Return-Path: Delivered-To: andrew@sterlingcal.com Received: from reseller401.webserversystems.com by reseller401.webserversystems.com with LMTP id 2KDrBNSiZWcabQoAchKAPA (envelope-from ) for ; Fri, 20 Dec 2024 11:01:08 -0600 Return-path: Envelope-to: andrew@sterlingcal.com Delivery-date: Fri, 20 Dec 2024 11:01:08 -0600 Received: from o13.ptr6032.mail.beehiiv.com ([159.183.141.176]:13156) by reseller401.webserversystems.com with esmtps (TLS1.2) tls TLS_ECDHE_RSA_WITH_AES_128_GCM_SHA256 (Exim 4.96.2) (envelope-from ) id 1tOgN9-002sAy-0z for andrew@sterlingcal.com; Fri, 20 Dec 2024 11:01:07 -0600 DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=mail.beehiiv.com; h=content-type:from:mime-version:subject:reply-to:list-unsubscribe-post: list-unsubscribe:to:cc:content-type:from:subject:to; s=s1; bh=Npnp+CMfjzla6gvhOAiXtRCdHQwFAcscPiSGopJyNKc=; b=L39VTCEA9ZGyBu8nhYA5ulHjS+kCuOAQplpZK3cEyDaHwxSGwIqnbkAymIQ8v9Ctzl1y iX+ZyawnlMO6LI4Gy8mJ9EL+DExJa5LsqT2nmIgcFAgBpmxy62oj5ZNt2dFupmUM34RK4e J6Lx17NtPOJSZc3xAlx7bcmpJX/lULpoB75DGUn94rMpVkEMmhA6I8+8e342k7IMcUGJHo hCNDUErhli9ablcoKERo9ak4BNZVD1YbaoVLq3YY1WGHe2EjWQIFmJ7oPJ+GkYcQtpPGgO STDXTOpl9SOSiVit+qfhTpFh9MUGW4zDEg2g4SmsTPTRuS89IBB+rK+TNgrIEgiQ== Received: by recvd-7465bcddf5-872f5 with SMTP id recvd-7465bcddf5-872f5-1-6765A2B9-B6 2024-12-20 17:00:41.758888692 +0000 UTC m=+3094714.200394201 Received: from NDAyMzQxODk (unknown) by geopod-ismtpd-39 (SG) with HTTP id 2P_tKHDBRwmiFXrpAz4nWw Fri, 20 Dec 2024 17:00:41.690 +0000 (UTC) Content-Type: multipart/alternative; boundary=e6d2a6cb682526de646b1ac3fdffb507cf38914a1fef7148e46fe35c0518 Date: Fri, 20 Dec 2024 17:00:56 +0000 (UTC) From: Collin Stewart Mime-Version: 1.0 Message-ID: <2P_tKHDBRwmiFXrpAz4nWw@geopod-ismtpd-39> Subject: revenue planning Reply-To: Collin Stewart Feedback-ID: =?us-ascii?Q?0d0de579-cbe4-4909-bafa-69d78f27d698=3Anewsletter=3A3c5b97ff-00a9-?= =?us-ascii?Q?4acc-916d-c137bca24b1d=3A23270855726497d?= x-beehiiv-type: newsletter x-newsletter: https://predictablerevenue-newsletter.beehiiv.com/p/revenue-planning List-Unsubscribe-Post: List-Unsubscribe=One-Click x-list-owner: List-Unsubscribe: =?us-ascii?Q?=3Cmailto=3A3c5b97ff-00a9-4acc-916d-c137bca24b1d+1d17dc26-c1df-44e?= =?us-ascii?Q?0-812a-883b6ad5b6bc+0d0de579-cbe4-4909-?= =?us-ascii?Q?bafa-69d78f27d698=40unsub=2Ebeehiiv=2Ecom=3E=2C?= =?us-ascii?Q?_=3Chttps=3A=2F=2Fpredictablerevenue-newsletter=2Ebeehiiv=2Ecom=2Funsubscribe?= =?us-ascii?Q?=2FeyJ0eXAiOiJKV1QiLCJhbGciOiJIUzI1NiJ9=2Ee?= =?us-ascii?Q?yJzdWJzY3JpYmVyX2lkIjoiMWQxN2RjMjYtYzFk?= =?us-ascii?Q?Zi00NGUwLTgxMmEtODgzYjZhZDViNmJjIiwicG9?= =?us-ascii?Q?zdF9pZCI6IjBkMGRlNTc5LWNiZTQtNDkwOS1iYW?= =?us-ascii?Q?ZhLTY5ZDc4ZjI3ZDY5OCIsImxhc3RfcmVzb3VyY?= =?us-ascii?Q?2VfZ3VpZCI6IlBvc3Q6MGQwZGU1NzktY2JlNC00?= =?us-ascii?Q?OTA5LWJhZmEtNjlkNzhmMjdkNjk4In0=2E6XeECXK?= =?us-ascii?Q?fW-gldytcDnEYlfADoRhaoWIFXwl4sAEBeXA=3E?= x-list-id: 3c5b97ff-00a9-4acc-916d-c137bca24b1d sId: 3c5b97ff-00a9-4acc-916d-c137bca24b1d x-beehiiv-ids: =?us-ascii?Q?{=22account=5Fname=22=3A=22https=3A=2F=2Fpredictablerevenue-newsletter=2Ebeehiiv?= =?us-ascii?Q?=2Ecom=2F=22=2C=22campaign=5Fid=22=3A=220d0de579-cbe4-490?= =?us-ascii?Q?9-bafa-69d78f27d698=22=2C=22category=22=3A=22newsle?= =?us-ascii?Q?tter=22=2C=22email=5Fgenerated=5Fat=22=3A1734714041=2C=22?= =?us-ascii?Q?user=5Fid=22=3A=223c5b97ff-00a9-4acc-916d-c137b?= =?us-ascii?Q?ca24b1d=22}?= x-newsletter-id: https://predictablerevenue-newsletter.beehiiv.com/ x-newsletter-signup: https://predictablerevenue-newsletter.beehiiv.com/subscribe X-SG-EID: =?us-ascii?Q?u001=2E7ozyt+tmjDsHnEocxX8pymFA2v5OOh2V4Pdr6hGVjZo99sLHT4OeEg7as?= =?us-ascii?Q?oEFtQzIa0qAOkk1QezFA4qrCcff9558yNK8x6zQ?= =?us-ascii?Q?0aLhxDCyAuB9kgcSLas3IIKR+fvCUJBBAqybVU0?= =?us-ascii?Q?2bTtmUSFIYbIkS5xkJlF=2FsfYRjgrvdtnEupwVOl?= =?us-ascii?Q?RSou0ku40piCBR8KK3wZ9NWxf3iH8rG=2FaeJn18G?= =?us-ascii?Q?WxluS=2F8IJiZofY9BNy1H5Bl9Kdng145r8sLi82U?= =?us-ascii?Q?+3cFY0bUSymtdGD7CSgDsklReyi8ASzIyJuL=2Fdy?= =?us-ascii?Q?pQ2SP71w=3D?= X-SG-ID: =?us-ascii?Q?u001=2ESdBcvi+Evd=2FbQef8eZF3BpTL9BgbK5wfSJMJGMsmprAVgeiC8iaV7rEmQ?= =?us-ascii?Q?+cYi2k7aX25Ne7rBCLyd+VpGUv9w21UYmE33ffC?= =?us-ascii?Q?U6+E3S6LqEHD4VMmZaSSUeR4U6pgJW6TGVlFK2+?= =?us-ascii?Q?GKVJ0eOjvnfWkHaEwvQGEZ4TZUeHOLrOExQfOCc?= =?us-ascii?Q?BWhLrDPhbnZSArhHnSuwqG3V9bObMHsLwVfIrcl?= =?us-ascii?Q?cXPRjKyI1WL8dj2HaFoQZdEhZx1=2F9h7ibX7B0Gb?= =?us-ascii?Q?TK+wxlw5VIp4pok1+jMLtuaXag=3D=3D?= To: "andrew@sterlingcal.com" X-Entity-ID: u001.RuZ2+X9IBGtjUb8qq3teHQ== X-Spam-Status: No, score=-3.3 X-Spam-Score: -32 X-Spam-Bar: --- X-Spam-Flag: NO --e6d2a6cb682526de646b1ac3fdffb507cf38914a1fef7148e46fe35c0518 Content-Transfer-Encoding: quoted-printable Content-Type: text/plain; charset=utf-8 Mime-Version: 1.0 Good morning Andrew,=20 _If this email feels like I=E2=80=99ve skipped ahead in the timeline or tha= t I haven=E2=80=99t written in a while it=E2=80=99s because I screwed up an= automation in Beehiiv and a bunch of you got stuck. Thanks to __Eugen for = catching it and reaching out. If you want to catch up, you can see all the = past posts _[_here_](https://predictablerevenue-newsletter.beehiiv.com/)_. = _ It must be planning time of year for startups because I=E2=80=99ve had more= founders reach out to talk about building sales development teams in the l= ast last week than any other week of the year. In all of my conversations, = I think I=E2=80=99ve successfully talked them out of it=E2=80=A6 for now. I= t=E2=80=99s not that sales development is dead or a bad investment for them= , it=E2=80=99s just the wrong investment for them _right now. _ Here=E2=80=99s the situation: * The founder has early signs of product market fit (customers & referrals)= and has raised some money=20 * They are also looking at the middle of next year and thinking about the n= umbers they want to see in order to raise their next round=20 * They don=E2=80=99t see the pipeline they want so they=E2=80=99re thinking= about ways of changing that. I love that they=E2=80=99re being proactive about the situation but buildin= g a sales development team won=E2=80=99t help them. To figure out why, let= =E2=80=99s take a look at some benchmark timelines for the types of deals t= hey were selling (all in the $30k - $80k ARR range):=20 * An average deal takes 2 months to close, a little longer with outbound * An SDR takes 3 months to ramp to full productivity and I always forecast = them to produce 0 pipeline in those months* * It takes an SDR 1 month to move a prospect from cold to meeting held _*I have different expectations for the SDRs (usually 2, 4, & 6 meetings re= spectively depending on the vertical) but I always forecast their contribut= ions conservatively. _ That's a 6 month revenue lag assuming you hit benchmarks and ignore the fac= t that new teams almost always take longer than you expect to get off the g= round. This is normal. SDR teams are an investment that take time to produc= e a return. Here=E2=80=99s the [sales math worksheet](https://docs.google.c= om/spreadsheets/d/1y-mGDPUcLEb90nfbSsmSY2FNVc9fD6f89Am59C88pPQ/edit?usp=3Ds= haring) I=E2=80=99ve shared before if you want to check my numbers.=20 When I walked the founders through the timelines, they all agreed that buil= ding an SDR team wasn=E2=80=99t going to help them achieve their 6 month go= al. It will help greatly at the 18 month mark but that won=E2=80=99t matter= if you aren=E2=80=99t able to raise that next round.=20 So, in spite of being proactive, are they still f=E2=80=99d? Not necessaril= y. While each of these founders had some customers, they were still in sear= ch of their first $1m in revenue. Which means they still have a lot to lear= n and can leverage their customer development process to build pipeline. T= he primary reason I recommend this path is that it produces both learning a= nd dollars.=20 When you're under $1m in revenue, it's actually easier to get meetings by a= sking for help than trying to sell. People are naturally inclined to help f= ounders, especially if you're transparent about building something new. I'v= e found that "can I pick your brain about X?" converts about 3x better than= "want to see a demo of our solution to X?" But here's the real magic - you don't have to choose between learning and s= elling. I've developed a four-step process that helps you gracefully transi= tion from customer development to sales without making it weird. I call it = "laddering up." If you already have paying customers, the process looks like this: 1. Start with focused interviews about your specific problem space 2. Share mockups/screenshots and ask for their opinion on what=E2=80=99s mi= ssing=20 3. Invite them to try your MVP and give you feedback Each interview step builds on the last, and crucially, ends with an ask for= the next conversation. The key is having a clear purpose for each interact= ion and being upfront about it. For example, "I'd love to show you what we'= ve built based on our last conversation and get your feedback - would you b= e open to that?" The first two interviews are strictly for learning/feedbac= k and the last one=E2=80=99s purpose is to invite them into a sales process= , assuming you can help them. This is a variation of my customer developmen= t process outlined in a [previous newsletter](https://predictablerevenue-ne= wsletter.beehiiv.com/p/the-middle). Here's why this works better than jumping straight to sales: * You build trust by showing you actually care about solving their problem * You get invaluable feedback to improve your product * Your prospects feel invested in your solution because they helped shape i= t * The transition to sales feels natural because they've seen the evolution Plus, as the founder, you're the perfect person to run these conversations.= You understand the problem space better than anyone else (you've probably = done 50+ interviews by now), and you can make product decisions on the spot= . Look, I get it. When you're staring down aggressive growth targets, it's te= mpting to jump straight to building a sales team. But if you're pre-$1m, yo= u'll get better results by leveraging your unique advantage as a founder - = the ability to learn and sell simultaneously. Until next week,=20 Collin=20 **PS1 ** Thanks for making it this far, now that I filtered out all the people that = don=E2=80=99t read the whole thing, I=E2=80=99d like your opinion on someth= ing, domains. I bought a few and can=E2=80=99t decide which one to use, hit= reply and let me know your preference:=20 * [terrifyingart.com](http://terrifyingart.com) (it=E2=80=99s a dot com and= fairly civilized) * [terrifying.af](http://terrifying.af) (it=E2=80=99s funny/true but a litt= le crude)=20 **PS2** One last thing about outbound that most people get wrong - it's not that ou= tbound deals take longer to close, it's that outbound is a long-term invest= ment that requires patience. When you're prospecting, you're reaching peopl= e in all stages of their buying journey. Some will be ready now (congrats, = you got lucky!), but most won't be. That's not a problem with outbound - it= 's actually the opportunity. The deals themselves close at the same speed a= s any other deal, but it takes longer to build up a reliable, predictable p= ipeline.=20 I've had three fascinating conversations in the last month with companies w= ho previously had outbound teams. Each had shut down their programs (either= deliberately or after losing a key hire) only to restart them 1-3 years la= ter. Why? Because when they analyzed their deals 12+ months after their out= bound efforts, they realized outbound was actually a massive contributor to= revenue. They just hadn't given it enough time to show results. This is why so few companies succeed with outbound - they treat it like a s= print when it's really a marathon. The companies that win at outbound are t= he ones who commit to playing the long game. They build systems to nurture = prospects who aren't ready today but will be in 6-12 months. When you do th= is right, outbound can be incredibly profitable - you just need to operate = on the right timescale. =E2=80=94=E2=80=94=E2=80=94 You are reading a plain text version of this post. For the best experience,= copy and paste this link in your browser to view the post online: https://predictablerevenue-newsletter.beehiiv.com/p/revenue-planning --e6d2a6cb682526de646b1ac3fdffb507cf38914a1fef7148e46fe35c0518 Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset=utf-8 Mime-Version: 1.0 revenue planning
<= td align=3D"center" valign=3D"top" style=3D"border:0px solid #FFFFFF;border= -radius:10px;background-color:#FFFFFF;" class=3D"c">

December 20, 2024   |   Read Online

revenue planning

<= table role=3D"none" border=3D"0" cellspacing=3D"0" cellpadding=3D"0" align= =3D"center">
=
3D"share
 
3D"share
 
3D"share
 
3D"share
=
3D""

If you already have paying customers, the process looks like this:

Plus, as the founder, you're the perfect person to run these conv= ersations. You understand the problem space better than anyone else (you= 9;ve probably done 50+ interviews by now), and you can make product decisio= ns on the spot.

=

= Good morning Andrew,

If this email fee= ls like I=E2=80=99ve skipped ahead in the timeline or that I haven=E2=80=99= t written in a while it=E2=80=99s because I screwed up an automation in Bee= hiiv and a bunch of you got stuck. Thanks to Eugen for catching it and reaching out. If you want = to catch up, you can see all the past posts here<= /span>.

It must be planning time of year for startups becau= se I=E2=80=99ve had more founders reach out to talk about building sales de= velopment teams in the last last week than any other week of the year. In a= ll of my conversations, I think I=E2=80=99ve successfully talked them out o= f it=E2=80=A6 for now. It=E2=80=99s not that sales development is dead or a= bad investment for them, it=E2=80=99s just the wrong investment for them <= /span>right now.

<= /td>

Here=E2=80=99s the situation:

  • The fo= under has early signs of product market fit (customers & referrals) and has= raised some money

  • They are also looking at the middle of next year and th= inking about the numbers they want to see in order to raise their next roun= d

  • They don=E2=80=99t see the pipeline they want so they=E2=80=99re thinking = about ways of changing that.

I love that they=E2=80=99re being proactive about the situation but buil= ding a sales development team won=E2=80=99t help them. To figure out why, l= et=E2=80=99s take a look at some benchmark timelines for the types of deals= they were selling (all in the $30k - $80k ARR range):

  • An= average deal takes 2 months to close, a little longer with outbound=

  • An SDR t= akes 3 months to ramp to full productivity and I always forecast them to pr= oduce 0 pipeline in those months*

  • It takes an SDR 1 month to move a prospect = from cold to meeting held

= *I have different expectations for the SDRs (usually 2, 4, & 6 meetings = respectively depending on the vertical) but I always forecast their contrib= utions conservatively.

That's a = 6 month revenue lag assuming you hit benchmarks and ignore the fact that ne= w teams almost always take longer than you expect to get off the ground. Th= is is normal. SDR teams are an investment that take time to produce a retur= n. Here=E2=80=99s the sales math worksheet I=E2=80=99ve shared before if yo= u want to check my numbers.

When I walked= the founders through the timelines, they all agreed that building an SDR t= eam wasn=E2=80=99t going to help them achieve their 6 month goal. It will h= elp greatly at the 18 month mark but that won=E2=80=99t matter if you aren= =E2=80=99t able to raise that next round.

So, in spite of being proactive, are they still f=E2=80=99d? Not necessari= ly. While each of these founders had some customers, they were still in sea= rch of their first $1m in revenue. Which means they still have a lot to lea= rn and can leverage their customer development process to build pipeline. T= he primary reason I recommend this path is that it produces both learning a= nd dollars.

When you're under $1m in= revenue, it's actually easier to get meetings by asking for help than = trying to sell. People are naturally inclined to help founders, especially = if you're transparent about building something new. I've found that= "can I pick your brain about X?" converts about 3x better than &= quot;want to see a demo of our solution to X?"

But here's the real magic - you don't have to choose betw= een learning and selling. I've developed a four-step process that helps= you gracefully transition from customer development to sales without makin= g it weird. I call it "laddering up."

  1. Start with focused interviews about your spec= ific problem space

  2. Share mockups/screenshots and ask for their opinion on wha= t=E2=80=99s missing

  3. Invite them to try your MVP and give you feedback

Each interview step builds on t= he last, and crucially, ends with an ask for the next conversation. The key= is having a clear purpose for each interaction and being upfront about it.= For example, "I'd love to show you what we've built based on = our last conversation and get your feedback - would you be open to that?&qu= ot; The first two interviews = are strictly for learning/feedback and the last one=E2=80=99s purpose is to= invite them into a sales process, assuming you can help them. This is a va= riation of my customer development process outlined in a previous newsletter.

Here's why this w= orks better than jumping straight to sales:

  • You build trus= t by showing you actually care about solving their problem

    • <= li class=3D"listItem ultext">

    You get invaluable= feedback to improve your product

  • Your prospects feel invested in your soluti= on because they helped shape it

  • The transition to sales feels natural because= they've seen the evolution

Look, I get it. When you&#= 39;re staring down aggressive growth targets, it's tempting to jump str= aight to building a sales team. But if you're pre-$1m, you'll get b= etter results by leveraging your unique advantage as a founder - the abilit= y to learn and sell simultaneously.

Until = next week,

Collin

PS1

Thanks for making= it this far, now that I filtered out all the people that don=E2=80=99t rea= d the whole thing, I=E2=80=99d like your opinion on something, domains. I b= ought a few and can=E2=80=99t decide which one to use, hit reply and let me= know your preference:

=

PS2

One last thing about outbound that most people get= wrong - it's not that outbound deals take longer to close, it's th= at outbound is a long-term investment that requires patience. When you'= re prospecting, you're reaching people in all stages of their buying jo= urney. Some will be ready now (congrats, you got lucky!), but most won'= t be. That's not a problem with outbound - it's actually the opport= unity. The deals themselves close at the same speed as any other deal, but = it takes longer to build up a reliable, predictable pipeline.

I've had three fascinating conversations in the la= st month with companies who previously had outbound teams. Each had shut do= wn their programs (either deliberately or after losing a key hire) only to = restart them 1-3 years later. Why? Because when they analyzed their deals 1= 2+ months after their outbound efforts, they realized outbound was actually= a massive contributor to revenue. They just hadn't given it enough tim= e to show results.

This is why so few com= panies succeed with outbound - they treat it like a sprint when it's re= ally a marathon. The companies that win at outbound are the ones who commit= to playing the long game. They build systems to nurture prospects who aren= 't ready today but will be in 6-12 months. When you do this right, outb= ound can be incredibly profitable - you just need to operate on the right t= imescale.

=
3D"yt"3D"in"
 

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