And why you should plan this way?
It’s that time of the year again. Most companies are wrapping up their final quarter, good or bad. Some are trying to push through those last few deals that have been on the brink for the last few weeks. As you round off the year, it’s time to make those 2020 plans. It’s the start of a new decade and I was this excited to ring in the new year last in 2000, when Y2K had every one on tenterhooks.
2020 feels like a new beginning. With AI taking over the world, stories of boom and bust all around us, and Asia becoming the new power bed for tech economy, “Decade 2020” will have a lot in store for all of us.
I was in a board meeting today, and at the end of it the CEO mentioned:
I’ll send in a 2020 plan very soon, but be cognisant that we still have a lot of unknowns, so I don’t want to micro-optimise
I vehemently agreed, but also something popped in my head at that instant: “Why don’t you send us a 6-month plan instead? You’ll try to fundraise within the next 6 months, so it will help us align targets accordingly.” And at that instant I also though to myself, why don’t we do this for all of our companies?
So here is my suggestion for all of you running early stage startups, instead of planning the full year this 2020,
Plan for 6 months.
Here are some reasons for why you should be doing this:
- You might not have enough money for 12 months of growth plans, but you most likely have money for at least 6 months. If you have money less than 6 months, you’re in trouble, stop reading this and start raising
- You can granularly plan budgets for first 3 months easily, down to every expected cost and revenue closure, and you can estimate the 3 more months relatively accurately
- Senior hiring takes at least 2–3 so you can easily plan this within the 6-month timeframe
- A quarter might be too short a time to ship product changes, but 6 months definitely is not
- Markets don’t get impacted significantly in any 6 month window. Unless you’re in the midst of a global meltdown, in which case you’re likely screwed anyway.
- If you’re a SaaS startup running annual contracts, you have clear visibility on contract renewals coming up to predict churn
- Fundraising timelines, at least in my portfolio, seem to have shifted from 12–18 months to 6–12 months, at least for high growth companies
Agree? Just do it. Disagree? Comment and let me know why.