How to keep your company from crashing

Executive overview

Most companies crash not because of bad products or weak sales, but because overhead grows too fast. Think of a company as an airplane: products are the wings (lift), sales and marketing is the engine (forward movement), and overhead is the body.

A bloated body with small wings and a weak engine brings the plane down. Keep overhead lean, invest in sales and product — in that order.

Overhead must always stay proportional to wings and engine, or the company crashes.

The airplane framework

• Products = wings: generate lift and future revenue
• Sales and marketing = engine: create forward momentum
• Overhead = body: crashes the plane if it grows too large
• Until future products are generating revenue, they count as overhead
• Willingness to spend: high on engine, careful on wings, minimal on body

Managing overhead in practice

• Trim overhead relentlessly: rent, salaries, office upgrades all add body weight
• Employees without P&L responsibility will naturally push for more overhead
• Morale perks (nicer office, stocked fridge) feel good but nothing hurts morale more than layoffs
• Let overhead grow only after sales and marketing are funded first
• Track three numbers: overhead spend, product spend, sales and marketing spend — keep them in healthy proportion