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October 24, 2019
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November 14, 2019

Putting the passion back in business

By Bill Fotsch and John Case

There’s nothing quite like a startup for passion. The founders have an idea that can go big. Their enthusiasm infects everyone else. People love coming to work, and they watch every new development with excitement.

But once a company is past the startup stage, what happens? Suddenly there’s bureaucracy. Rules. Silos. “We’re all in this together” somehow becomes “You do your job, and I’ll do mine.” Engagement drops. People come in at 9 am. They start putting on their coats around 4:30.

Entrepreneurs: It doesn’t have to be this way! Every day, we see companies where everyone stays passionate—about the business.

One company we work with is in the healthcare field. It’s on the Inc. 5000 list. It has been named one of its state’s top workplaces five years in a row. And if you could visit the company, you’d find that its team is very passionate.

Part of this passion comes from what drives any health-care company: a deep concern for the patients the company serves. Clinicians and administrators genuinely rejoice with those who are helped by the company’s therapies. It’s important work, and everyone knows it.

But they also know something else: they’re all building a business together. The more successful the business, the more people they can help, and the better off they all will be. To understand this kind of passion, look in on one of the company’s weekly meetings. All the core staffers are there. There’s a sense of excitement in the air. And what’s fueling it is a clear understanding of the numbers that move the needle toward business success.

Exceeding forecasts

As the meeting opens, the COO commends the finance team for closing the monthly books in just seven days. Then the meeting dives into the numbers. The first product under review, infusion therapy, has a budget of $200,000 and a forecast of $240,000 for August. Budgets are set annually; forecasts are updated every week.

The actual? $272,987. Wow. People talk about why the number was above forecast. They decide to increase the forecast through December, based on what they learned from the August results and what they expect for the product over the next few months.

Analyzing a one-off opportunity

The next product is also crushing it. Budget for August is $480,000, actual $566,391. Don’t get too excited, explains the product chief—this was due to a one-off opportunity. The forecast through the end of the year remains conservative.

So it goes with each of the seven major product groups, plus the company’s “Other” category. Total revenue for the month is $1,847,104, almost $400,000 above budget. Forecast revenue for the year is now $18.2 million, compared to a budget of $17.0 million and last year’s revenue of $12.7 million.

Celebrating the bottom line

The meeting moves on: gross profit percentage, budget and forecast vs. actual. One product is well below both forecast and budget, so the team discusses the reasons and adjusts the forecast accordingly. But the overall results are good: gross profit is $300,000 above budget and $1.4 million above this time last year. It’s a record for the company, and the number is greeted with whoops and hollers.

Now it’s time to review operating expenses. This goes pretty quickly, since there are few surprises. The total comes within 2% of forecast. But excitement is building: everyone wants to see the bottom line. Some calculate it in their heads. Others wait for the number from finance.

And there it is: net profit of $224,044 in August, about $100,000 over budget and another company record. More cheers—the company is hitting it out of the park. And here comes the updated forecast for the third-quarter bonus: 60 hours of extra pay for every employee. If things continue to go well, they may reach 71 hours in the next quarter.

Radical transparency

All this has only taken 45 minutes. But look at what has happened. The business’s growth—its success—is out there for everyone to see. People at the meeting don’t just see the key numbers, they also learn what’s happening behind the numbers. They come to understand where they’re doing great and where they still have work to do. They address things as a team, which means they’re all in it together. Their passion for the business gets a weekly boost.

Startups are great, but they don’t last. The real challenge for entrepreneurs is to create a company that builds and maintains people’s passion over time—just the way this company does. Sharing the numbers is big part of this. Fortunately, this company is willing to do just that.

Bill Fotsch is founder and president of Open-Book Coaching. John Case is a writer who has published widely on open-book management and related business philosophies. To subscribe to their biweekly email newsletter, please send the word “Subscribe” to [email protected].