I am surprised by how many startup CEOs leave the board hanging at the end of the quarter. As a CEO my rule of thumb was that if a board member ever asked me about the quarter then I’d failed in being sufficiently proactive in communications. In tight quarters I’d send a revised forecast about a week before the end of the quarter — hoping to pre-empt a lot of “how’s it going” pings.
And every quarter I would send an update within 24 hours of the quarter-end. In fact, if we’d effectively closed-out all material opportunities before quarter-end, I’d send it out before the quarter was technically even over.
Why should you do this?
- It’s a good habit. Nobody wants to wait 3 weeks until the post-quarter board meeting to know what happened.
- It shows discipline. I think boards like disciplined CEOs (and CFOs) who run companies where the trains run on time.
- It pre-empts one-of emails and phone calls. It’s probably less work, not more, to send a quick standard end-of-quarter update that includes what you do know (e.g., bookings) but not what you don’t (e.g., expenses because accounting hasn’t closed the quarter yet).
What form should this update take? I’d start with the board sales forecast template that I’ve already written about here. (And I’d change Forecast to Actual and drop the Best Case and Pipeline Analysis.)
Since cash is oxygen at a start-up, I’d add a line about forecast cash flows, making sure they know the numbers are preliminary, with final numbers to follow at the upcoming board meeting. I might add a little color on the quarter as well.
Here’s an example of a good end-of-quarter board update.
Just a quick note to give you an update on the quarter at GreatCo. We beat new ARR plan by $200K (landing at $1,700K vs. plan of $1,500K) and grew new ARR YoY by 42%. We came in slightly under on churn ARR, landing at $175K vs. a plan of $200K. The result is we ended the quarter $225K ahead of plan on ending ARR at $11,546K, with YoY growth of 58%.
Cash burn from operations is preliminarily forecast to be $240K ahead of plan at $2,250K and ending cash is just about at-plan of $10,125K (we were a little behind in 1Q and 2Q has caught us back up).
We had some great competitive wins against BadCo and WorseCo — I’m particularly happy to report that we won the Alpha Systems deal (that we discussed in detail at the last meeting) against BadCo for $275K. Sarah will tell us how we turned that one around at the upcoming board meeting.
Finally, I did want to point out — given the concerns about sales hiring — that we ended the quarter with 12 quota-carrying reps (QCRs), only 1 behind plan. Sarah and Marty did a great job helping us catch almost all the way back up to plan. That said, we’re still having trouble hiring machine-learning engineers and are nearly 5 heads behind plan to-date. Ron and Marty will update the board on our plans to fix that at the meeting.
Overall, we feel great about the quarter and I look forward to seeing everyone in a few weeks. Thanks, as always, for your support.
[Table with Numbers]
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Another great post. You should package this and your other gems up into a book or two – perhaps by theme. Maybe I could get a signed copy since I know the author 😉
This is an example of the adage that bad news travels at the same speed as good news – both in a timely fashion.
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