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Comment by rmason | Hacker News Reader

I really like The Profit and have recommended the show to others. A similar show (with way more drama) is Bar Rescue. It's becoming a trend now because Richard Rawlings of Fast 'n Loud has a new show called Garage Rehab where they turn around failing auto repair shops.

Things all these businesses in different industries have in common:

1. They don't know their numbers so they're flying blind

2. Problems with family members or employees

3. Lots of unsold inventory and sometimes plain junk tying up capital

4. Owner isn't taking a salary

I've personally worked for small businesses as well as startups that had some of these problems so they're pretty common.

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All of these seem reasonable, self-explanatory except (4), can you expand/expound on why not taking a salary seems harmful? Is it because then the owners tend to just dip into their cash on hand and aren't that disciplined?

Isn't it just an indicator that the business isn't making any money?

I suppose and that makes sense, but that's more of a correlation/symptom of failure, whereas 1-3 seem more causal

The business is losing money and by not taking a salary the owner is trying to prolong the inevitable. However in most cases he or she isn't making any changes in how the business is run so real improvement is nearly impossible. In effect all they're doing is delaying the business closing.

It depends why they're not taking a salary. If the owner is already loaded and doesn't need the money, that's fine. If they're having some cashflow issues but the pipeline is full and there's revenue coming, then that's probably OK. If the business is tanking and can't support a wage, obviously that's bad.

Exactly. This is an issue with non-profits as well. They delude themselves into thinking they're in decent financial shape, even though they have a managing director, often the founder, who's taking no salary, or a very reduced salary. Then that person moves on and--BAM--they're hit with market rates trying to replace them, and they're in trouble.

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