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

7a6f8abf3af4af2ab8720782b06c9d77?s=47 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

7a6f8abf3af4af2ab8720782b06c9d77?s=128

Rob

April 03, 2019
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Transcript

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

    & THE UGLY @robertharr
  2. GOOD MORNING!!

  3. None
  4. None
  5. None
  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.

  19. None
  20. So what is this then?

  21. THIS IS A STUDIO OPERATIONS WORKSHOP!

  22. None
  23. What is operations?

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

  25. None
  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!

  33. None
  34. None
  35. Studio Operations & Forecasting BACKSTORY

  36. Writing the codes.

  37. FORGE

  38. Employee #1

  39. Failure?

  40. None
  41. Story

  42. Web software studio specializing in development and design.

  43. Hourly work for hire.

  44. None
  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.”

  60. None
  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?

  82. 32

  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.

  182. None
  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

  193. None
  194. None
  195. None
  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.
  198. None
  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:
  248. None
  249. THANKS! @robertharr rob@heysparkbox.com