below is a letter from me to one of our CEOs re 2010 budget. but i think it is good general practice.
1. SLOW
go slow until your figure things out, then go fast. we are in a learning and discovery phase, the market is in motion. let’s learn before we spend big.
marketing budget at this point in time comes to mind. let’s set ROI goals for $ in marketing and leads. let’s take a phased approach. do something. analyze, learn, do again. we will win by how many cycles we have, not how hard we try in each cycle
2. STRETCH money over time
this round should last for at least 10 quarters, not 7.
if it last for only 7, you need to fundraise in 5 quarters. perhaps 6. to have an up round, say at 2x valuation, you would need to get revenues up 8x in less than 2 years. hard to do.
3. EXPOSE your assumptions
to start communicating about the budget, start communicating about the assumptions.
there are no more than 10 main assumption that drive all else. can we start communicating about them?
Tags: ceo, communication, measurement
