I’ve always been a fan of the transparency movement. I didn’t have the guts to make the time to do it myself.
Recently, it’s started to bug me. Because I trust the transparent companies. Even when – or especially when – they cop to mistakes.
A few people that do a good job:
- Nathan Barry, ConvertKit CEO. An example post is here. He said “not all dollars are created equally,” and that hit home to me very specifically in the way that he means it. We’re working on a recurring revenue/subscription model because of this guy.
- Pat Flynn is an individual leader in this space. You can find what he has here.
- Rand Fishkin, both personally and from a business perspective. This was a favorite of mine.
- Buffer (all about transparency). They did it in foul weather here.
- WP Curve’s Dan Norris (they’ve slowed down the reporting: http://wpcurve.com/monthly-reports/)
- The Money Lab (aka Matt Giovanisci) is all about that.
This inspires me. And it’s sobering as we try – really hard – to make our company a great place to work and more. I love those that are honest about their businesses in fair and foul weather.
I don’t want to be writing some self-congratulatory post-mortem on Medium in a couple of months. It’s important to describe our company in terms of present & future. The past is over, we all agree.
Where We Are
Right now we have been delivering good work for several years. We had some quality issues between November and probably early April of this year. This is described in part here. It was largely a consequence of not having a growth plan. It’s the consequence of being overly dependent on me for everything. Those issues are largely corrected (once he’s back from his honeymoon, we’ll introduce Tim).
Right now, we can comfortably handle 6 projects a month. (Though in July, we’ll deliver 11.) That’s mostly because of the hangover effect: June we delivered 3 and there’s normal variance when you’re dealing with single digit units. Quarters are consistent, but months often aren’t.
The issues are debt. Because I had too much overhead, and in 2015 I bought my partner out, we didn’t accrue as much cash as we would have liked. That, and I went on an Ahabesque grow-at-all costs ethos. I grew revenue, but I grew expenses more. That’s been corrected, but only recently.
Our debt right now – and our biggest creditor is Uncle Sam – is $130,000 (we rounded up to account for interest). With the ultra-lean expenses that we have now, it’s realistic to get all of that paid off by the end of the year.
Where We’re Going
I want to be a great company, not a great big company. Somewhere in the neighborhood of 2mm with a team of around 10. That feels right. Profitable. Generous. Capable of being kind. I want to keep Simplifilm as an investment and a vehicle for my own creativity.
What We Will Report AKA The Real Metrics
So we have to have a list-type monthly report with some commentary. We’ve recently added a very promising Sr. Producer that is really handling our clients with vigor and aplomb. He’s been a relief and a godsend to us.
The Core C’s: Completed, Contracted, Collected & Combined
This is the core numbers. The marketing numbers that follow are largely curiosities. Not particularly important in the scheme of things, with the exception of prospecting hours.
The core metrics I care about are as follows:
Completed Units and Dollars: This is work that has been delivered, accepted and paid for by our client. There are no loose ends. As my friend Chris Lema says, it’s Done-Done.
Contracted Units & Dollars: This is stuff that’s been signed for. The orders that come from our availability. The client must have signed, and payment must be in order. We’ll derive average prices from this.
Collected Cash: Exactly how much we’ve collected from our clients, and where it came from. This will include change orders and original work. Collected cash is the revenue metric we like to see.
Combined: Since we’re dealing with small amounts of units (under 25), a three video project that gets delayed could have an impact on us and we could still be performing well. We want to be ahead of our goals. That means that if we have a month where we complete – but don’t collect – it will penalize or reward us accordingly.
Right now it doesn’t make sense for us to do this any faster, the goal will be to do it better by our own quality of service metrics.
The Marketing Metics
Appointments, Leads, Subscribers & Uniques are the metrics for marketing.
Our marketing goals are finally defined.
Appointments: This is someone that is qualified to purchase from us, who meets & keeps an appointment with us. This is the real goal. The make/break.
Leads: Someone who fills out a form and wants to become a lead and to work with us here & that understands pricing. That’s a lead.
Subscribers: Someone that subscribes to our Lessons Learned newsletter.
If we had one goal it would be to generate a ton of qualified appointments.
The next goal would be to add new subscribers. These are people that join our list, on purpose, and confirm. We got a subscriber the other day before we really launched. Goal for July would be to net 100 subscribers.
The Sales Metrics
Sales is about prospecting, presenting and closing. The core numbers are caught in the above situation.
Presentations: The number of qualified people that met with me on purpose with the potential of buying from us and getting our work featured. All the appointments + 10 more is the goal here. So 30 Appointments. We’ll get 30% of them wanting to work with us and pick 10.
Prospecting Hours: The goal here is to do 40 hours each month prospecting. This means calling on past leads and warming people up to get referrals. The trick here is to do this every week, even when we are selling well.
Proposals Sent: How many proposals I send out at any given time is an important metric for our business.
Expenses: The Missing Link.
We have two expense categories:
- Overhead: this is the salary and expenses of everyone.
- Production Expenses. This includes every cost incurred because we took a job. Including cost of sale. At some point when we are at about 10 projects/month we’ll look at changing this and breaking down a separate cost of sale category.
Right now, expenses sit at $4,600 a month. This includes:
- stock art subscriptions (getty etc).
- production manager’s salary (he gets a heavy incentive for deliveries, so he accepted a below market salary).
- SAAS (contactually, convertkit, hosting, basecamp.)
- iPhones (personal & business).
As far as production expenses go: we want to keep production expenses at around 60% of the sale. Once we break cost of sale out we’ll want to be at 45%/15%.
Unless the client chooses to make public their information we’ll respect their privacy and sanitize the data. This will mean that we redact some people but probably not a ton of them.
The other thing that will leak out is that clients pay different prices. This is based on when they came on board with us. I try hard not to outgrow the clients so if you’ve been a consistent customer since you started, we support you at about the price you came in at.
We’ll start every report with our goals. Since this is the zeroth edition of the monthly report, we’ll list our goals for July.
Here’s where they are:
Core Goals: (C’s)
Completed Work: $100,000. This is stretched because of monthly variance.
Contracted Work: $65,000 We want to sell 6 projects this month. This will account for a mix of :30s and 2 minute projects.
Collected Revenue: $66,000. This will represent deposits on new work plus existing work.
Combined Work: $231,000. This is an ‘inflated’ number, but it represents a healthy standard. We’ll back down to $180-200 in future months.
When these goals are hit, the month will be great. Everything will be gravy after that. We’ll take gravy. But that’s what we want to do.
Appointments: We want to set 20 appointments with buyers that come in automatically.
Leads: Simplifilm wants 30 total leads. 20 of them will be pre-set appointments (i.e. every lead is an appointment).
Subscribers: Simplifilm wants to generate +150 gross subscribers. In August we’ll worry about net subscribers. We have a list that we have largely ignored, so I expect to lose 200-300 subscribers from the jump.
Uniques: Simplifilm wants to generate 8,000 unique visitors. That more than doubles what we’re doing these days.
Presentations: We want to do 30 presentations in July.
Prospecting Hours: I want to have 40 focused hours prospecting at a highly efficient rate. Because I’m going to focus more on that, I may be switching to Close.IO to make this happen (Close.IO’s lack of texting is criminally deficient).
Proposals Sent: I want to get 15 proposals out. 6 is then closing 40% and that’s about right. We may sell a mutli video project.
In addition to running in real time we want to ship a few projects.
- Formalize all of our pricing. (That’ll come next post.)
- Decide on tiers: do we stay where we are or add a premium tier?
- Finish our home page
- Re-add our testimonials to our site page.
- Get a better 404 page built.
- Finish our process video.
That’s “enough” improvement to build our site out and make a lot of progress. We’ll be back with a rundown of how all of this went by the end of the month.
This is a big month for us. I’m excited about doing everything we can do to make an impact for our client and customers.
It feels good to bathe in the sunlight of transparency, and I look forward to reporting good things in the near future.