The things that scare you: Money and company transparency

The philosophy of transparent business is a fascinating field. Especially when you consider the well-​known factoid that most small businesses fail in their first three years. Add to it another interesting factoid: The number one reason for this failure is lack of cash. And suddenly you have a a question to address: How open is too open?

See that revenue drop? Let’s examine it

This is what makes running an open business so interesting for me, as the founder of Brutal Pixie. Not only did our metrics become publicly available two months before Brutal Pixie (in its current iteration) turned two years old, but it happened at a time of great flux here. It was at about the same time that I became involved in another shiny startup, as a result of Startup Weekend. You can read more about that here.

Because of this, you will see some wild drops in our revenue. One reason for high expenditure is because of foolish investment into that other project. And the other is because when you chase shiny things, you take your eye off the most important things, which then suffer accordingly. I call it chasing the dragon.

If you’re curious, you can see some of that on our charts, here. It’s a challenge to be honest about things like this, because they’re the typical things that companies keep hidden. But we figure that if we know them, if we can talk about them, then we have understood them enough to learn faster. (And therefore, not repeat it.)

SAAS can be an expensive way to do business

An interesting point in the finances that you don’t get in the openly available data is that one of the top three most expensive things in this company is Software As A Service (SAAS).

Don’t let the small monthly fees trick you into thinking that SAAS services are cheap. They’re not: We’re currently spending about $500 per quarter on the tools we have just to keep things running.

It’s an interesting conundrum, and we are now evaluating what we don’t actually need. What can go? What can stay? Are they still as useful now as they were before?

And, of course, the age-​old question, what can we do in an alternative way that renders managed cloud services redundant? Who would’ve have thought that it would be one of our highest expenses? It’s crazy.

If you’re not careful, it can literally get out of control. Once you have online proposal software, project management tools, social media management tools, cloud-​based accounting (and so on) you are paying out buttloads. In fact, our proposal software is probably the most expensive, and is currently attracting the most intense scrutiny in terms of efficiency creation versus expenditure. The outcome will be very interesting.

The bumpy financial ride is one of our milestones

It’s a bit odd to say that we’ve “just turned 2” because technically we’re entering our third year (2013−14, 2014 – 15, 2015 – 16). Just prior to our second birthday, we hit a couple of major milestones:

1. we recruited and brought on board our first employee
2. we recruited and brought on board a contractor who is likely to become our second employee
3. we hit our first patch that I will describe as “bumpy”.

Why celebrate the bumpy rides?

If you’re not sure why you’d celebrate the bumpy rides, I’ll give you a clue: It’s because the bumpy roads are the ones from which you learn the most. As a result of an extremely interesting third quarter, we’re emerging into the final quarter of 2015 stronger, sharper, and more focused than ever before.

The transparency conundrum

While your numbers tell part of the story, they don’t tell the whole story. And there is a risk when you run an open business that people won’t hang around for the explanations. Or, rather, there is perhaps a risk that you feel moved to give people explanations.

The truth is really that we don’t need to be writing about our journey through this puzzling pipeline into transparency. We could, like many other businesses, just do our thing and show the world our dashboards, and not write about the whys and hows and wherefores.

But if we did that, would we still be as open as we claim to be? And what level of opacity does our version of transparency contain? Realistically, you could claim that you run a transparent company if you only have a vague view through the veil. Being fiercely literal, the scope of transparency runs from 0% — 99% opacity.

Perhaps there needs to be a scale for companies, too. Maybe there’s a way that we could calculate a transparency quotient. Drop us a line if you have any ideas.

As a founder, I believe that you have to make a call at some stage about what is, and what is not appropriate for your own business. At Brutal Pixie, we believe that honesty is magical. And it is in the spirit of living that value that I write to lay things bare.