How do you talk to your employees about your cash position? On one side they don’t understand how little there is so they are not as careful, frugal, they insist on autonomy, maybe an expense budget, they say they need more people, need more equipment. On the other side if you tell them the cash balance, and how long and difficult fundraising really is, they may run for the hills!
This is a question I have been asked a number of times by founders and early stage CEOs. My answer is always to communicate, but how you communicate is what makes the difference.
My suggestion, I love to put up a graph. You can put numbers on it or not, that doesn’t matter. The image of a downward line that gets to a plateau and then heads upwards is the powerful piece. You should show how higher spending pushes the line down further and steeper, and lower spending does the opposite. Compare this timeline to the engineering timeline. They better be in sync. You can show how every decision, every action of every employee, affects how low the line goes before it turns around, and how long it takes to get there. You are burning your cash balance and you want to reach a point where you are generating cash, or you achieve a milestone to receive your next funding. The turning point of cash flow positive or next funding, is certain milestones. Reaching these milestones is what drives you everyday and will drive them if they can see how they contribute. Everyone wants their day to matter, to have contributed to the goal.
Communicate, communicate. Tell them the goals, show them the progress. You will gain much loyalty and the behaviors day to day that you were looking for!
This is the kind of thing your Consultant CFO can help you with. These are the ideas we have the experience to know and advise. We can prepare the graphs, ppts, etc so you can have the credibility in front of your team. You don’t need a full time person for this, just the right experience when you need it, no more, no less.