Financial Health Stakeholder

From our Founder, Neil

Background

In Conscious Capitalism, it argues one of the sizx major stakeholders is “Investors”. The premise of this stakeholder, though, is how most view business: “return on shareholder value”. Well, Rayobyte doesn’t have any investors (an intentional decision so we can build the company we want to see come to life!), so we prefer to see this bucket as ‘Financial Health’, or ‘Profit’.

Indeed, profit is important for any for-profit business to survive. Without profit, we can’t do any of the other socially responsible things we strive for. We can’t pay our team members’ wages, which allow them to have enjoyable lives with their family. We can’t serve our customers, who may have to go to less-than-ethical competitors. We can’t help the environment by offsetting our carbon. All of this is only possible if we remain profitable.

When I started the company, I’m not entirely sure what my motives were. I was 21 and the business hit $1.1m in the first year of the company running (mind you: limited to no profit, all growth). That was EXCITING! Every sale came in was me realizing my entrepreneurial dream. Had I not seen the dollars, would I have been motivated to keep going? I can’t say for certain, but one thing I know I found appreciation in was learning and being curious.

That, too, was only made possible by the growth ($$) of the company. Had we not grown, I wouldn’t have had to learn legal, finances, marketing, sales, tech. So, I’m indebted to the money that allowed me to learn at an exponential rate.

Profit can be a good thing, as highlighted above, if used for the right reasons. Where I believe businesses go wrong is when profits are seen as a means of greed so shareholders can go buy the next yacht. If profit can be used to: improve one’s knowledge, treat its team members well and give them a stable job, serve customers authentically (and playfully!), help the environment, build friendships with suppliers, and help those in need… then, count me in!

Our ethos towards Financial Health

We have two forces at play in this context:

1. We’re entirely bootstrapped with no outside investors

   1. This is an intentional decision so that control remains with our company. Unfortunately, we have yet to come across an institutional investor that would align fully on our ideas of Conscious Capitalism, and therefore, we don’t want to risk taking external funding that would put pressure on us to focus too much on profits alone. We believe there are investors out there, though, and we will ‘never say never’, but we’ve just never come across them. This force against us means we have to be very careful with our cash flow because our cash is our cash, that’s it.
      
      

2. We first have to have enough profit to ensure long-term survival and growth

   1. If we go out of business, we can’t serve any Stakeholders, so we must be financially responsible and resist the temptations (which are high 🙂) to focus more on the social responsibility. We have our relatively low profit targets (<10%) communicated widely to our team so everyone understands the impacts of our decisions through this model. Beyond this value, we aim to balance a drive for growth and contributing directly to the other Stakeholders.