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

Transcript

1. Rob Harr STUDIO OPERATIONS & FORECASTING: THE GOOD, THE BAD & THE UGLY @robertharr
2. GOOD MORNING!!
6. Workshop Guarantee.
7. Studio Operations & Forecasting: The Good, the Bad & the Ugly
8. Studio Operations & Forecasting: The Good, the Bad & the Ugly Or… What I wish someone had told me about running a studio 10 years ago.
9. YMMV!
10. 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”.
11. Speak Up
12. Why are you here?
13. Agenda Part 1: Backstory Part 2: Designing Operations Part 3: Forecasting Part 4: Outcomes
14. What is this?
15. THIS IS NOT A TOOLING TALK!
16. +
17. THIS IS NOT A PRICING TALK!
18. Hourly web work for hire.
20. So what is this then?
21. THIS IS A STUDIO OPERATIONS WORKSHOP!
23. What is operations?
24. Figure out what you make, then spend less than that!
26. THANKS! @robertharr rob@heysparkbox.com
27. Operations is the HOW between SALES and PROFIT.
28. Operations is more of a discipline then it is magic.
29. Discipline > Motivation TAN GEN T!
30. I believe the single biggest win for operations is forecasting.
31. For us, all of our operations centers around accurate forecasting.
32. GIANT SPOLIER!
35. Studio Operations & Forecasting BACKSTORY
36. Writing the codes.
37. FORGE
38. Employee #1
39. Failure?
41. Story
42. Web software studio specializing in development and design.
43. Hourly work for hire.
45. “You won’t be in control of your business until you can accurately predict it.” ~Geoff Mandeville
46. I am a HOW Person.
47. Rob Harr Ben Callahan
48. Rob Harr Ben Callahan
49. PM Buddy.
50. PM Buddy.
51. Optimized for sustainability and sleeping at night Goal
52. Running a business is hard.
53. Running a profitable business is even harder.
54. Running a profitable business while treating people like humans is a constant struggle.
55. Our Craft What we believe. Business
56. Our Craft The Truth. Business
57. Our Craft It’s all about the people. Business People
58. Projects don’t fail for technical or design reasons, they fail because of the people involved.
59. There is no “One Way.”
61. Studio Operations & Forecasting DESIGNING OPERATIONS
62. To not be needed at Sparkbox. Goal
63. Autonomy. Goal
64. This is a cash intensive business.
65. Resources Talent
66. I am in the talent business.
67. People are our biggest asset.
68. 2 kinds of Companies: Talent Producers Talent Consumers
69. The employee arrangement Sarah 2080 hours a year Developer Salary Vacation Benefits
70. Our Fake Team $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly cost
71. Our Fake Team - Individual rates - 4x $84 $152 $192 $112 Bill Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost
72. 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
73. 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
74. People have different values in different contexts. TAN GEN T!
75. 20% 5% 6% 11% 58% Your Budget 58% Compensation 11% General + Admin 6% Rent 5% Advertising 20% Net Margin
76. 20% 5% 6% 11% 58% Your Budget 58% Compensation
77. Growth costs $$$$
78. Apprenticeships.
79. 6 months
80. For most of us it comes down to staff utilization.
81. Hours per week?
83. What gets measured gets done. TAN GEN T!
84. Different target utilization by role.
85. 80%
86. Devs 95% Designers 95% PMs 60%
87. Slack Projects and Maintenance Agreements TAN GEN T!
88. There are seasons for things.
89. Surviving Growing Thriving
90. Surviving Growing Thriving
91. Designing efficient companies.
92. Maximizing overhead value.
93. Freedom is not free.
94. I am a simple man. I love simple solutions.
95. Design your week.
96. Monday Tuesday Wednesday Thursday Friday Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s All-Team Demo Forecasting updated
97. Monday
98. Weekly Breakfast M onday
99. Hit list M onday
100. Timesheets M onday
101. Projects Stand-up M onday
102. Invoicing M onday
103. Monday Tuesday Wednesday Thursday Friday Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
104. Tuesday
105. Late Invoices Tuesday
106. Sales Report Tuesday
107. Tuesday
108. Profitable Projects vs Profitable Portfolio TAN GEN T!
109. Monday Tuesday Wednesday Thursday Friday Late Invoices Sales Report Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
110. Wednesday
111. MicroCash W ednesday
112. Micro-Cash flow
113. Micro-Cash flow
114. Future P&L W ednesday
115. Micro-Cash flow
116. Micro-Cash flow
117. $$$ Meeting W ednesday
118. Humans Meeting W ednesday
119. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
120. Thursday
121. Director 1:1’s Thursday
122. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
123. Friday
124. All-Team Demo Friday
125. Forecasting Updates Friday
126. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ 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
127. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices All-Team Demo Forecasting updated
128. Selfcare TAN GEN T!
129. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ 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
130. Monday Tuesday Wednesday Thursday Friday Morning yoga Coffee Afternoon Golf league Morning Lifting Coffee Morning Lifting Coffee Weekly Breakfast Blocked Lunch TAN GEN T!
131. Smart Hours TAN GEN T!
132. You will always have something to do. TAN GEN T!
133. TAN GEN T!
134. It is ok to punt to future you. TAN GEN T!
135. 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
136. The other 20%
137. A week last year. Story
138. ✈ LA -> SF -> Seattle ✈ Story
139. Storey
140. Spirit Week. Story
141. Story
142. Story
143. Story
144. Story
145. Story
146. Story
147. Wearing in the rut.
148. Month Close Client Strategy Meetings OPS Team Meeting M onth
149. Estimated Taxes Semi-Annual Tax planning Q uarter
150. Year End Close Staff Retreat Owner Retreat Year
151. Optimized for Sustainability and Sleeping at Night
152. What are you optimizing for?
153. OPS Cadence Exercise
154. Short Break
155. Studio Operations & Forecasting FORECASTING
156. image credit: http://thedealnewsroom.tumblr.com/post/123030031822/quantum-energy-co-founder-you-can-make-money-at
157. What we think of as magic is what we have yet to completely understand.
158. Forecasting is more of a discipline then it is magic.
159. Discipline > Motivation
160. Three simple steps.
161. Step 1: Measure Yesterday Step 2: Predict Tomorrow Step 3: Grade and Adjust
162. Step 1: Measure Yesterday
163. The first step in developing this superpower is to be able to measure what happened yesterday.
164. You have to get this right.
165. Metrics
166. Capacity
167. Utilization
168. Step 2: Predict Tomorrow
169. How many hours, on which projects during the week, and time out of the office.
170. This is a team effort.
171. Forecasting is an operations exercise, not a project management exercise.
172. Develop a forecasting cadence.
173. I think weekly works best.
174. Monday Tuesday Wednesday Thursday Friday Timesheets due at 9:30 am Forecasting updated before close of business
175. Step 3: Grade and Adjust
176. Using letter grades.
177. Ask good questions.
178. Accuracy vs Precision TAN GEN T!
179. It is really that simple…
180. It is really that simple… Except it’s not.
181. Bring on the pain.
183. Start with a small group.
184. Stick with it.
185. Wear in the rut.
186. Celebrate the small wins.
187. Rolling it out to the team.
188. Remember the humans.
189. Transparency
190. Clearly setting expectations.
191. What gets measured gets done.
192. Forecasted Work vs Actual Work
196. 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
197. No one will watch things more closely than the humans being measured.
199. Where we are now.
200. The truth about time.
201. Step 1: Measure Yesterday Step 2: Predict Tomorrow Step 3: Grade and Adjust
202. PM Buddy.
203. Operations Team
204. 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
205. It takes a team to not be needed.
206. PEOPLE WHO WORK 
 ON THE BUSINESS. PEOPLE WHO WORK 
 IN THE BUSINESS.
207. LEADERSHIP TEAM OPERATIONS TEAM OUTREACH TEAM
208. DIRECTOR OF PROJECTS DIRECTOR OF HUMANS TECHNICAL DIRECTOR X 2 CREATIVE DIRECTOR
209. COMMUNICATIONS DIRECTOR
210. Accountant
211. To not be needed at Sparkbox. Goal
212. The biggest risk to Sparkbox. TAN GEN T!
213. Studio Operations & Forecasting OUTCOMES
214. Forecasting Cashflow
215. Micro-Cash flow
216. 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
217. Most of our costs are fairly consistent and predictable.
218. This may be the single biggest win.
219. Accurate Sales Report
220. Future Available Capacity
221. Good forecasting helps with current negotiations.
222. 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
223. Accurate Forecasted P&L
224. Micro-Cash flow
225. Micro-Cash flow
226. When to Hire
227. When you can accurately forecast cash and future needs, these decisions become much easier.
228. Winning in business is when our capacity for sales is bigger than our capacity to do the work.
229. Being ready for slower times.
230. Shovel-Ready Tasks
231. Q4 2016 Story
232. Estimating New Projects
233. Estimating software projects at the beginning is irresponsible and impossible.
234. Reason 1: Estimating software projects is impossible because: Clients are really bad at describing their actual needs.
235. 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:
236. 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:
237. But…
238. We can compare future estimates to projects in the past that feel the same.
239. People Over Process
240. Embrace your staff’s super powers.
241. Clearly set team expectations.
242. There are no shortcuts.
243. 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.
244. Accept the fact that you will be completely wrong about things that you are sure you learned.
245. Rob’s two basic rules for happiness in business:
246. Life is too short to work with people you hate. Rob’s two basic rules for happiness in business: Rule 1:
247. 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:
249. THANKS! @robertharr rob@heysparkbox.com