15.9.2019 | MVIR, Reporting
The context
is GOKR (Goals, Objective, Key Results) – see another article to explain that.
Note that
“Key Result” is a bit misleading of a term, “Key Activity” would be more
descriptive but this is the standard term so we stick with it.
Traditional
KPIs are looking into the history and state what has already happened. Revenue
(like MRR) for instance – “the MRR for last month was X”. Of course most
businesses would want their MRR to grow. But how is focusing on the MRR figure
itself helping you to increase it?
Also,
instead of just knowing what the MRR was for last month, wouldn’t you rather
know what it is likely to be in 3 months time? I.e. you should have predictive
indicators, not history based.
A real life
parallel: if your objective is to lose weight, how does staring at the numbers
on the scale every morning help you make the number smaller?
That alone
won’t do anything. It’s the ACTIVITIES you do between reading the scale that
may help you reduce the number. So the key thing to focus on are the
activities. The numbers are a direct consequence of them – do the activity, the
result will follow. Exercise more, eat less – weight will drop, do the things
that drive the sales for you – and the MRR will grow.
“Key Result” is the activity that has a direct correlation with the end result. If you know what you need to do to move the needle, you set yourself a goal to do that and you measure your activity so that you have really done it – the desired end result will follow, automatically. You lost weight, won more MRR.
But identifying the real Key Result (=activity, remember the misleading term) is not always easy. But if you understand how your engine of business is working, and you know what lever is connected to what end result, you can do it. If this feels too hard, you may not yet quite understand the engine of your business. You cannot succeed unless you do, so make it a priority to study it so that you will master it, inside out.
15.9.2019 | Growth, Scaling
You must
have a product that does the job – i.e. you must have found product/market fit
(see a separate article on product/market fit).
You must
have a business model that works – i.e. you have unit economics that produce a
positive result, so that for every cycle the engine of your business turns you
earn money, rather than lose it. Only then does it make sense to rev up the
engine. (see a separate article on Business Model)
Some acid
test type of questions to verify you really are ready to focus on just scaling
your business:
- You
can make your business cashflow positive within the next 3 months
- At
least 1 of the 5 biggest customer deals have been completed successfully
without any involvement of any of the founders.
- You
must have at least two non-founder team members generating more annual revenue
than their all-in cost is to the company.
- You
must have at least one non-founder team member who is bringing in more revenue
than the customer-facing founder.
- The
Founder can switch her email off for 2 weeks and it causes no dent in revenue
15.9.2019 | Early-exit, Exit, Investor
When the
buyer is willing to buy you at reasonable terms. The most critical element of
this is the motivation of the buyer, and that is out of your control. The “open
to buy” window is created when their strategy shows a need they need to address
and do it yourself doesn’t really cut it. That’s when they start looking, and
you need to make sure you show in their radar screen when they do. And that is
the part which you CAN control. Sometimes this happens earlier than you would
have liked, sometimes later. Timing is not in your hands. Accept it, and act
accordingly.
15.9.2019 | Early-exit, Exit, Investor
The best
time is when you start the company. The second best time is now. But the
preparation does not mean hiring an advisor etc, it is about doing the
groundwork that will increase the probability of an exit, when the time for
that is right.
6.9.2019 | KPI's, MRR, Scaling
Scaling is a startup mantra and obsession. Financiers and investors - public and private alike - push startups to scale.
Newborn startups talk about scaling and measure themselves on scale stage quantitative metrics, like growth, MRR etc.
But doing things in a big scale is not scaling. Trying to force business by spending money, hiring more salespeople and increasing number both inbound and outbound actions is not scaling.
Scaling means cloning a concept that has been proven to work, both technically and commercially, in volume.
If your company does not have a concept that can be cloned, ignore this at your peril.
