Upgrade to Pro — share decks privately, control downloads, hide ads and more …

PeersConf 2019: Operations and Forecasting: The Good, the Bad, and the Ugly

Rob
April 03, 2019

PeersConf 2019: Operations and Forecasting: The Good, the Bad, and the Ugly

“You won’t be in control of your business until you can accurately predict it.” One of my early mentors and business advisors must have said that a thousand times over our time together—and it’s true. Running a web studio is hard. But you can either run your business or your business can run you—and I have always hated having a boss.

During this workshop we will cover how we run our studio (from planning for projects, cash flow, hiring, and sales) that centers around forecasting. I’ll share a relatively simple weekly cadence you can implement that doesn’t lose sight of the people. We will dig into the details and discuss the important metrics to track and what is just noise. Before long you’ll actually be in charge of your business.

During this workshop, we will cover:
-What is Operations?
-The difference between operations and project management
-Where to start with forecasting
-Improving forecasting through feedback loops
-Predicting and Managing cash flow
-Setting a process for your own peace of mind

Rob

April 03, 2019
Tweet

More Decks by Rob

Other Decks in Business

Transcript

  1. Rob Harr
    STUDIO OPERATIONS &
    FORECASTING:
    THE GOOD, THE BAD & THE UGLY
    @robertharr

    View full-size slide

  2. GOOD MORNING!!

    View full-size slide

  3. Workshop Guarantee.

    View full-size slide

  4. Studio Operations & Forecasting:
    The Good, the Bad & the Ugly

    View full-size slide

  5. Studio Operations & Forecasting:
    The Good, the Bad & the Ugly
    Or…
    What I wish someone had told me
    about running a studio 10 years
    ago.

    View full-size slide

  6. I AM NOT A LAWYER!
    This is really small print that Rob Harr is not a lawyer. All of the things that he says should
    be checked with an actual lawyer who know what the heck they are doing. This is not a
    time that I would suggest that you “Better call Saul”.

    View full-size slide

  7. Why are you here?

    View full-size slide

  8. Agenda
    Part 1: Backstory
    Part 2: Designing Operations
    Part 3: Forecasting
    Part 4: Outcomes

    View full-size slide

  9. What is this?

    View full-size slide

  10. THIS IS NOT
    A TOOLING TALK!

    View full-size slide

  11. THIS IS NOT
    A PRICING TALK!

    View full-size slide

  12. Hourly web work for hire.

    View full-size slide

  13. So what is this then?

    View full-size slide

  14. THIS IS A
    STUDIO OPERATIONS WORKSHOP!

    View full-size slide

  15. What is operations?

    View full-size slide

  16. Figure out what
    you make,
    then spend less
    than that!

    View full-size slide

  17. Operations is the
    HOW between
    SALES and PROFIT.

    View full-size slide

  18. Operations is more of a
    discipline then it is magic.

    View full-size slide

  19. Discipline > Motivation
    TAN
    GEN
    T!

    View full-size slide

  20. I believe the single biggest
    win for operations is forecasting.

    View full-size slide

  21. For us, all of our operations
    centers around accurate forecasting.

    View full-size slide

  22. GIANT SPOLIER!

    View full-size slide

  23. Studio Operations & Forecasting
    BACKSTORY

    View full-size slide

  24. Writing the codes.

    View full-size slide

  25. Web software studio specializing
    in development and design.

    View full-size slide

  26. Hourly work for hire.

    View full-size slide

  27. “You won’t be in control of your
    business until you can accurately
    predict it.”
    ~Geoff Mandeville

    View full-size slide

  28. I am a HOW Person.

    View full-size slide

  29. Rob Harr Ben Callahan

    View full-size slide

  30. Rob Harr Ben Callahan

    View full-size slide

  31. Optimized for sustainability and
    sleeping at night
    Goal

    View full-size slide

  32. Running a business
    is hard.

    View full-size slide

  33. Running a
    profitable business
    is even harder.

    View full-size slide

  34. Running a
    profitable business while
    treating people like humans
    is a constant struggle.

    View full-size slide

  35. Our Craft
    What we believe.
    Business

    View full-size slide

  36. Our Craft
    The Truth.
    Business

    View full-size slide

  37. Our Craft
    It’s all about the people.
    Business
    People

    View full-size slide

  38. Projects don’t fail for technical or
    design reasons, they fail because of
    the people involved.

    View full-size slide

  39. There is no “One Way.”

    View full-size slide

  40. Studio Operations & Forecasting
    DESIGNING
    OPERATIONS

    View full-size slide

  41. To not be needed
    at Sparkbox.
    Goal

    View full-size slide

  42. Autonomy.
    Goal

    View full-size slide

  43. This is a cash
    intensive business.

    View full-size slide

  44. Resources
    Talent

    View full-size slide

  45. I am in the talent business.

    View full-size slide

  46. People are our
    biggest asset.

    View full-size slide

  47. 2 kinds of Companies:
    Talent Producers
    Talent Consumers

    View full-size slide

  48. The employee arrangement
    Sarah
    2080 hours a
    year
    Developer
    Salary
    Vacation
    Benefits

    View full-size slide

  49. Our Fake Team
    $45k $80k $100k $60k
    Salary
    $21 $38 $48 $28
    Hourly cost

    View full-size slide

  50. Our Fake Team - Individual rates - 4x
    $84 $152 $192 $112
    Bill Rate
    $45k $80k $100k $60k
    Salary
    $21 $38 $48 $28
    Hourly Cost

    View full-size slide

  51. Blended Rate
    $45k $80k $100k $60k
    Salary
    $21 $38 $48 $28
    Hourly Cost
    $33.75Average 

    Hourly Cost
    4x
    Multiplier
    $135 Bill Rate
    Our Fake Team

    View full-size slide

  52. Value Hourly Rate
    $45k $80k $100k $60k
    Salary
    $21 $38 $48 $28
    Hourly Cost
    $33.75Average 

    Hourly Cost
    ?
    Fuzzy Math
    $185 Bill Rate
    Our Fake Team

    View full-size slide

  53. People have different
    values in different contexts.
    TAN
    GEN
    T!

    View full-size slide

  54. 20%
    5%
    6%
    11%
    58%
    Your Budget
    58% Compensation
    11% General + Admin
    6% Rent
    5% Advertising
    20% Net Margin

    View full-size slide

  55. 20%
    5%
    6%
    11%
    58%
    Your Budget
    58% Compensation

    View full-size slide

  56. Growth costs $$$$

    View full-size slide

  57. Apprenticeships.

    View full-size slide

  58. For most of us it comes
    down to staff utilization.

    View full-size slide

  59. Hours per week?

    View full-size slide

  60. What gets measured
    gets done.
    TAN
    GEN
    T!

    View full-size slide

  61. Different target utilization by role.

    View full-size slide

  62. Devs 95%
    Designers 95%
    PMs 60%

    View full-size slide

  63. Slack Projects
    and
    Maintenance Agreements
    TAN
    GEN
    T!

    View full-size slide

  64. There are seasons for things.

    View full-size slide

  65. Surviving Growing Thriving

    View full-size slide

  66. Surviving Growing Thriving

    View full-size slide

  67. Designing efficient companies.

    View full-size slide

  68. Maximizing overhead value.

    View full-size slide

  69. Freedom is not free.

    View full-size slide

  70. I am a simple man.
    I love simple solutions.

    View full-size slide

  71. Design your week.

    View full-size slide

  72. Monday Tuesday Wednesday Thursday Friday
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices
    MicroCash updated
    Future P&L updated
    $$ Meeting
    Humans Meeting
    Late Invoices
    Sales Report
    Director 1:1’s
    All-Team Demo
    Forecasting updated

    View full-size slide

  73. Weekly Breakfast
    M
    onday

    View full-size slide

  74. Hit list
    M
    onday

    View full-size slide

  75. Timesheets
    M
    onday

    View full-size slide

  76. Projects Stand-up
    M
    onday

    View full-size slide

  77. Invoicing
    M
    onday

    View full-size slide

  78. Monday Tuesday Wednesday Thursday Friday
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices

    View full-size slide

  79. Late Invoices
    Tuesday

    View full-size slide

  80. Sales Report
    Tuesday

    View full-size slide

  81. Profitable Projects
    vs
    Profitable Portfolio
    TAN
    GEN
    T!

    View full-size slide

  82. Monday Tuesday Wednesday Thursday Friday
    Late Invoices
    Sales Report
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices

    View full-size slide

  83. MicroCash
    W
    ednesday

    View full-size slide

  84. Micro-Cash flow

    View full-size slide

  85. Micro-Cash flow

    View full-size slide

  86. Future P&L
    W
    ednesday

    View full-size slide

  87. Micro-Cash flow

    View full-size slide

  88. Micro-Cash flow

    View full-size slide

  89. $$$ Meeting
    W
    ednesday

    View full-size slide

  90. Humans Meeting
    W
    ednesday

    View full-size slide

  91. Monday Tuesday Wednesday Thursday Friday
    MicroCash updated
    Future P&L updated
    $$ Meeting
    Humans Meeting
    Late Invoices
    Sales Report
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices

    View full-size slide

  92. Director 1:1’s
    Thursday

    View full-size slide

  93. Monday Tuesday Wednesday Thursday Friday
    MicroCash updated
    Future P&L updated
    $$ Meeting
    Humans Meeting
    Late Invoices
    Sales Report
    Director 1:1’s
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices

    View full-size slide

  94. All-Team Demo
    Friday

    View full-size slide

  95. Forecasting Updates
    Friday

    View full-size slide

  96. Monday Tuesday Wednesday Thursday Friday
    MicroCash updated
    Future P&L updated
    $$ Meeting
    Humans Meeting
    Late Invoices
    Sales Report
    Director 1:1’s
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices
    All-Team Demo
    Forecasting updated

    View full-size slide

  97. Monday Tuesday Wednesday Thursday Friday
    MicroCash updated
    Future P&L updated
    $$ Meeting
    Humans Meeting
    Late Invoices
    Sales Report
    Director 1:1’s
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices
    All-Team Demo
    Forecasting updated

    View full-size slide

  98. Selfcare
    TAN
    GEN
    T!

    View full-size slide

  99. Monday Tuesday Wednesday Thursday Friday
    MicroCash updated
    Future P&L updated
    $$ Meeting
    Humans Meeting
    Late Invoices
    Sales Report
    Director 1:1’s
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices
    TAN
    GEN
    T!
    All-Team Demo
    Forecasting updated

    View full-size slide

  100. Monday Tuesday Wednesday Thursday Friday
    Morning yoga
    Coffee
    Afternoon Golf league
    Morning Lifting
    Coffee
    Morning Lifting
    Coffee
    Weekly Breakfast
    Blocked Lunch
    TAN
    GEN
    T!

    View full-size slide

  101. Smart Hours
    TAN
    GEN
    T!

    View full-size slide

  102. You will always have
    something to do.
    TAN
    GEN
    T!

    View full-size slide

  103. It is ok to punt
    to future you.
    TAN
    GEN
    T!

    View full-size slide

  104. Monday Tuesday Wednesday Thursday Friday
    All-Team Demo
    Forecasting updated
    MicroCash updated
    Future P&L updated
    $$ Meeting
    Humans Meeting
    Late Invoices
    Sales Report
    Director 1:1’s
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices

    View full-size slide

  105. The other 20%

    View full-size slide

  106. A week last year.
    Story

    View full-size slide

  107. ✈ LA -> SF -> Seattle ✈
    Story

    View full-size slide

  108. Spirit Week.
    Story

    View full-size slide

  109. Wearing in the rut.

    View full-size slide

  110. Month Close
    Client Strategy Meetings
    OPS Team Meeting
    M
    onth

    View full-size slide

  111. Estimated Taxes
    Semi-Annual Tax planning
    Q
    uarter

    View full-size slide

  112. Year End Close
    Staff Retreat
    Owner Retreat
    Year

    View full-size slide

  113. Optimized for Sustainability and
    Sleeping at Night

    View full-size slide

  114. What are you optimizing for?

    View full-size slide

  115. OPS Cadence Exercise

    View full-size slide

  116. Studio Operations & Forecasting
    FORECASTING

    View full-size slide

  117. image credit: http://thedealnewsroom.tumblr.com/post/123030031822/quantum-energy-co-founder-you-can-make-money-at

    View full-size slide

  118. What we think of as magic
    is what we have yet
    to completely understand.

    View full-size slide

  119. Forecasting is more of a
    discipline then it is magic.

    View full-size slide

  120. Discipline > Motivation

    View full-size slide

  121. Three simple steps.

    View full-size slide

  122. Step 1:
    Measure
    Yesterday
    Step 2:
    Predict
    Tomorrow
    Step 3: Grade
    and Adjust

    View full-size slide

  123. Step 1: Measure Yesterday

    View full-size slide

  124. The first step in developing this
    superpower is to be able to
    measure what happened yesterday.

    View full-size slide

  125. You have to get this right.

    View full-size slide

  126. Step 2: Predict Tomorrow

    View full-size slide

  127. How many hours, on which
    projects during the week, and time
    out of the office.

    View full-size slide

  128. This is a team effort.

    View full-size slide

  129. Forecasting is an
    operations exercise, not a
    project management exercise.

    View full-size slide

  130. Develop a forecasting cadence.

    View full-size slide

  131. I think weekly works best.

    View full-size slide

  132. Monday Tuesday Wednesday Thursday Friday
    Timesheets due
    at 9:30 am
    Forecasting updated
    before close of business

    View full-size slide

  133. Step 3: Grade and Adjust

    View full-size slide

  134. Using letter grades.

    View full-size slide

  135. Ask good questions.

    View full-size slide

  136. Accuracy
    vs
    Precision
    TAN
    GEN
    T!

    View full-size slide

  137. It is really that simple…

    View full-size slide

  138. It is really that simple…
    Except it’s not.

    View full-size slide

  139. Bring on the pain.

    View full-size slide

  140. Start with a small group.

    View full-size slide

  141. Stick with it.

    View full-size slide

  142. Wear in the rut.

    View full-size slide

  143. Celebrate the small wins.

    View full-size slide

  144. Rolling it out to the team.

    View full-size slide

  145. Remember the humans.

    View full-size slide

  146. Transparency

    View full-size slide

  147. Clearly setting expectations.

    View full-size slide

  148. What gets measured gets done.

    View full-size slide

  149. Forecasted Work
    vs
    Actual Work

    View full-size slide

  150. Monday Tuesday Wednesday Thursday Friday
    Timesheets due
    at 9:30 am
    Forecasting updated
    before close of business
    ForecastBot runs
    at 9:00 am
    Individual sheets
    updated

    View full-size slide

  151. No one will watch things more
    closely than the humans being
    measured.

    View full-size slide

  152. Where we are now.

    View full-size slide

  153. The truth about time.

    View full-size slide

  154. Step 1:
    Measure
    Yesterday
    Step 2:
    Predict
    Tomorrow
    Step 3: Grade
    and Adjust

    View full-size slide

  155. Operations Team

    View full-size slide

  156. Monday Tuesday Wednesday Thursday Friday
    Forecasting updated
    MicroCash updated
    Future P&L updated
    $$ Meeting
    Humans Meeting
    Late Invoices
    Sales Report
    Director 1:1’s
    Weekly Breakfast
    TimeSheets due at 9:30 am
    Projects Stand-up
    Prepare and Send Invoices

    View full-size slide

  157. It takes a team to not be needed.

    View full-size slide

  158. PEOPLE WHO WORK 

    ON THE BUSINESS.
    PEOPLE WHO WORK 

    IN THE BUSINESS.

    View full-size slide

  159. LEADERSHIP TEAM
    OPERATIONS TEAM OUTREACH TEAM

    View full-size slide

  160. DIRECTOR OF PROJECTS DIRECTOR OF HUMANS
    TECHNICAL DIRECTOR
    X 2
    CREATIVE DIRECTOR

    View full-size slide

  161. COMMUNICATIONS
    DIRECTOR

    View full-size slide

  162. To not be needed
    at Sparkbox.
    Goal

    View full-size slide

  163. The biggest risk to Sparkbox.
    TAN
    GEN
    T!

    View full-size slide

  164. Studio Operations & Forecasting
    OUTCOMES

    View full-size slide

  165. Forecasting Cashflow

    View full-size slide

  166. Micro-Cash flow

    View full-size slide

  167. Monday Tuesday Wednesday Thursday Friday
    Timesheets due
    at 9:30 am
    Forecasting updated
    before close of business
    ForecastBot runs
    at 9:00 am
    Individual sheets
    updated
    MicroCash updated

    View full-size slide

  168. Most of our costs
    are fairly consistent and
    predictable.

    View full-size slide

  169. This may be the single
    biggest win.

    View full-size slide

  170. Accurate Sales Report

    View full-size slide

  171. Future Available Capacity

    View full-size slide

  172. Good forecasting helps with
    current negotiations.

    View full-size slide

  173. Monday Tuesday Wednesday Thursday Friday
    Timesheets due
    at 9:30 am
    Forecasting updated
    before close of business
    ForecastBot runs
    at 9:00 am
    Individual sheets
    updated
    MicroCash updated
    Weekly sales
    report

    View full-size slide

  174. Accurate Forecasted P&L

    View full-size slide

  175. Micro-Cash flow

    View full-size slide

  176. Micro-Cash flow

    View full-size slide

  177. When to Hire

    View full-size slide

  178. When you can accurately forecast
    cash and future needs, these
    decisions become much easier.

    View full-size slide

  179. Winning in business is when our
    capacity for sales is bigger than our
    capacity to do the work.

    View full-size slide

  180. Being ready for slower times.

    View full-size slide

  181. Shovel-Ready Tasks

    View full-size slide

  182. Q4 2016
    Story

    View full-size slide

  183. Estimating New Projects

    View full-size slide

  184. Estimating software projects
    at the beginning is
    irresponsible and impossible.

    View full-size slide

  185. Reason 1:
    Estimating software
    projects is impossible
    because:
    Clients are really bad at describing
    their actual needs.

    View full-size slide

  186. We are bad at estimating work
    because we are optimistic.
    Reason 1:
    Reason 2:
    Clients are really bad at describing
    their actual needs.
    Estimating software
    projects is impossible
    because:

    View full-size slide

  187. We are bad at estimating work
    because we are optimistic.
    Reason 1:
    Reason 2:
    Clients are really bad at describing
    their actual needs.
    Business needs change over time.
    Reason 3:
    Estimating software
    projects is impossible
    because:

    View full-size slide

  188. We can compare future estimates
    to projects in the past that feel the
    same.

    View full-size slide

  189. People Over Process

    View full-size slide

  190. Embrace your staff’s
    super powers.

    View full-size slide

  191. Clearly set team
    expectations.

    View full-size slide

  192. There are no shortcuts.

    View full-size slide

  193. The best part of our companies is
    that they are made up of humans.
    Humans sometimes suck.
    The worst part of our companies is
    that they are made up of humans.

    View full-size slide

  194. Accept the fact that you will be
    completely wrong about things
    that you are sure you learned.

    View full-size slide

  195. Rob’s two basic rules for
    happiness in business:

    View full-size slide

  196. Life is too short to work with people
    you hate.
    Rob’s two basic rules for
    happiness in business:
    Rule 1:

    View full-size slide

  197. If you ever become annoyed by a
    client, it is only because you’re not
    charging them enough money.
    Life is too short to work with people
    you hate.
    Rob’s two basic rules for
    happiness in business:
    Rule 1:
    Rule 2:

    View full-size slide