Transparency in business is becoming increasingly popular in the startup world today. A quick look at Baremetrics’ Open Startups page shows that multiple startups are making their numbers all available to the public eye; from monthly recurring revenue (MRR) to churn rate.
Transparent startups share everything with the public; salaries, future plans, goals, and even failures. The idea is intimidating for a lot of entrepreneurs because there are risks. Many believe that going transparent will threaten their security.
Some of the more common questions include;
- How does it work?
- Why does transparency in business matter?
- What are the risks?
If transparency is done in the right way, it could improve employee motivation and satisfaction, marketing, website traffic and many other aspects of your business. Moreover, it’s easier to gain trust and loyalty when you’re transparent, which will help you convert visitors into customers.It's easier to gain trust and loyalty when you're transparent, which helps convert visitors into customers Click To Tweet
The decision of whether or not to embrace revenue transparency should ideally be made in the early stages of the startup. Try not to start with a closed business then change your mind and unveil everything later on.
Having an open startup is a great way to be seen as trustworthy, innovative and even daring. At Hubstaff, we have made our numbers public, and we detail all of our failures and successes in our Growth Series.
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How does transparency work?
Many transparent companies publish information such as their overall profit, the number of customers, the number of website visits per day and many other details. Some businesses decide to take it a step further and publish employee salaries and the differences between team members. Companies can also create an easily accessible financial dashboard that illustrates the current situation of the business.
Another way to make a business transparent is internally, among the entire company and all employees. Some companies make all of their email conversations public and available to all employees, no matter their rank, salary or function within the company. This strategy improves the efficiency of the employees because everyone is informed about what’s happening in the company, which results in fewer misunderstandings and coordination issues.
One popular company who decided to establish transparency in business is Buffer. They significantly increased the number of visitors and customers after publishing their employees’ salaries and discussing them in public. This move attracted a lot of attention and brought the company respect from competition and potential clients alike.Transparency breeds trust, and trust is the foundation of great teamwork. -@joelgascoigne Click To Tweet
Why does transparency in business matter?
Transparency helps entrepreneurs because it improves their knowledge of how business operates, what obstacles are common in their industries, how to deal with setbacks, and which failures and challenges are considered normal in their field.
On the other end of the company, customers tend to feel more comfortable with transparent businesses because they know exactly what they are paying for and what kind of service to expect. Transparency motivates businesses to improve, since they always want to leave an impression of being sustainable and trustworthy.
Transparency in business is a smart choice because it gets you trust, spurs innovation, and earns honest feedback. Investors and shareholders want to know if their chosen business is facing problems. Making all of your mistakes public will strengthen your relationship with both customers and employees.#Transparency in #business gets you trust, spurs innovation, and earns honest feedback. Click To Tweet
One of the biggest problems a team faces is the absence of trust. If every employee has access to all the decisions and valuable pieces of information, the team will become more motivated and effective. Transparency will also help eliminate injustice and inequality. Employees will be able to make informed decisions confidently, and make suggestions for the good of the company.
Typically, transparent businesses are open to constructive criticism and advice. Perhaps the greatest benefit of going transparent is the feedback. You can use feedback loops to kill mistakes while they’re still not threatening, raise the level of awareness about your company and improve your services. The more feedback you get, the more insight you’ll have about how others view and use your product or service.
Transparency in business improves the feedback loop because it gives outsiders (and sometimes even internal audiences) a clearer view of your company. Valuable audience members can then send in improvement advice from a clearer perspective.
Possible risks for transparent startups
It’s normal for startups with transparent revenue to face some risks, one of them being competition. If your business is doing well and you publish your financial report, other companies will probably try to replicate your success by launching similar products or services. However, customers are quite capable of recognizing a genuine product and business, so this shouldn’t affect your company in a negative way. Also, if the business strategy of your competitors is to copy your business, they will always be a step behind.
Another possible risk to business transparency is premature criticism. If you’re dealing with a challenge and your numbers look bad, viewers may judge your work based on a snap decision rather than truly getting to know your story.
Fortunately, this doesn’t have to be a bad thing. Criticism may motivate and encourage you to make crucial changes and improvements. Just make sure you don’t get distracted by the criticism, and keep the focus on growth.
With all the risks, many startups are justifiably hesitant with transparency. However, we live and operate in a world where no information is truly private. There’s always the possibility of information going public, and there shouldn’t be any reason for businesses to avoid transparency.
Promoting transparency in business
Hubstaff promotes transparency between clients, employers and employees. Our time tracking software gives insight into how remote teams work, where time is spent, which projects are taking too much time and how productive different weeks are.
Managers can see randomized screenshots of work being done while team members log billable time. Activity levels show how engaged a user is, and software monitoring can show what apps and websites a user spends the most time on. These insights are all available in downloadable reports that can be sent to clients so they can see exactly what services they are paying for.
Because managers and clients get a clearer picture of work being done, employees don’t have to spend time sending weekly email reports or justifying their time. Transparency in business means additional accountability and less wasted time clarifying work done.
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What’s your take on transparency in business?
The advantages of transparency in business undoubtedly outweigh the risks. You gain trust from employees and customers, teamwork gets more efficient and there’s a good chance it will help you drive traffic to your website.
What’s your take on transparency? Love it, hate it, and why? Let us know in the comments.