Monday, 24 January 2022

SaaStr

SaaStr

The Top 10 Important Finance Mistakes First Time Founders Make

Posted: 24 Jan 2022 06:20 AM PST

This SaaStr Classic post didn’t much of an update, but we added a few things to it.  Take a read if you are still running finance yourself, or just have an part-time outsourced resource.

— Jason, ed.

In the old days, we didn’t have to worry about finance too much.  Companies grew more slowly, there was nothing for a CFO to really do for years, and you could sort of outsource everything and just keep an eye on the bank statement.

Things have changed a lot.  SaaS accounting and finance has gotten pretty complicated, and the impacts of getting it wrong have gone up substantially.

Image from here: https://theprofitablefirm.com/blog/embrace-boring/

Image from here: https://theprofitablefirm.com/blog/embrace-boring/

I’ll give you a couple of examples.  Last year, I met with the founder of a start-up I really, really liked.  The plan and numbers he had, both for last year and the coming year, were impressive and aggressive.  But it was on the margin — the ACVs were low, and the CAC was high.  And then — he sent me his financials.  They didn’t make any sense.  I simply couldn’t get them to even remotely tie to his presentation deck.  Was it misunderstanding bookings vs. ARR vs. GAAP revenue, was that the issue?  I couldn’t even figure that out.  Anyhow, the gap, the delta was so large … I just had to pass.  It was too big a flag for a company at the edge of where I like to invest.

I’ve also seen upside surprises, which sound good, but sometimes aren’t.  I’ve worked with numerous start-ups that used outsourced accounting services with zero SaaS experience, and these firms didn’t even recognize automatic upsells, additional seats, etc. that weren’t captured in existing, crappy tracking systems.  The delta was often huge — as much as 30-40%.

In the early days, I guess it doesn’t matter.  Cash is king.  But in SaaS, once you even get to about $2m ARR — it’s time to get your finances in order. You may blow a financing round, get your cash runway wrong, or at least, freak your investors out if you don’t.

With that, I asked my first controller at my first start-up, Anita Kutlesa, who has since gone on to be CFO at several SaaS and software companies, from Pipedrive to Coverity and more, to share her suggestions and learnings:

…

anitaThe Top 10 Important Finance Mistakes First Time Founders Make

Anita Kutlesa

Anita Kutlesa is a senior financial executive with nearly two decades of expertise driving performance through cash management, process improvement and strategic planning in start-up, high growth and restructuring environments. She has worked with numerous start ups in Bay Area and Europe (Virgin Mobile USA Inc., NanoGram Devices Inc., Coverity Inc., Buongiorno USA Inc., Pipedrive Inc.) from Dotcom to SaaS era. She is currently serving as a VP of Finance at the SaaS start up Transifex, localization automation company.

quoteHaving worked with first time founders and chief executive officers, many leading early stage Saas companies, I really do get it.

You're working on the next stellar SaaS success and your foremost focus is — and should be — the product. Quickly, though, your attention turns to initial traction, your first critical hires, and building out those early business functions. Your focus expands. With early revenue, you start thinking about churn and scalability of every aspect of the business, including product, infrastructure, customer support, sales and marketing.

However, during all this time, you've likely overlooked the business function that ultimately tells you — and the world — how well you are performing in all the areas where you've dedicated your full attention.  

Accounting and Finance.

As a first-time founder, does any of the following sound familiar to you?

  • Cash goes in and cash goes out. I know, roughly, how much money is in our account.
  • I know I've got to pay all the bills and do payroll, but there are so many other pressing priorities right now.
  • I've got my Excel sheet to help me explain to investors, advisers and friends how well revenue will increase.
  • I've contracted accounting help. They will pay the bills, file tax returns and do the accounting.

If it were only that simple. Here are 10 mistakes made by other first-time founders that I want you to avoid. Equally important, is my advice on how to fast track your company's proper finance and accounting support systems.

Mistake #1: Bookings are not revenue

I've advised many first time executives in the past 20 years. Always, my first questions is, "What's your revenue?" More often than not, the response is, "Well, our bookings are ________". My next question is then, "What do you define as booking?" I swear I've heard as many different definitions of "bookings" as there are flavors of ice cream.

Advice: Sooner or later, you will have to know both booking and revenue numbers, and the difference between them. Not doing so may cost you in a lower valuation, less investment, or even losing an interested buyer or investor. During your first or next round of financing, or during any type of financial decision involving a third party, some type of due diligence will be performed by accountants that will define revenue per Generally Accepted Accounting Practices (GAAP).

Mistake #2: Cash accounting and accrual accounting are equal  

I've found that first-time CEOs haven't had much experience (or time) understanding the gritty details of a full set of financial statements. With "bookings-based" executives I've learned there's little value in creating a pretty financial slide deck summing up the month, when what's more important is an education and shift from doing business in "cash-based" to "accrual-based" accounting terms.

Cash-based accounting is something we do in our everyday lives. I have $1,000 in my bank account at the end of January. I receive a paycheck for $1,500 in February and pay my only monthly bill for $500. At the end of February my cash balance is $2,000. In cash-based accounting you recognize your Net Income/Loss in a given month based on your cash in and cash out.

You are allowed to do this in business, too. But don't.

I know a CEO who sold his company for many millions of dollars with his cash-based financial statements. During the acquisition's due diligence, those cash-based books had to be converted to accrual-based figures. He probably lost several millions in his purchasing price because of it.

Advice: Beginning today, think of your business in terms of accrual-based accounting. Simply put, you recognize revenue or cost in the month it incurred. Let's say you receive a contract from a customer that outlines they will pay you $100 for the monthly subscription with an invoice of terms Net 30. Accrual accounting means you send the invoice for $100 to your customer in January, but will not receive the money until February. You can still recognize $100 as January revenue because this is when you provided the service and when you earned that money. In a nut shell, you are recording your revenue/cost based on when you earned it/incurred the cost, rather than based on when the cash exchange took place.

Mistake #3: Recognizing revenue improperly

Revenue recognition has always been complicated, and is even more so these days. Additionally, specific to SaaS companies, the problem is that with increasing transaction volume, the gap between correct/conservative revenue recognition and some "improvised" approach becomes more material.

You might at some point be asked to re-state your revenue. There is nothing worse than telling your board and investors you need to adjust your revenue recognized or revenue forecast.

Advice: With an Excel sheet model, start tracking your recognized/deferred revenue balances. If this model doesn't get set up early enough, your clean-up effort later will be much harder and more costly. Once you reach certain revenue volumes, you should invest in a tool or full time help (see Mistake # 4) that can manage correct and error-free revenue recognition with increasing sales volumes. Down the road you will need a tool that might offer some automation in revenue recognition.

Mistake #4: DIY Accounting

With initial revenue traction under your belt, you're now diligently watching every dollar you spend and those spending priorities are ticking up quickly. You need to get to that next revenue level and KPIs that will help you with your next round of funding, which confirms my next statement: Instead of trying to pay your bills, process payroll and recognize revenue (correctly), make sure you get help from an accountant.

Find accounting firms that outsource different roles. They will help you identify how many hours of support you may need to, for example, set up your first accounting system properly, reconcile monthly bank statements, and set up a much needed revenue recognition process.

Advice: Don't fool yourself into believing that writing a check or paying via your online banking service is all it takes to "do accounting." The longer you wait to get that formal accounting support, the bigger the clean-up effort and larger the bill will likely be.

Mistake #5: Controller = CFO

When you finally admit you need to bring in more senior finance support to help with financial reporting to the board and investors, set up some scalable processes, planning/budgeting exercise, and prepare for future investment rounds, you will most likely stumble upon two different titles — Controller and CFO.  Here's the difference between the two: A controller will take care of everyday accounting business, close the books and report numbers, but the responsibilities end there. A CFO, on the other hand, starts working with numbers after the actual results are reported and, additionally, takes into great consideration future indicators, budget, planning and strategy variables.

This is not to say that both roles in early-stage start-ups should not be flexible and not assist with all areas to some extent. CFOs should be able to manage the month-end close and some controllers can assist with planning.

Advice: A controller can't do it all, especially as you grow. If you hire well, you should be able to see the strategic value of your CFO within a matter of months. You should look to hire a CFO with start-up experience, someone who will help you identify business needs that you might not be even thinking about it.

Mistake #6: Putting off that CFO hire when you're comfortable with your current "Rent-a-CFO"

While convenient, the hourly rate of your current "Rent-a-CFO" means you can't afford that role full-time. Given that, the contractor is only asked to prepare for board/investors meetings and help with budget planning. Removed from everyday business, she can only speak to the larger picture, which is important, but that's often not enough with the fundamental processes of billings, collections, cash flow management, revenue reporting, corporate compliance and more.

With a rental engagement, the burden falls on you. As you grow, you might miss some important steps to set scalable accounting practices that will help you along the way.

Advice: Don't be afraid to bring in a "right-stage" CFO earlier in process than you might think warranted. It will be worth it down the road when you are facing due diligence or find that you need to stretch cash for a few more months.

Mistake #7: Not creating a detailed and complete budget

I am certain most of you first-time founders have an Excel sheet set up to track your revenue projections. And you probably have some kind of tool tracking churn, upgrades, and new revenue numbers. That's great, but that is not a budget.

An actual budget helps you track performance and, subsequently, plan for future needs. I know of first-time founders who get money in, but they don't know how to strategically invest in the business areas that need the most nurturing. On the flip side, I've certainly seen founders who need money desperately, but can't adequately justify their ask to investors.

Advice: Make a concerted effort to define a detailed 12 to 24-month budget. It will help you answer three very critical questions: (1) "How much money do you need to get you to $X revenue?" (2) "What will you do with that money?" and (3) "What is the return on that investment?"

Mistake #8: Not reading your financials regularly

Taking my advice on numbers 6 and 7, you've already hired yourself appropriate accounting help and they are currently closing your books, which means they are issuing a financial package  to your board, investors, the bank and, firstly, to you.

Take time to understand its details. You don't have to do CPA-speak, but at least absorb the Income Statement and its correlation to Cash Flow Statement, your Balance Sheet, deferred revenue, and your liabilities to be paid.

Advice: You are not doing yourself a favor if you look solely at that revenue number. Have your accountant walk you through the specifics. If they get too technical, ask them to explain it again in non-accountant speak. Simply looking at you, I can tell whether I am clear enough in my explanation, or if I am losing you with terminology. Unfortunately, more often than not, once I lose you, you don't ask questions. Rather, you opt out, saying, "That is why I have you to understand all of this."

Mistake #9: Don't forget about compliance

Compliance can be complicated. Here is just one simple example. You've likely outsourced corporate compliance using a law firm's "start-up package" that's helped you incorporate, create board resolutions and confirm equity documents. In most cases, you're incorporated in the State of Delaware and qualified to do business in the state where you are located physically. You think you're all set.

With every company I've worked, I proactively check whether it's in good standing in Delaware and if the annual franchise taxes are paid to date. I've had more than a few crazy tax balance surprises (say a $70,000 past due bill)!

Advice:  Your compliance responsibility doesn't end after you incorporate. The same is true for taxes, US GAAP, contracts, HR….Don't panic. Get in place the right type of resource — someone who knows which compliance is a one-time action and which have to be maintained on an ongoing basis, which, by the way, change with the size of the company and can't be avoided without future penalties.

Mistake #10: Data Consistency Inconsistencies

I go nuts, as I'm sure you do, when found in a situation where an investor or board director says, "Why is your sales revenue different than revenue reported on your financial statements?" Or, "Why is your sales churn figure different than your marketing churn?" While not necessarily an accounting-specific mistake, it is a business management offense.

Advice: Agree on what business unit is responsible for what KPI and that the CFO defines revenue for the company. Then, make sure all departments use the same data sources for KPI reporting. This will require cross-functional collaboration and ongoing communication. A benefit is that it will reduce time each team independently spends tracking the "same" number.

By avoiding these top 10 first-time founder mistakes, you can have an easy(ier) state of mind when it comes to the accounting health of your company. Hire what's needed sooner rather than later, but don't remove yourself from understanding the finance responsibilities. Ask questions (again and again) until you understand, in your own way, what it all means.

And Jason here, I’m going to add a #11

Mistake #11:  Not Having Someone Dedicated To, And Great at, Collections on Your Team.  Especially if You Sign Contracts.

So many start-ups I work with collect less cash than their MRR.  That’s a sign.  A sign you are falling way, way behind on collecting cash from those contracts.   A bit more on that here.

You Should Be Collecting At Least 100% Of Your MRR Each Month in Cash. Ideally, 110%+.

The post The Top 10 Important Finance Mistakes First Time Founders Make appeared first on SaaStr.

Why Founder-Led Sales Breaks Earlier Than You Think

Posted: 23 Jan 2022 06:54 AM PST

Over the years at SaaStr we’ve talked a lot about hiring a great VP of Sales, when it works, when it doesn’t, and how it moves the needle.  Put simply, a great VP of Sales will come in and if nothing else, take whatever leads you have … and get more out of them.  Close more of them.  And close them for more money, on average.  The combination of the two alone can dramatically increase your new bookings, even with the exact same number of leads.  More on that here.

What we haven’t discussed as much is the simple math on the flip side … what happens if things are going OK, so you decide to hold off.  To stick with founder-led sales longer than most folks do, i.e. past $1.5m-$2m ARR or so.

Sometimes this can work, especially in a heavily freemium model, and especially when you sell to very small businesses or individual developers or small teams.  Sometimes, enough leads keep are coming in that even if in theory a traditional VP of Sales could close more, it doesn’t matter for now.  You are growing fast enough.  The distraction of building a real sales team isn’t worth it yet.  Stripe didn’t begin to add a traditional sales team until 2018, and they did just fine.  Although Twilio started a lot earlier …

If you don’t think you need a real VP of Sales even after $1m-$2m ARR, then I’d at least suggest an admittedly obvious test.  Are your new bookings still growing?  And are they growing fast enough?

This is the trap I find a lot of CEOs with early product-market fit fall into.  On their own, or with, say, 1-3 sales reps or even happiness officers, they figure out how to close $20k a month, then $40k, then $100k a month in new bookings.  That’s great.  But then, it sort of slows down.  That $100k in bookings, say, drops the next month to $80k, then rebounds to $120k, then back to $90k.  The MRR/ARR keeps growing, because you are still adding bookings and customers.  But the % growth rate begins to decay as the absolute bookings growth slows way down.

Here’s an over-simplistic version of that math, but you can see it here:

You can see in this example, that the % growth looks strong through the summer … even as new bookings start to flatten.  Even by the end of the year, growth seems OK at 10% a month.  But really, decay has set in long before that.  The founder-led sales process stopped making progress in bookings growth months ago.

I see this again and again.  Founders push through flattening bookings for 6+ months … time they could have used to be recruiting a VP of Sales.  

And you should start looking early, because it takes time.  It can take 6-12 months to close a great VP of Sales, because many of them already have a well-paying job that it will take time for them to leave.  More on that here.

So my simple advice in a simple post is just this:  if you want to wait past $2m ARR to start looking for a VP of Sales, maybe that’s OK if the numbers are strong.  But at least be hyper-alert to any slowdown in new bookings.  Because when it comes, you’ll wish you’d hired someone who could have turned the exact same leads you now have into 50%+ more revenue.

At least, begin the interviewing process the month you realize new bookings growth isn’t accelerating anymore without a VP of Sales.

(note: an updated SaaStr Classic post)

The post Why Founder-Led Sales Breaks Earlier Than You Think appeared first on SaaStr.

Top Post & Vids of the Week: CRO Box, CMO Calendly, COO Asana, CCO Figma, and More!

Posted: 23 Jan 2022 06:20 AM PST

Top Blog Posts This Week:

  1. Meritech: The Average SaaS Company IPO’s at $225m in ARR. And is No Longer in the Bay Area.
  2. Dear SaaStr: How Much Does The VC On My Board Make If We Sell for 1 Billion?
  3. You’ll Lose Customers. It Hurts. But Don’t Let Them Become Angry Ex-Customers.
  4. 8 Things That Change When Your Company is Acquired
  5. The 2 Things To Look For — At a Minimum — In Any First VP of Sales. And 3 Flags Almost Everyone Misses.

Top Videos This Week:

Reaccelerating Growth at Scale with Box CRO Mark Wayland and SaaStr CEO and Founder, Jason Lemkin

What’s Changed in Product-led Growth with Calendly CMO Patrick Moran

How to Scale Outbound Sales with Anna Baird (CRO, Outreach), Amy Appleyard (SVP Global Sales, Malwarebytes), Michelle Benfer (VP, Head of North America Sales, HubSpot), Tony Benvenuto (SVP of Sales West, Seismic)

Full-Funnel Product-Led Growth with Jenn Steele, VPM at Reprise, and Grace Tyson, VPS at Reprise

Grow Your Customer Base 10x Through the Power of Self-Serve & Direct Sales w/ Asana COO Anne Raimondi & Figma CCO Amanda Kleha

The post Top Post & Vids of the Week: CRO Box, CMO Calendly, COO Asana, CCO Figma, and More! appeared first on SaaStr.

Dear SaaStr: Do VCs Prefer Startups With No Competiton, Or Those Disrupting Competitive Spaces?

Posted: 23 Jan 2022 06:07 AM PST

Q: Do venture capitalists choose companies that have no competition or ones that are trying to disrupt a competitive market?

I think most VCs do both.

We did an analysis of SaaS startups that had IPO'd and about 70% were new versions of something new, and 30% were truly new categories:

So VCs like to do both.

The reality is, entering an existing market especially in B2B is often faster and easier, despite the competition. But creating a new market is sometimes where the really huge outcomes come.

I think the bigger change in venture in the past few years, with the rise of 1,000+ unicorns and multiple unicorns in categories, is that VCs are less worried about competition. It used to be that you couldn't make much money as a VC investing in the ultimate #2 or #3 in a space. Now, they might turn out to be worth billions.

More on that here:

This has fueled a lot more large funding rounds in spaces that are or can be large, often with 10+ startups raising tens of millions and more. That's a lot more common than it used to be.

Startups that had plenty of competition:

  • Slack
  • Zoom
  • Asana
  • Canva
  • Notion

The list goes on

The post Dear SaaStr: Do VCs Prefer Startups With No Competiton, Or Those Disrupting Competitive Spaces? appeared first on SaaStr.

Want To Steal a Customer from the Competition? You Gotta Do The Work

Posted: 23 Jan 2022 05:37 AM PST

Q:  What factors that make it difficult for a salesperson to sell a new product to a customer who has been buying a competing product for many years?

You can steal a customer from a competitor. But unless they are so fed up that they'd inbound to switch — you have to go further. And most vendors are too lazy to go far enough to get folks to switch to them.

I see so many reps trying to steal a customer that focus on:

  • Price (we can save you 10% vs the competition!! so what)
  • Wanting to get "on a call" to talk (i don't have time to help you sell to me)
  • Why their product is so great (why do I care?)

None of this matters, most of the time, in SaaS. Not really. Because the switching costs are so, so high to rip one app out and replace it with another. To find the time to deploy a new app. To train the team. To figure out the corner cases that won't work as well. To learn slightly different, new ways to do the same thing.

So a discount isn't remotely enough. The switching costs will far exceed the costs for the software itself, in many cases.

What sales reps should be selling if they want to steal a customer from the competition is:

  • "We'll do all the hard work for you to replace their app with ours. We'll install it, tweak it, and even let you do a totally risk-free pilot for 90 days if that helps."
  • “Is there 1 critical thing you are missing from your existing vendor?  What is it?  Let me know so we’ll see if we can solve that big problem for you.”
  • "Here is the 1 reason we are 10x better. Does this solve your problem? If so, again, we'll do all the work."
  • "We'll buy out the term, if any, with the other vendor so the direct switching costs are zero."
  • "If you want, you can use both apps at the same time and test them side-by-side. And we'll do 99% of the work for you."

Imagine you heard that …

Then, when there's a real bump with an existing vendor … you just might switch.

But so few companies and sales orgs go this far. So very few. It's more work, no doubt, than just closing a warm inbound lead.

As you get bigger, you may need a SWAT team that just does … this.   A sales team, with higher commissions and specialized skills, just focused on Stealing Deals / Stealing Deals Back.  At a minimum, the best marketing teams do.  They track Lost to Competition Leads as ones they get a new shot every 12-24-36 months down the road.

A bit more here: How to Steal a Customer From the Competition | SaaStr

(note: a classic SaaStr post updated)

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Dear SaaStr: Should I Move Our Fiscal Year From Dec 31 to Jan 31? Will It Help The Team?

Posted: 22 Jan 2022 06:57 AM PST

Q: Dear SaaStr: Should I Move Our Fiscal Year From Dec 31 to Jan 31? Will It Help The Team?

There’s a natural evolution as you scale a SaaS company.  In the beginning, every day can almost seem life and death.  Every single deal feels critical.  Sales cycles seem so long, and you can barely even see a quarter ahead, let alone a year.

Peter Gassner, CEO of $35B market cap Veeva and I had this discussion at a SaaStr Annual, where in the early days he could only plan about a quarter ahead, max:

But then, as you scale, things do get more predictable.  Sometimes as early as $4m-$5m ARR, sometimes it can take longer, especially for enterprise deals, where it may not even seem predictable at $15m ARR.  But it does get there.

And when it does, one of the things that can make sense is to move from montly to quarterly quotas and sales goals.  Do this too early, especially in mid-market and SMB and “mixed” (S/M/L) sales, and the sales team often just doesn’t work as hard the first two months of the quarter — and can struggle to make it up the last month.  More on that here:

But still, in the end, most SaaS companies move to quarterly quotas and projections as they scale.  At least past $20m, $30m ARR.  Because it all gets more predictable, and a quarterly goal does take a little stress out of the system once there’s enough predictability that you don’t have to worry as much about the first 2 months of a quarter.

Another step folks then do is move their fiscal / financial year from Dec 31 to Jan 31.  Salesforce does it, and has for a long time, and so do so many other public and later stage SaaS companies.  Why?  It takes the pressure off the holidays for the sales team — so the team can relax more — and it makes closing deals at year-end a bit easier, as your prospects and customers haven’t gone on break.

But there’s a downside.  It again removes a little bit of urgency.  It removes that pressure to hit the Dec 31 deadline to get those deals in for the year.  Jan 31 just isn’t the same.  I know some will disagree, and it probably doesn’t matter when your bigger, or have a truly excellent VP of Sales on board.

But what I see time and time again, in 2006, 2016, 2022, every single year I’ve been in SaaS … a Dec 31 year-end works.  The best SaaS sales team just close more on Dec 31 than you would ever imagine.  It’s glorious in fact.  More on that here.

Why The Greatest Sales Teams Just Kill It On Dec 31. When Everyone Else Has Gone Home.

But still, you have to go long.  It does make the holidays easier on your team if the pressure is off a bit with a Jan 31 fiscal year.  The team gets to come back from Christmas break, sell hard, and sell to customers who are 100% for sure working at the end of the month.

So my simple recommendation is this:  like moving from monthly to quarterly quotas … hold off on moving from Dec 31 to Jan 31 fiscal year.  In particular: hold off until you have such a strong VP of Sales in place that you are confident it doesn’t matter.  And she is confident also it won’t help.  This often isn’t much before $20m-$30m ARR.  Until then, hold the line if you can.  Stick with a Dec 31 push to close out the year strong.

And then after that, after $20m-$30m ARR when you have a great VP of Sales you trust, and you know will hit the plan either way.  Well after that, let her decide.

Also, David Sacks of Craft Ventures had a good SaaStr session on how you have to build a cadence here, at least after the early days, after 50+ employees:

 

 

The post Dear SaaStr: Should I Move Our Fiscal Year From Dec 31 to Jan 31? Will It Help The Team? appeared first on SaaStr.

7 Changes You Can Make >Today< To Grow Faster

Posted: 22 Jan 2022 06:00 AM PST

Almost all of our 10,000+ pieces of content and 1,000+ SaaStr sessions and 500+ podcasts are really just about how to do … better.  A smidge better.  A bit better.  Since SaaS compounds, even doing just 5% better now can compound dramatically over time.  Everything doesn’t have to be 10x better to move the needle, if it compounds.

But a lot of advice takes time to pan out.  What are 5+ changes you can make today, or at least this week, to do better?

A few thoughts:

1. Visit all prospects and customers in person that have an ACV of >= $50k.  The more of your prospects you visit in person, the more that will close.  And the more existing customers you visit in person, the better the upsell and revenue retention.  Want to increase your close rates, with the leads you already have?  Get on a jet.  Want to increase your revenue retention?  In person. Visit all your customers > $50k every quarter.  Just give them a roadmap update and check in.  Even with no new leads, and no new customers, this alone will boost your revenue.  And you can start Monday.

I Never Lost a Customer I Actually Visited

2. Have a weekly 1-on-1 with a VP/direct report that you don’t have one with right now.  Weekly 1-on-1 meetings are critical.  They are one of the simplest ways to get more out of the team you already have.  Meet each week, in an unstructured way.  This will help you surface simple ways you can help then do better.  Most of us tend either not to do 1-on-1s, or only do them with some reports.  Force yourself to do them with all your reports.  And if there’s someone you don’t want to do a 1-on-1 with … that’s a sign she/he should report to someone else.  So make that change this week, too.  So they report to someone who can be a more effective boss than you.

Your #1 Management Hack: Weekly 1-on-1s

3. Hire a new recruiter and meet with 30+ new candidates for your #1 open role.  As you begin to scale, the gaps on your team can become overwhelming.  Because there will be so many of them.  Take a breath, and if you want to do better this week, focus on just one key hire.  The #1 you need.  And find a new recruiter.  You need a fresh perspective.  Tell her you want to meet 30 candidates in 60 days, if possible, and you are committed to making the hire ASAP.  That will motivate both of you.  And pay up.  A recruiter fee is tiny compared to the value a top VP will bring.

How To Get Better at Recruiting. (We All Need To).

4. Set a burn-rate budget for each and every month. This will focus your team and de-stress your life.  Most of us come up with a rough budget for the year, but not a burn-rate budget for each month.  This will force everyone on the team, starting Monday, to collaborate on hiring and other trade-offs.  If you go over the budget, now everyone will know. In close to real-time.  This will almost immediately improve the efficiency of your limited budgets, and improve teamwork.  And you will make better decisions on where to deploy your limited resources.  Which will not just manage your burn rate — but increase your revenues.  Starting Monday.

Zoom Had a Burn Rate Budget. So Should You.

5. Cut out toxic folks.  Most of us keep / sit on a hire or two that has strong skills, that we feel we need, but that is dragging down the team.  It turns out, you don’t need them.  It turns out, the week you move them out of the company, the folks that are great and positive will somehow fill the gap, someway.  And it turns out, you’ll do better just one week after moving the super experienced, but toxic folks out.  Do it this week.  Do it on Monday.  And you will do better this month.

6.  Specialize and Segment Your Sales and Customer Success Teams.  If you aren't doing this yet, it's time.  Split your sales teams into at least 2-3 teams focused on small, medium and large or smaller vs larger customers.  Almost everyone has a "commercial" sales and commercial success team focused on smaller customers.  Specialize here and your close rates and NRR will go up.  You can roll this out this month. You probably already know who to put on which team.

After $2m in ARR — Start Specializing Your Sales Team

7.  Add a real Customer Marketing function, and spend at least 20% of your marketing dollars and time on existing customers.  Almost all of us wait way too long to add Customer Marketing.  But if 90% of the revenue from customers is after the first dollar in, and especially if you see NRR of 100% or more, then marketing should only start when the customer first e-signs.  You'll job is to increase the odds they stay happy, and buy more from you.  More content, more webinars, more drip marketing, more help, more events, more steak dinners more your existing customers.  Not just the potential ones.  Ultimately you need to have a full-time here.  But you can probably start with whatever resources you have now.

You Aren’t Doing Enough Customer Marketing

Scaling a SaaS company past say 100 customers, $1m ARR, or even earlier, is as much about making fewer mistakes than it is about going faster, bigger, strong.  Take as many actions as you can to just do a bit better.

And above are 5 you can take this week.

Make it so.

(Note: an updated SaaStr Classic post)

The post 7 Changes You Can Make >Today< To Grow Faster appeared first on SaaStr.
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