“You should give us the authority to spend up to $1,000,” “Randy,” one of my co-founders, said to me at a staff meeting right after we received our initial funding. Then he continued, “And we should each have a company credit card.”
Randy’s requests sound reasonable, don’t they? How much damage can someone do with $1,000 of spending authority? And, you can always rescind someone’s credit card, right?
I looked at Randy, and, as calmly as I could, I said, “No. That’s not something I’m willing to do.”
“Why not!” Randy exploded.
“Cash is the one thing we have control over,” I said. “And, for now, I want to keep a tight control on cash.”
Randy backed down.
Rule Number One: You need to be disciplined about your spending.
I had a routine that I went through every Friday afternoon when I wasn’t traveling. I would meet with Tina, our controller, and we would sign checks. Make that, Tina would give me a check, explain what it was about, and then I would decide to sign it.
Most of the time, I would sign the check. Every once in a while, I wouldn’t sign the check. Instead, I would ask for more information before I agreed to sign the check.
This was a great way for me to simultaneously learn how we were spending our precious funding, and it helped us stay disciplined regarding our spending.
This was one of the smartest things I did as CEO. I always knew exactly what our cash position was.
In the same meeting with Tina, we would also review and update our financial plan. For discipline’s sake, I would always know what our cash flow break-even date was, what our revenue would be when we hit cash flow break-even, and how much cash we spend to get to cash flow break-even.
Now, I always knew the key financial information I needed to run the company. Okay, one down, two to go…
Rule Number Two: You need to always be recruiting as a startup CEO.
Back to our staff meeting. We always reviewed the status of our open spots for hiring.
In fact, hiring is so important when you are starting out, that the status of open spots was the first thing we spoke about every single week. The good news was that our team was on top of it.
I was fortunate that I had an experienced group of founders, so they knew, like I did, that if we didn’t keep up with our hiring goals, then we wouldn’t be able to execute our plan. If you can’t execute your plan, then you can’t sell anything. And, if you can’t sell anything, then you go out of business…
That’s why we started every staff meeting with recruiting.
This leads to….
Rule Number Three: You are always selling as a startup CEO.
I remember when I interviewed for my first CEO job. The executive recruiter said to me, “As CEO you recruit, recruit, recruit, and you sell, sell, sell.
Oh, how right he was.
Every successful startup CEO I’ve ever worked with has been the best salesperson for their company. It doesn’t matter if you’ve never sold anything in your life previously, this will hold true for you.
Yeah, you might not be a natural salesperson. Few of us are naturals. However, you will have more knowledge of your product or service than anyone else.
And, you’ll be the most passionate person about your company and its vision than anyone else. This will allow you to be more effective than anyone else.
That’s why, despite all your fears and worries, you have to be front and center selling. The cool thing I’ve enjoyed witnessing is the transformation of the CEOs I’ve worked with.
The CEO starts out shy and reserved. Then, as time goes on, the CEO starts winning deals despite the shyness. Then, they break through and feel comfortable working with customers.
So, you’ve got recruit, recruit, recruit. And you’ve got to sell, sell, sell. Plus, you’ve got to keep on top of your spending. That’s the early ticket to startup success.