April 16, 2020
So, which should come first, profit or people? The correct answer will sound like a dodge and a company pitch. A two-fer! Profit and People must move simultaneously, in Parallel.
But that's weasel-y, so I will shout this out: A mindset of putting People Before Profit will kill your small business, despite what pundits say.
There. I said it. No profits = no people. No-brainer. This is preaching to the choir for most Small Business Owners out there. And it should be blindingly obvious to anyone seeing the wreckage today - closed doors that will never reopen. Our SBO heroes are fighting to save the companies and the people who they love. Most knew the simple truth of profit before people long ago. Others learned it the hard way a few days into all this.
Small Business Owners can’t afford to put anything before profit. People (or human capital), mission, vision, just cause...None of that can come before profit. If it does, you have a hobby, not a business. You just can’t do any of that fancy, world-changing stuff without money! We’re talking about sequence, not necessarily priority. If the People part is why you do this, and you want a culture of growth and reward, great! I’m right there with you. Our company is built on that. I might also choose People over Profit if that were the choice. But saying, “put people before profit” is a very different message. Words matter. In my small business world, that advice means debt and likely failure. Maybe things are different in the Mythical Land of Venture Capital and Rainbows; I wouldn’t know. I don’t run in those circles. But I do know that every organization, even a nonprofit, has a bottom line and must put Money Before Mission.
Who are (until recently anyway) the activists behind the People Before Profit movement? I’m not talking about Green New Dealers, Wall Street Occupiers, or minimum wage protesters. Not my area. The People Before Profit Movement comes from our own business thought leaders. I just finished Infinite Games by Simon Sinek. He tells us to consider business a continuous game with no clear ending and no winners and losers. Love that concept. There’s a big “but” coming. BUT he goes on to demand we all join the “People before Profit” movement, part of his personal mission to change the business world. He laments the out-sized influence of Wall Street investors and suggests that acting in the interest of shareholders (the business owners) must no longer be the primary objective. Every person must have a “why” and every business a just cause - other than profit. Shareholders (the business owners!) must be treated as only one of the interested parties. People Before Profit. He even dictates a hard rule that no worker should ever be laid off due to lack of revenue.
Top-selling Business authors typically write to and from (1) Academia, (2) The Fortune 500, or (3) Silicon Valley. When they do refer to SBOs, they must picture the next Jack Dorsey in the next-big-thing, sexy Silicon Valley startup. None of the three are my crowd, but that’s ok. I can filter what doesn’t apply to small business, and maybe give an eye-roll or two. But this “People Before Profit” movement we are all called to join? That’s more than just naïve woo-woo. I thrive on naïve woo-woo. That is a dangerous message.
Imagine if Simon Sinek were speaking to a live audience of small business owners today, April 16, 2020. How is that People Before Profit lecture going over, Simon? How about the “business is not about the selfish owners. It’s about a just cause” shtick? You were obviously not writing to my friend Carey, fighting to hold onto her massage business. Or to Joe and the ten employees in his restaurant supply company. Problem is, you don’t seem to recognize the difference. You write as if every business leader must join your cause du jour. Please, before writing your next book, get to know the good people who get up early every day to make the donuts or fix your car. Before giving us another absolute edict like “Start with Why,” maybe ask for feedback from the owner of a septic tank cleaning service. Before you speak in generalities about owner greed, consider your favorite coffee shop that might have closed and left several jobless. Picture that owner’s face sometimes, not just the flavor-of-the-month CEO who might embrace a new stakeholder model of governance. Most SBOs don’t care about any of that. Most don’t call themselves CEOs. Milton Friedman’s wealth maximization theory might as well be Milton’s Paradise lost. Seed money is what we take to our local Richmond, Virginia, Pleasants Hardware.
They might not have Ivy League MBAs, but American small business owners are the heart of our country and our economy. They have risked and fought and clawed and overcome unimaginable barriers. Today, these heroes must hear a clear message from all of us: Your profit is good for our society. Your first job as a small business owner, what we all need from you, is to survive. When you come back from this, and you will, always put Profit before People and don’t let anyone tell you differently.
Todd Bradberry Founder & CEO, Parallel Management Co.