It's Not a Lie If You Believe It
Planning for 2023
Want to know why most SaaS companies missed targets in 2022 and why most of them will miss again in 2023?
The way SaaS companies do planning is absolutely broken.
The typical flow is something like this :
The CEO or CFO pick a target that sets the company up for a specific valuation or trajectory to some outcome
Sales and Marketing Leaders are handed down targets for the year from the CEO & CFO and ask to build plans to hit them.
The targets often require growth rates the company has never experienced before.
The Sales and Marketing leaders backload their plans to try and give themselves some time to get momentum, hoping to catch some magic or find ways to hit the numbers.
The company then begins to hire to try and have the resources for this magical 2nd half.
The company ends up missing wildly in the 2nd half and are completely over their skis in terms of burn rate and head count and have to cut back.
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So how can you actually avoid this fate in 2023?
Don’t do top down. Ask your go-to market leaders to go off and build a model with their budgets- don’t give them targets to hit. Ask for a bottom up model based on realistic growth they think the can achieve with a baseline budget.
Then ask the question - what could we do to accelerate this number or increase it? This will show you where there are some big areas of potential opportunity.
Can you make key hires earlier?
Can you pump more budget into a specific program?
Include the Product, People and Support teams in the discussion.
What new product launches are coming that could impact the targets? Are there new upsell opportunities? How about pricing or packaging changes?
Is your support team set up to actually retain the volume of customers coming in or are you suddenly going to have a churn problem?
Speaking of churn - what ways can we reduce that through better support?
Can HR even hire that amount of folks?
Ask the hard questions
If you are just building a plan with assumptions that everything will go correct, you are setting yourself up for massive failure. Spoiler - it never all goes correct.
What are the worst case scenarios in each model or initiative?
What are everyone’s biggest worry with the plan?
What are the biggest risks?
Spend as much time trying to evaluate how to expand the revenue from your current customers as you looking at just acquiring new ones.
Getting your model correct will greatly impact your teams morale, expectations from your board, focus and keep teams aligned.
Get your model wrong, and 2023 might be more painful than 2022 for a lot of companies.
Happy Planning!
Adam