees: health care for all, better salaries, better cafeteria plans, you name it. Then they fired 75% of them six months later. Then, after six years, they proceeded to shut it down and fired everyone … except my husband. He then had the unenviable task of driving four hours to deliver final paychecks, which the new owners couldn’t be bothered to do.
Here’s what I know now that I didn’t know then: those payroll expenses WERE PROFIT. I used to look at them as some burden, wishing employees weren’t so expensive, wishing the tiresome emotional toll it takes to manage people wasn’t so hard, especially when we had nothing left over at the end of the year. Now, I think, “this big corporation doesn’t like the break-even bottom line, so, if it doesn’t make money, you cut it.”
But our business WAS making money, it was putting $1.2 million back into our little county’s economy every year. And that’s not even counting the goods and services we purchased from local suppliers and vendors. Our business was feeding over 50 families. That’s a solid profit!
- Our business was giving 50 people a reason to get out of bed every day. That’s a profit!
- Our business was creating teamwork and a sense of purpose. That’s a profit!
- Our business was leaving its mark on this world in some very big ways, but those ways just didn’t show up on our bottom line.
So, if your clients’ businesses are breaking even, or have a small loss, look between the numbers to see the profit that isn’t liquid capital. A huge corporation may have more resources, more money to invest, a bigger vision, but they are too detached and unconcerned about the little people. They don’t see payroll as profit.