Venture Debt as Safety Net

Lately, several entrepreneurs have asked me about venture debt. Venture debt is bank-provided debt for startups that have raised money from venture capitalists or have a few million in annual recurring revenue. At Pardot, we didn’t raise any venture capital but we did use a $3M line of credit from SVB. Only, I’m not seeing entrepreneurs sign up for venture debt to actually use, like we did at Pardot.

Today, entrepreneurs are signing up for venture debt as a safety net. The idea is to have the money available in the event things don’t go according to plan, but not to be used as part of the plan. Here are a few thoughts on venture debt as safety net:

  • Entrepreneurs are optimistic at their core, but they also know that things don’t always work out like the plan. Having a financial back up option provides some peace of mind.
  • Venture debt has a price (legal fees, closing costs, etc.) but the actual debt doesn’t have to be drawn down making it much cheaper than expected to have access to the capital
  • Signing up for venture debt requires more ongoing financial rigor with the bank, but that financial rigor is a good thing in that there’s another set of eyes reviewing the business operations (e.g. someone at the bank that reviews a number of these types of businesses)

Entrepreneurs that have the scale or funding should actively evaluate venture debt as a safety net. The costs are relatively low and the value is high.

What else? What are some more thoughts on venture debt as safety net?

8 Questions to Ask at an Annual Financial Plan Review

After reviewing a number of annual financial plans, both department and company-wide, I’ve created a list of questions to ask in an attempt to help think through the high-level topics and generally make sure things make sense. A financial plan is a detailed financial model incorporating a number of elements like assumptions (e.g. ratios of account executives to sales development reps), budget line items, and specific targets (e.g. sales).

Here are eight questions to ask at an annual financial plan review:

  1. What are the top three takeaways from the plan? What’s the big picture?
  2. What are the biggest risks? What are the biggest differences from the prior year results?
  3. Are the ratios and assumptions in the range of other similar startups (e.g. percent of company in product development as compared to other SaaS startups)?
  4. Does the burn rate and the corresponding revenue growth make sense (e.g. the growth in recurring revenue should at least be larger than burn, if not a multiple of it)?
  5. Is the hiring plan achievable? Is there a pipeline of candidates already in place?
  6. What financing has to take place during the year, if any? Is there enough time to run a process?
  7. What product enhancements need to happen to achieve key targets like renewal rate and average revenue per account?
  8. What do the key metrics like revenue, revenue growth rate, gross margin, and churn rate look like? Are they trending in the right direction?

Annual financial plans are critical for startups, especially post product/market fit. Ask these eight questions and work to understand the big picture.

What else? What are some questions to ask at an annual financial plan review?

Q4’s Sales Results Inform Next Year’s Budget

As entrepreneurs are putting the last minute, final touches on the 2017 operating plan, there’s an important point that is often overlooked: Q4’s sales results inform next year’s budget. Meaning, entrepreneurs are an optimistic bunch and like to make big plans using a combination of a bottom-up and top-down sales forecast. Only, these forecasts are made before Q4 has finished, and Q4 is often the best sales quarter as many companies make purchases at the end of the year with fresh budget in place for the new year.

Here are a few thoughts on Q4’s sales results informing next year’s budget:

  • New sales drives a number of other functions like the number of people needed for support, customer success, customer implementations/on-boarding, etc. such that Q4 sales results affects hiring plans for the new year
  • If Q4 sales exceed plan or are below plan, that means there’s a higher/lower run-rate to start the new year, and budgets will need to be adjusted
  • If Q4 sales are off plan, good or bad, that’ll reset sales expectations for Q1 of the next year higher or lower

As much as budgets and operating plans for the next year are reviewed and finalized, the reality is that they’re built around hitting sales expectations for Q4. If Q4’s sales are better or worse than expected, budgets should be revised.

What else? What are some more thoughts on how Q4’s sales results inform next year’s budget?

2017 Simplified One Page Strategic Plan

Continuing with yesterday’s post Time for 2017 Budgets, it’s also time to get the 2017 Simplified One Page Strategic Plan ready. The goal with the plan is to align everyone in the company around a simple, straightforward document that outlines the most important things in a concise manner. Too often, the entrepreneur runs around with a number of great ideas in his or her head and doesn’t realize that everyone else in the organization doesn’t see what they see. Communication and alignment takes work; start with a simple plan.

Here are the contents of the Simplified One Page Strategic Plan (Google Doc templateexample plan, and the free


  • One line purpose

Core Values

  • General – fit on one line
  • People – fit on one line


  • One line description of your market

Brand Promise

  • One line brand promise

Elevator Pitch

  • No more than three sentences for the elevator pitch

3 Year Target

  • One line with the goal

Annual Goals

  • 3-5 annual goals in table format with the start value, current value, and target value

Quarterly Goals

  • 3-5 quarterly goals in table format with the start value, current value, and target value

Quarterly Priority Projects

  • Three one-line priority projects with the percent complete for each


That’s it — simple yet powerful. Check out the Simplified One Page Strategic Plan Google Doc template and take a look at an example plan. Good luck!

What else? What are some more thoughts on the Simplified One Page Strategic Plan?

Time for 2017 Budgets

With the end of 2016 almost upon us, it’s a great time to start planning for 2017, and that means making budgets. Budgeting, especially for seed and early stage startups, is more about outlining the costs to execute a plan and defining a not-to-exceed number as things are fluid and change rapidly with new information.

For budgeting, I like a simple Google Spreadsheet (see this budget example) as follows:

  • One tab for XYZ Budget Detail and one tab for XYZ Budget Summary
  • One column for each month “Budget” and one column for each month “Actual” followed by the corresponding quarter “Budget” and “Actual”
  • A concluding column for the year “Budget” and the year “Actual”
  • In the “Detail” sheet, a line item for each thing in the category followed by a summary row for the category
  • In the “Summary” sheet, a line item for each category summary followed by a row total for the month, quarter, and year

Here’s an example budget Google Sheet that works well for a department and can be copied and customized.

Budgets aren’t the most fun project but are an important part of a startup when scaling the organization.

What else? What are some more thoughts on budgeting?

5 Weekly Action Items for Entrepreneurs

As the startup grows and raises a financing round or achieves product/market, it’s time to add more structure and process. Now, it’s still critical to stay close to the customer and move fast, but it’s also important to start building a foundation for the future.

Here are five weekly action items for entrepreneurs:

  1. Write a weekly team update email
  2. Track the right metrics for the stage of the company
  3. Update the Simplified One Page Strategic Plan
  4. Run the internal meeting rhythm
  5. Review the sales opportunity pipeline

This process seems pretty simple but it’s actually harder than it looks. Issues are always coming up and there’s always something else to work on — figure out a process and stick to it.

What else? What are some additional weekly action items for entrepreneurs?

Metrics to Track by Startup Stage

Recently an entrepreneur asked what metrics they should track at their stage startup. Being in the seed stage, I recommended keeping it simple by tracking the 9 Simple Weekly Metrics for Seed Stage SaaS Startups, with cash on hand, burn rate, and monthly recurring revenue being the most important. As the startup grows, the number of metrics tracked should grow as well.

Here are the weekly metrics to track by stage:

Match the metrics to the stage and add more operational rigor as the startup grows.

What else? What are some more thoughts on metrics to track by startup stage?

Benchmarking Sales Development Reps

After talking to a number of entrepreneurs that are getting value out of their sales development rep (SDR) team (especially when using SalesLoft Cadence), a common question comes up: what are some SDR benchmarks? Entrepreneurs want to know where they are in relation to average, and areas to improve.

Here are a few questions to benchmark the sales development reps:

  • What’s the average number of successes (demos, appointments, meetings, etc.) per rep per month?
  • What’s the ratio of demos/appointments scheduled to completed (e.g. how many people don’t show up)?
  • What’s the average number of calls per day?
  • What’s the average ratio of calls to connects (calls that result in talking to someone)?
  • What’s the average ratio of positive conversations to calls?
  • What’s the average ratio of voicemails left to calls?
  • What’s the average number of emails per day?
  • What’s the average ratio of email opens to emails sent?
  • What’s the average ratio of email clicks to emails sent?
  • What’s the average ratio of email replies to emails sent?

While I don’t have the benchmarks (yet), I’m sure we’ll be seeing them soon. Look for more data to emerge as the sales engagement industry grows.

What else? What are some more questions to ask around benchmarking sales development reps?

Analyzing the Sales Opportunity Pipeline

Continuing with yesterday’s post on Mining the Sales Opportunity History for Insights, there’s another more common sales leader and executive function: regularly reviewing the sales pipeline. Early in the startup lifecycle, the sales pipeline is often more sporadic as the sales stages and process are being developed. Then, as the sales process matures and there’s more operating history, the pipeline becomes an importance source of forecasting.

Here are a few questions to ask when analyzing the sales opportunity pipeline:

  • What’s our coverage ratio goal? What’s our current coverage ratio? Coverage ratio is the sales pipeline relative to quota (typically 3:1 is a starting point).
  • What opportunities are in our normal range for average amount (value), average sales cycle (days from opportunity creation to close), and any other key data points?
  • How well does each opportunity meet the MEDDICC qualification standard?
  • How has each opportunity moved forward or backward in the time period since the last review?
  • What is the next step with the opportunity?
  • Anything else we need to know about the opportunity?

Reviewing the sales opportunity pipeline is a regular part of growing a startup. Build a process and include a consistent set of questions.

What else? What are some more questions to ask when analyzing the sales opportunity pipeline?

Mining the Sales Opportunity History for Insights

Continuing with yesterday’s post on the sales ops role, there’s an extremely useful table in called Opportunity History (API info). Opportunity History is based on the Opportunity object which is used to keep track of potential deals so as to manage the sales pipeline. As expected, Opportunity has fields like Account (the company), Amount (the potential value), Close Date (when it’s expected to close), Stage (the current sales stage), and more.

Now, Opportunity History comes in as the audit trail of all changes to the Opportunity object. So, if a sales rep changes the Close Date of a potential deal, a new Opportunity History object is created reflecting that change. Why is this important? Opportunity History contains a treasure trove of information relating to how opportunities progress through the sales stages, how often reps change key values like Amount and Close Date, as well helps inform projections.

Here are a few questions to ask from the Opportunity History info:

  • How often does the close date get pushed out, on average? How does it vary by sales rep?
  • When an opportunity close date is pushed out, how many days of lead time is there on average? How does it vary by sales rep?
  • How many days does an opportunity stay on a stage, on average? How does it vary by sales rep?
  • How does the number of days in a stage compare between opportunities that were won vs opportunities that were lost?
  • What’s the win rate of opportunities by stage (e.g. for all opps that reach the third stage, how many make it through to a sale)? How does it vary by sales rep (this is a much better way to do sales forecast as compared to a basic probability by stage)?
  • What’s changed recently in the pipeline? Which opportunities moved stages? How is this month/quarter progressing against the previous one?

These types of questions can be answered by exporting the data into a spreadsheet and building a model or by using an automated analytics platform. Overall, the Opportunity History object has very valuable data and should be mined for insights.

What else? What are some more questions to ask of the Opportunity History object in