The Big Picture Goal:
This will help you keep a tight beat on your runway, to make sure you don’t run out of money and plan fundraising efforts accordingly. This will also make sure you always have realistic revenue and growth goals that you can manage towards.
FIRST STEP: Schedule a monthly-recurring 30-minute block to run the Monthly Finance Playbook.
If you have accounting, schedule this recurring block for after the date your books close
If you don’t have accounting, schedule this recurring block in the first week of the month, like the “First Monday”
SECOND STEP: A Quick Look at Your Revenue Forecast
Open your financial model in Forecastr [use the "Active Scenario"]
Go to Customer Acquisition, review your customer forecast over the next few months
Ask yourself: “Do these goals still feel attractive, but reasonable?”
If “Yes”: Do nothing, move on, you’re good
If “No”: Ask “Why?” and tweak your model until you feel good
Zoom out. Review your customer forecast over the next 12 months
Ask yourself the same question: “Do these goals still feel attractive, but reasonable?
If “Yes”: Do nothing, move on, you’re good
If “No”: Ask “Why?” and tweak your model until you feel good
Repeat the “Customer Acquisition” process above, but for “Revenue”!
THIRD STEP: A Quick Look at Your Expenses & Hiring Plan
Go to People, review your headcount & salaries + new hires over the next few months
Ask yourself: “Does all of this still look accurate?”
If “Yes”: Do nothing, move on, you’re good
If “No”: Update dates, people, salaries, costs, etc. until you’re good
Zoom out. Review your People over the next 12 months
Ask yourself the same question: “Does all of this still look accurate?”
If “Yes”: Do nothing, move on, you’re good
If “No”: Update dates, people, salaries, costs, etc. until you’re good
Repeat the “People” process above, but for “Expenses”!
FOURTH STEP: Let’s Update Your Cash
You’ll need to hardcode a few metrics to make sure your model is “grounded in reality” for runway and cashflow planning purposes
Hardcode the “Ending Cash” metric from last month
Hardcode the “Accumulated Retained Earnings” metric from last month
FINAL STEP: Review & React!
Take a step back and review the impacts on your runway & revenue goals from the tweaks you just made. Did your runway shorten or lengthen? Are you still on track to hit your big milestones before you run out of money?
What (if anything) do you need to do differently next month to make sure you hit your revenue goals and don’t run out of cash!?