Today’s Tech Market: Have we sacrificed profit and positive financial business operating for growth?
According to the Blossom Street Ventures article in August 2022 — since October 2017, 73 software businesses have gone public.
Using the spend guidelines in the article:
However, should we sacrifice profit and positive financial business operating for growth? This model will have its limitations.
A hiring spree is therefore associated with all aspects of growth. This is fine if business plans are delivered. Pressure builds if they don’t, and efficiencies are required. In terms of recruitment this means redundancies, and this is what the tech market is experiencing currently.
To ensure consistency in growth and “survival”, software businesses must make some basic assumptions when hiring a new sales contributor on income from each sales contributor and the cash burn to enable this revenue achievement. This ratio is usually 1:2 (Income: Cash Burn).
Figures we do not see are the number of ineffective or poor hires made by software businesses. We’ve all seen reports on this and the overall cost to the business. However, with unbridled over hiring post pandemic, some software businesses may have been betting on the success of new hires and ignore the principles of the cost of a poor hire with the hope of continued growth.
The music has slowed to a little hum. Once lessons have been learnt, we can start dancing again. Maybe this time under new rules.
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