3 Reasons Why Monthly Planning Matters (even if it is a wild ass guess)
While annual goals are essential for setting a vision for a company, the reality is that most startup execution is refined month by month. That's why creating a monthly forecast of revenue, expenses, and headcount from day one is crucial, even if it feels like pure guesswork.
1. Short-term Focus is Key
Startups operate in a state of constant evolution. Annual projections, while necessary, lack the granularity to inform day-to-day decisions. Monthly forecasts provide a roadmap for the immediate future, allowing you to make adjustments in real-time based on market conditions, customer feedback, and internal performance.
2. Reality Check
Founders are often brimming with enthusiasm, which can lead to overly optimistic revenue projections and make it harder for you to hit. If you have an opportunity to set your own goals, temper them with reality. Founder lead sales process almost always take longer than expected. With a monthly forecast you know exactly where you stand and you always want to be the type of company that always hits the forecast.
3. Short term execution is critical
Monthly forecasts provide a framework for tracking progress, identifying trends, and understanding your business's performance. This data is invaluable for making informed decisions about hiring, spending, and product development. A detailed monthly forecast demonstrates your understanding of the business and your commitment to financial discipline.
While revenue, expenses, and headcount are essential metrics, SaaS businesses should also track key performance indicators (KPIs) like new users, user retention, and product uptime. These metrics provide a deeper understanding of customer behavior and product performance.
