You’re an early stage entrepreneur building a Web-based subscription business. You have your board meeting coming up soon, or you’re sitting down with your close advisors. What information should you provide? How should you focus the discussion?
I’d suggest 7 business slides to help frame the conversation. But I’d also suggest, ahead of any board/advisory meeting:
• Agree on a way of reporting your business metrics and get everyone comfortable with these definitions
• Talk or meet with your board members before the board meeting so that during the meeting the metrics, hiring, and other news is not actually news to board members. Instead spend most of your time on one or two strategic issues that you choose for each meeting. For example, “Hiring,” “Building a Sales Machine,” “Company Positioning,” “Strategic Challenges,” etc.
The 7 slides:
1. The funnel/sales/customers. Measuring each stage of the funnel (traffic → trial → conversion) is obvious. The key discussion points are what parts of the funnel are underperforming, why, and what you are going to do about it. Is it an issue around your target audience, messaging, product features, product performance, pricing, competition, or your sales team? Or perhaps it’s a challenge around building a new category, where it’s taking time to build awareness.
There are many Web-based subscription businesses targeting many different customer markets (consumer, very small business, SMB, specific verticals, etc.). For each market, you should be able to collect some data on what on what funnel metric ranges you should be targeting (for example, a solid traffic/sign-up ratio might be in the 8-12% range).
2. Sales/marketing. Building off the funnel discussion are a range of sales related issues. What are you learning about your sales model? How will you generate leads (inbound, outbound) and what sort of coverage are you looking for? When do you hire your first sales rep? What profile should you look at (just out of school; some business experience; some sales experience; domain knowledge; technically proficient)? How do you structure the compensation plan, particularly if you are in the early days of building the pipeline? How do you think about the time to ramp and therefore impact on cash? Have you sufficiently defined the target markets?
3. Product. This tends to be a significant discussion topic at the seed/early stages and covers a wide range of sub topics – features, use cases, personas, development timelines/resources, scaling, user experience, design, API strategy, “whole product” strategy, etc.
And of course, it can’t be separated from the funnel and sales discussion. Assuming you have some early customers, the discussion typically revolves around key learnings for the business – feedback from customers around the product, onboarding process, post-sales process. Where do customers perceive the real value in the product? Do you need to adjust your pricing model? Increase or decrease feature set? Should you start to think about different price/value bundles?
4. Business development. In technology markets, value is rarely created in isolation. All tech markets have ecosystems that your startup needs to understand and navigate. When and how should you engage in business partnerships? How do you prioritize these given limited resources? Partnerships take time and resources, so the discussion typically involves prioritizing which companies to approach, where warm introductions are needed, and how progress should be measured.
5. Team. For tech companies most of the expense – burn – is headcount related. Adding more headcount will add to the burn and the “cash out” date is brought forward. The discussion on the team is multifaceted based on what you are learning about the business. Where are the priorities? Who are the critical short term hires? How do you find them? Should you hire a search firm? On the other hand, maybe you need to look at extending the cash runway because expenses have gotten too far ahead of sales growth. Where/how do you and the investors deal with this?
6. Financials/funding. There is the obvious comparison of financials/key metrics to the plan and related discussion. Most importantly, what are you starting to learn about the economic engine of the business: the cost to acquire customers from different channels, cost to on board & service customers, retention rates, gross margins, etc.
A lot of focus is also put on the “cash out” date. Do you need to adjust this? What are you trying to prove with this financing that will enable you to raise the next financing, from either current or new investors? Are you hitting the milestones that you agreed with your investors? Is the “investment story” starting to come together? Of course, if you can get to cash-flow break-even, then that gives you more options.
7. Market developments. This is one slide that I don’t actually see startups including as much as I would like. This is the “big picture” slide that covers significant events happening in the broader market. Such events could range from competitors’ significant product releases to acquisitions, financings, new competitors, pivots, and the like. Overall, how do you think the market is developing? In light of these developments, are you making the right strategic choices?
The goal of my pointers is not to make you build a ton of slides, but to engage smart people around the table to get input/help on a range of strategic and tactical issues for the business. As mentioned in the beginning, the more prepared board or advisory members are about the state of the business, the more a board meeting can focus on one or two strategic issues.