Mike Casey :: Random thoughts on Startups

So last night we went to an interesting talk put on by Ernst and Young about commercialisation. There was a panel of three, Hamish Hawthorn who is the CEO of ATP Innovations, Damian Kay who is the MD of Telcoinabox and Jamie Munday; a commercialisation expert from EY .

Government grants make me bored, so I was glad to see it was only a small part of the evening :)

I asked the question about when you should turn your revenue into profit and when you should invest it back into your company. This is something that has been playing on my mind for a while. All I want to do is reinvest our hard earned income back to make GradConnection bigger and better, but is this going to hinder the company’s long term financial success?

The answer is No. First of all, the advice given was to always reinvest back into the company. Damian was being paid less than his senior staff for the majority his business lifetime. It is also important to note that profit on the balance sheet will not make your company worth more. As long as you can demonstrate positive outgoings, whether via salary, reinvestment or profit it doesn’t really matter where the money goes when the time comes to get a valuation.

Hamish also had a very interesting point around lifestyle vs asset companies. Do you want to build a business to maintain a lifestyle, or to sell? This effects what you do with your revenue.