The #INDIETECH Method: Freedom and Planning In 2017



How independence helps us plan growth at Wisetail.

Effective planning and goal setting is difficult but critical to the success of any growing business. Too aggressive and you can’t pay your bills. Too conservative and you miss opportunities. For me, personally, the exercise has felt a lot like daydreaming via spreadsheet followed by pushing a rope. I’ve always wanted to feel the rope pulling and after 8 years of experimenting I think we got pretty close this year.

This is what we have learned with one important disclaimer: it requires you to be in complete control of setting your own growth rate. If you have to maximize shareholder value this may not apply to your business.

First, a few facts about Wisetail that influence our planning:

We are independent and focused on growing aggressively. We do not believe that you are either fast growing or independent. You can be both. So, we plan accordingly.

We are committed to people and profit which simply means that we believe wholeheartedly that being a great place to work drives our financial performance.

We assume 100% client retention into our planning. I know, it’s audacious, but it also creates a specific objective for the company to rally around and measure against. Without an accumulation of ARR, an independent SaaS company has no source of growth capital and no solid foundation for cash flow planning.

With the above in mind, here’s a glimpse into how we plan growth at Wisetail:

1. We do our planning in December so we can hit the ground running in January. In the past, we did our annual planning in January and it was clear that the month was wasted. Now, we start our planning process in late November with the goal of completing it before Christmas. Then we take a break and return the first week of January ready to sprint.

2. We do all our financial planning on a Cash Flow Statement. Operating Cash Flow is God in our business and we have very few accruals longer than 30 days so we only use a Cash Flow Statement to do all of our projections.

3. We start our revenue projections from the bottom-up with existing ARR and assume 100% client retention. In a VC-backed scenario, you may be forced to start with the growth rate that maximizes shareholder value and then build your plan to hit it. We flip the process by starting with existing ARR. Then we focus on the strategy for retaining 100% of our clients for the coming year. This number lays the foundation for our growth rate.

4. Next, we project new revenues — realistically. Now that we have our ARR foundation, we add in our new revenue projections. Our goal is to be eyes wide open to the operational realities of the company while also being aggressive. In my experience, it’s better to blow past a realistic new revenue goal by October then to come into Fall with no plausible way of achieving an audacious goal. Our projected revenue and annual growth is then, simply: Existing ARR + New Revenue.

5. We build budgets to support the revenue projections. Now that we have our projected revenue, we build our budgets, hiring plan and operating expenses all with an eye towards liquidity and the investments necessary to support our growth plan.

6. Does this plan still allow us to be a great place work? Growth is a big part of being a great place to work but there is a point where too much growth negatively affects the experience of working at Wisetail which, in turn, hurts the company’s performance. So, we talk about the amount of hiring and training our culture can withstand in the coming year, access to high-fit talent to execute on the hiring plan, our ability to lead a larger team and how our systems can scale. If we conclude that we can’t be a great place to work and execute the plan, we revisit the projected growth and adjust it down accordingly.

7. Does this plan allow me to sleep at night? I know, this is a selfish one. It’s a fine line between making investments that drive growth and being able to sleep at night knowing that dozens of families depend on the company and its liquidity. I think it’s different for each person but, for me, I like having 6 months of operating cash in the bank at all times. It allows me to lead the company with less stress and I don’t bring a nervous energy to the office. For us, this is an easy one. If the projected monthly cash balance on the Cash Flow Statement stays above our 6-month threshold then it’s a green light and, if not, we revisit our revenue and expense projections. If it maintains our target level of liquidity, the plan is set.

8. We identify and communicate the key performance drivers of the plan. Once our plan passes the above tests, we come up with a short list of what we need to do as a company to make the plan happen. This provides focus and allows us all to edit out things we don’t need to be thinking about or working on. We use the OKR System to communicate and track these key performance drivers. The key performance drivers become the company objectives which then flow into bottom-up department and individual OKRs.

9. We communicate progress towards the plan throughout the year. We use a variety of systems to keep us all aware of our collective and individual progress including: monthly all-hand meetings rooted in our OKRs, a shared Google Sheet that houses all OKRs, related training and communications in our internal Wisetail LMS and near real-time financial reporting. Ultimately, we’ve learned that our intent is as important as our systems when it comes to tracking performance. Our aim is to be transparent, fair, honest and timely so that we can all focus on doing great work with the best possible information.

10. Lastly, we plan but don’t expect. With all of the above considered, we also try to keep in mind that we can’t really force anything to happen. All we can do is position the company for success, roll up our sleeves and learn as we go.

Read More About Our #INDIETECH Culture