b2b2dot0: Highly profitable per employee

The front page story of this week’s Triangle Business Journal is entitled “The Big Squeeze”.  Its subtitle is “How Triangle (Raleigh/Durham/Chapel Hill North Carolina) companies are drawing every ounce of productivity from workers”.  The gist of the article is that thanks to the Great Recession, Triangle public companies haven’t hired a whole helluva lot and revenues have started to inch up.  That bodes well for the profitability per employee numbers.  You can see the top 13 companies here.

That got me to thinking.

I get the fact that we’re not a public company.  And I’m also quite aware of the fact that we’re not a very large company from a headcount perspective.  However, now that we’re in our sixth year of business, according to the statistics in this article, we would be (if we were public) the third most profitable per employee (PPE) company in the Triangle.  I think that that’s pretty impressive.

By comparison, we were 260% more profitable per employee than Red Hat!  And everyone knows who Red Hat is :-).

There were only two companies that were more PPE than we were last year…Highwoods Properties and Salix Pharmaceuticals.  A real estate firm and a pharmaceutical firm respectively.

The funny thing is, that in some circles (aka Venture Capitalists), a company of our size and in our industry, profitability isn’t exactly a badge of honor.  To them, it’s a sign that we’re not investing in the company…which in our case couldn’t be farther from the truth.  Not only did we invest in marketing and product development, we added staff and continue to do so this year.  The results speak for themselves!  Our client count has grown 44% since the beginning of this year and our revenue is growing accordingly.

With that said, we’re trying not invest too far ahead of ourselves…which most High Tech VC funded firms end up doing.  According to a University of Tennessee study, we’re in the 37% minority of firms that are still in business after 4 years.  I believe we’re succeeding because we have a great business model, “own” a very well defined and targeted market segment, and have organized a great team that knows how to execute.  After we’ve set aside whatever capital is required to operate and invest in the business, we think it’s important to reward all of the people that are helping us grow…and grow profitably.  So we’re distributing those profits on a quarterly basis amongst all of our employees.  That’s the right thing to do.

In 2013, I’m pretty certain that we’ll remain in the top 3 in the Triangle…even though I’m the only one counting :-).

Sam

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