“Finance Guilt” — A Startup Epidemic

“Finance guilt” is an affliction that impacts many startup and corporate finance professionals. Most don’t even realize they have it. I’ve observed it in myself, in current and former colleagues, and in others during my time in the finance profession. I’ve mentioned this concept to several finance professionals and without exception, they agree that it’s a widespread problem. But apparently no one wants to talk about it — I googled “finance guilt” and the search returned zero relevant results. So here is my attempt to define it.

Finance guilt: when a finance leader is hesitant to invest in or allocate resources to their organization because they feel guilty spending their company’s valuable cash.

Finance professionals in startups are usually so close to the business’s financial situation they understand better than anyone the importance of every dollar and the levers in the company that drive revenue growth. Putting others’ needs in the company ahead of their own is usually a desired quality of finance leaders, but can backfire when it manifests itself as finance guilt. Here are some symptoms:

1. Failing to add resources to the finance team during budgeting or forecasting cycles or allowing those resources to be cut when “solving” for expense overruns.
2. Waiting too long to hire junior resources to offload lower-value tasks from a manager or executive’s plate.
3. Not considering or investing in systems that will make the team more efficient because of cost.
4. Hesitating to invest in team building or company culture activities.

These cost savings may feel financially responsible, but, as a finance leader, you’re actually failing to appropriately allocate resources and investment for the long-term health of the business. And making this mistake can have a big impact on the leader and the team. If the team doesn’t scale appropriately, it can be bad news for the following reasons:

Attrition or unproductive employees due to:

• Burnout: the current individual or team assumes responsibility for an ever-growing list of responsibilities that are difficult, if not impossible, to keep on top of.
• Suboptimal resource allocation: important and talented resources end up spending time on administrative or non-strategic tasks.
• Job dissatisfaction: team members don’t feel the company invests in them or rewards them.

Costly mistakes:

• The team doesn’t have enough time to check their work.

Stunt professional growth and decrease the perception of value to the organization:

• The finance function is seen as purely a transactional team (AR, AP, payroll, etc.).

Next time you’re faced with an investment decision for yourself or your own team, remove the cloud of finance guilt. Look at the investment as that — an investment — rather than as another expense for the company. What is the benefit? What is the cost? One way to check yourself is to find another executive in the organization and talk through the benefits and costs to get an outside perspective on the ROI.

Beat the epidemic! Remove the cloud of finance guilt and make decisions for yourself and your team for the long term — you will be glad you did!

Big thanks to Brian Montminy of Lessonly for his input on this topic.

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