- Hi there. I'm Dan Martell.
Serial entrepreneur, investor and creator of SaaS Academy and
in this video I'm gonna teach you how to build a simple
forecasting projection system for your startup that doesn't
require you to buy NetSuite or SAP
or deal with tons of spreadsheets.
And be sure to stay to the end where I share with you how to
get a copy of my Weekly Sync agenda structure.
It's what I use every week with my companies that I coach to
help them scale and grow their business and keep their whole
team accountable and on track.
(upbeat music)
So when I was building my company Flowtown
one of the things that I always struggled with,
and maybe you can relate to this
is setting crazy, ambitious goals.
We read these books and they say you gotta define a BHAG,
a big, hairy audacious goal.
So when we sit down with our team and we're planning and
we're like, "Alright, we're gonna 10X this year.
"We're gonna 20X.
"We're gonna crush it in the next three months."
The challenge with that, what I discovered really quickly
is all of a sudden you start teaching your team
that it's okay to lose.
You set this crazy goal for the next three months and then you
fall short and you have to go back.
And look, it's typically real legit reasons that
you don't hit your numbers.
The product wasn't done on time.
A key partner didn't do the distribution the way you thought
they did or would or you didn't hire that key engineer who was
supposed to build that, you know,
artificial intelligent machine learning component that was
going to change the game for you.
But what happens is you make it okay.
And the last thing you want to do is get to a place with your
team where they're okay missing their numbers.
Or they stop believing in some of these crazy,
audacious goals you set anyway and kind of,
you know, glad hand you and say,
"Yes, that's great, Dan. I'm gonna accomplish that."
And then when you turn away they're essentially gonna do
what they're gonna do anyway.
I want to teach you how I had to learn this from my investors,
sit down with them and say,
"Look, I feel bad because we keep settin' these goals
"and we're not hitting them."
And they gave me a different way of thinking through the problem
and built the solution that I'm gonna share with you guys today
that allowed Flowtown to go from literally ramen profitable to
over 50,000 customers in an 18-month period.
So yes, we grew really quick but we also knew how to set our
targets and our forecasts so that we could hit them and build
that moment and that's what I want to share with you today.
Number one, historical data.
One of the first things I do when I'm coaching a client is
ask them whatever their goals is,
"I want to 10X over the next 12 months."
I just ask them if they've ever done it before because
historical behavior is a great indication
of future performance.
So the first thing we want to do is look
at the three month rolling. It's called the R3.
What kind of growth have you accomplished
in the last three months?
What have you done in the last six months? That's R6.
And then R12 is the previous year.
Now I'm not saying that you can't improve upon that.
I just want to know what the baseline is.
So when you're sitting down with your team and you're planning,
you know, your year end, kind of the next 12 months strategy work
with them by looking at the historical.
Get them to pull that data forward so that you can start
making some assumptions on hey, if we improve 20% quarter over
quarter, what would those numbers start to look like?
So look at the historical.
Number two, resources.
As much as you want to grow, you're always gonna be limited
by what I call the management bandwidth.
You have to work through your people.
Your people are an extension of who you are
and their ability to execute.
So if you don't have the resources through people,
through capital, maybe partners, maybe intellectual property,
you got to look at everything you have so that you can
understand how to properly deploy the resources as you
start thinking strategically about growth or setting some
projections for your business.
Number three, got to the end and then work backwards.
If you've ever read the book
"Seven Habits of Highly Effective People" one of the
habits is begin with the end in mind.
That's the way I think of forecasting
and setting projections. I want to go right to the end.
Ideally three years is the furthest I'm gonna plan out.
Then I'm gonna work it one year and I'm gonna start looking at
what are the numbers that I want to achieve in the next 12 months
and break it down by quarter.
If I want to hit that number, what's the milestones on each
quarter that I need to hit to make sure that we're on pace.
Number four, set targets.
Once you know where you want to go in the next 12 months,
you've broken that down into quarterly goals then your job is
to start setting the targets on a monthly basis.
If you think about it, if you start falling off pace every
month then all of a sudden the quarterly goal is totally gonna
be out of the question and that just keeps cascading.
So what you do is you set your monthly targets,
then you add, and ideally you have some kind of scorecard,
spreadsheet, report that you look at with your team.
I have a scorecarding process that I teach that
you can search on my channel.
And what we do is we set the targets for the month,
then the actuals, where you're at so far.
If you're two weeks into the month,
there's only four weeks, then you should be at about 50% of
target and you review it and measure it
every week with your team.
So every week you look at the targets for the month,
you set the number that you've accomplished so far in the
previous seven days, and measure that every week and hopefully
your actuals based on trend is gonna allow you to hit your
targets for the month and that's the focus you need with your
team to make sure you actually have a projection process and a
way to set the targets and hit them.
Number five, review monthly.
So there might be a month where you come in and
you're off pace a little bit.
And maybe it was a strategic challenge.
So you look at your numbers and work yourself backwards and say,
"What were the activities that caused these numbers?"
So every month I highly recommend that you have a team
meeting to look at the strategy for the quarter and
ask yourself, "Are we focusing on the right things,
"on the right initiatives that actually gonna allow
"us to hit our numbers?"
See, the challenge with business is when we do our planning we
have a level of confidence and understanding of impact and
maybe some guesses around how easy these strategies or
projects are gonna be to deploy but we really don't know.
So what I want you to do is give yourself permission on a monthly
basis with the team look at your numbers so far.
If you're off pace ask yourself,
"Are there things we need to ramp up?
"Are there projects we need to table for later?
"Do we need to double down on something that might be
"working really well but we should really invest
"more resources into it?"
But don't wait 'til the end of the quarter to adjust,
to realign your monthly goals 'cause if you fall off then
you're gonna have to make that time up in month two and three
to make sure you hit your numbers for the quarter.
Number six, iterate quarterly.
So one of the things that I believe in is that
really it's a 90 day sprint.
If we think about performance, this is personal or
professional, we want to focus on the
next three months in front of us.
Yes, we want to have goals for three years,
one year and break it down per quarter but at the end of the
quarter when we look back at all the progress we've made,
we want to use that information
to start planning the next 90 days.
And when we do that, I want you to give yourself permission to
take all of the projects that you planned on doing...
If you're off pace, those projects are
on the table for being cut. There's no reason,
and I see this all the time with my clients.
They're moving forward on strategies or actions that they
know probably will not work because the stuff that they've
been working on have not performed either so what you
want to do through kind of a forecasting and a target process
is to teach your team how to hit plan,
how to be accurate, how to set the projections
and hit the target.
And I think that on a quarterly basis you need to give yourself
permission to reset the strategy.
Maybe you're way off in Q1, you need to fix that for Q2.
Readjust the projections and then move forward.
Now, I'm not giving you permission to get off the hook
for your goals if you set them but I think that it doesn't
serve anybody to not talk about the big challenges you might be
facing if you're missing your numbers on a quarterly basis.
Number seven, don't teach your team to lose.
I mentioned this at the beginning but I think it's
probably one of the most important things
that you can do.
As a leader, your job is to work through your people to coach
them to success and to ensure that they have the ability to
forecast and be consistent on hitting plan.
That to me is the sign of a mature management company.
When I see somebody's pro forma or their estimates and then
I look at their actuals and it kinda goes like this and there's
no consistency in their numbers or they continue to give me
these lofty goals and always come short about half,
to me that's not a great sign of great leadership.
That's telling me that you have been okay with setting goals and
teaching your team that it's okay to lose.
And when you get into this spiral,
if you think about some of the great sports teams out there
that have gone in these spirals of losing streaks like it's
really tough to get out there and build this champion mindset.
Right? This team that winning is the only option.
Right? So if you set these goals and one strategy,
I learned this from my buddy Todd Herman,
is good, better, best.
Think about it like this is good if we hit this,
you know maybe it's 25% growth for the year, that's good.
Best would be 50% growth or better would be 50% growth and
then best would be maybe 75%
or 100% growth over the next 12 months.
It depends what that would mean for you.
What would be a stretch?
But you still want to make sure that you set a good that is
aggressive for your team to grow into but allows them to win.
And then I always plan for best so that when I'm talking about
strategies I'm executing on a strategy that's gonna get us
best and then if my team gets good then they feel
great about our progress.
Because at the end of the day, you are the person curating,
hiring the people that they're gonna work with,
funding the resources they're gonna need to execute and you
want to make sure that they don't feel like you're asking
them to do the impossible without giving them the
resources and support they need.
So I highly recommend that you try to be accurate in your
projections and allow your team to hit them and win.
You don't want to teach them to lose.
So quick recap.
Number one, use historical data.
Number two, review your resources.
Number three, go to the end and then work backwards.
Number four, set targets, measure weekly.
Five, review your monthly progress as a team.
Six, iterate quarterly strategies and tactics and
seven, don't teach your team to lose.
So as I mentioned at the beginning of this video,
I want to share with you an exclusive resource
called the Weekly Sync.
It's my agenda structure and
it's got a bunch of details in it.
You can click the link below to download it but
it's how I manage my team on a weekly basis.
In there there's a line item for scorecard.
That's where you would actually put your numbers,
your projections, your targets and measure your actuals on a
monthly forecast basis and also every week have your team lock
those numbers in there. It's super powerful.
One of my favorite things to do is customer headlines so that we
actually celebrate our customer wins as a group so click the
link below, download your copy of that.
If you liked this video I would encourage you to share it with a
friend that you care about that might benefit from it.
Click the like button and leave a comment and let me know what
part you feel you need to add to your planning process.
And as per usual, I want to challenge you to live a bigger
life and a bigger business and I'll see you next Monday.
Good.
(clears throat)
(hums)