Not to scare you, but...
This is going to scare a lot of you...
There are exactly 122 days until Jan 1st. 81 working days at most.
So.... have you started your 2024 planning yet?
2023 has been a tough year for SaaS. For most companies, their 2023 plan is crumpled up in the corner somewhere.
Dreams of 50% growth dead on a spreadsheet.
Want to know why most SaaS companies missed targets this year and why most of them will miss again in 2024?
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.
Here are 5 ways you can 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.
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 help keep teams aligned.
Get your model wrong, and 2024 might be more painful than 2023 for a lot of companies.
Interested in Going Deeper?
On September 20th, I am teaming up with my old forecasting partner at G2, Brad Rosen to share our expertise from scaling the GTM machine at G2 together, as well as all the learnings we’ve gathered from working with hundreds of B2B clients since.
We will cover:
Revenue modeling best practices
Which revenue / growth rate do you use as a baseline for next year 2022 or 2023?
What type of scenario planning should be used and how do you best prepare for any economic outcome?
How do you balance ambition with caution?
Thanks for reading!