Workshop: Studio Operations & Forecasting: The Good, the Bad & the Ugly - Owner Summit 2019

“You won’t be in control of your business until you can accurately predict it.” One of Rob Harr’s early mentors and business advisors must have said that a thousand times during their time together—and it’s true. Join Rob for a deep dive into studio operations and forecasting. Take a guided tour through the good, the bad and the ugly, and uncover actionable strategies to help you take control of your business.

Get an inside look at how you can put forecasting at the heart of your business to improve project planning, cash flow, hiring, sales and more. Discover a relatively simple weekly cadence to implement (that doesn’t lose sight of your people), and dig into metrics to determine what you should track and what’s just noise. Before long, you’ll actually be in charge of your business.

Transcript

1. Rob Harr STUDIO OPERATIONS & FORECASTING: THE GOOD, THE BAD & THE UGLY @robertharr
2. GOOD MORNING!!
7. SSID: harvest_guest Password: getharvest W ifi
8. Workshop Guarantee.
9. Studio Operations & Forecasting: The Good, the Bad & the Ugly
10. Studio Operations & Forecasting: The Good, the Bad & the Ugly Or… What I wish someone had told me about running a studio 10 years ago.
11. YMMV!
12. 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”.
13. Speak Up
14. https://sli.do #H732
15. Collaborative Notes https://bit.ly/bureau-forecasting-summit
16. Why are you here?
17. Agenda Part 1: Backstory Part 2: Designing Operations Part 3: Forecasting Part 4: Outcomes
18. What is this?
19. THIS IS NOT A TOOLING TALK!
20. +
21. THIS IS NOT A PRICING TALK!
22. Hourly web work for hire.
24. So what is this then?
25. THIS IS A STUDIO OPERATIONS WORKSHOP!
27. What is operations?
28. Figure out what you make, then spend less than that!
30. THANKS! @robertharr rob@heysparkbox.com
31. Operations is the HOW between SALES and PROFIT.
32. Operations is more of a discipline then it is magic.
33. Discipline > Motivation TAN GEN T!
34. I believe the single biggest win for operations is forecasting.
35. For us, all of our operations centers around accurate forecasting.
36. GIANT SPOLIER!
39. Studio Operations & Forecasting BACKSTORY
40. Story
41. Web software studio specializing in development and design.
42. Hourly work for hire.
44. “You won’t be in control of your business until you can accurately predict it.” ~Geoff Mandeville
45. I am a HOW Person.
46. Rob Harr Ben Callahan
47. Rob Harr Ben Callahan
48. PM Buddy.
49. PM Buddy.
50. Optimized for sustainability and sleeping at night Goal
51. Running a business is hard.
52. Running a profitable business is even harder.
53. Running a profitable business while treating people like humans is a constant struggle.
54. Our Craft What we believe. Business
55. Our Craft The Truth. Business
56. Our Craft It’s all about the people. Business People
57. Project don’t fail for technical or design reasons, they fail because of the people involved.
58. There is no “One Way.”
59. Studio Operations & Forecasting DESIGNING OPERATIONS
60. To not be needed at Sparkbox. Goal
61. Autonomy. Goal
62. This is a cash intensive business.
63. Resources Talent
64. I am in the talent business.
65. People are our biggest asset.
66. 2 kinds of Companies: Talent Producers Talent Consumers
67. The employee arrangement Sarah 2080 hours a year Developer Salary Vacation Benefits
68. Our Fake Team $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly cost
69. Our Fake Team - Individual rates - 4x $84 $152 $192 $112 Bill Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost
70. 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
71. 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
72. People have different values in different contexts. TAN GEN T!
73. 20% 5% 6% 11% 58% Your Budget 58% Compensation 11% General + Admin 6% Rent 5% Advertising 20% Net Margin
74. 20% 5% 6% 11% 58% Your Budget 58% Compensation
75. Growth costs $$$$
76. Apprenticeships.
77. 6 months
78. For most of us it comes down to staff utilization.
79. Hours per week?
81. What gets measured gets done. TAN GEN T!
82. Different target utilization by role.
83. 80%
84. Devs 95% Designers 95% PMs 60%
85. Slack Projects and Maintenance Agreements TAN GEN T!
86. There are seasons for things.
87. Surviving Growing Thriving
88. Surviving Growing Thriving
89. Designing efficient companies.
90. Maximizing overhead value.
91. Freedom is not free.
92. I am a simple man. I love simple solutions.
93. Design your week.
94. Monday Tuesday Wednesday Thursday Friday Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s All-Team Demo Forecasting updated
95. Monday
96. Weekly Breakfast M onday
97. Hit list M onday
98. Timesheets M onday
99. Projects Stand-up M onday
100. Invoicing M onday
101. Monday Tuesday Wednesday Thursday Friday Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
102. Tuesday
103. Late Invoices Tuesday
104. Sales Report Tuesday
105. Tuesday
106. Profitable Projects vs Profitable Portfolio TAN GEN T!
107. Monday Tuesday Wednesday Thursday Friday Late Invoices Sales Report Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
108. Wednesday
109. MicroCash W ednesday
110. Micro-Cash flow
111. Micro-Cash flow
112. Future P&L W ednesday
113. Micro-Cash flow
114. Micro-Cash flow
115. $$$ Meeting W ednesday
116. Humans Meeting W ednesday
117. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
118. Thursday
119. Director 1:1’s Thursday
120. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
121. Friday
122. All-Team Demo Friday
123. Forecasting Updates Friday
124. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ 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
125. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices All-Team Demo Forecasting updated
126. Selfcare TAN GEN T!
127. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ 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 TAN GEN T! All-Team Demo Forecasting updated
128. Monday Tuesday Wednesday Thursday Friday Morning yoga Coffee Afternoon Golf league Morning Lifting Coffee Morning Lifting Coffee Weekly Breakfast Blocked Lunch TAN GEN T!
129. Smart Hours TAN GEN T!
130. You will always have something to do. TAN GEN T!
131. TAN GEN T!
132. It is ok to punt to future you. TAN GEN T!
133. 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
134. The other 20%
135. Wearing in the rut.
136. Month Close Client Strategy Meetings OPS Team Meeting M onth
137. Estimated Taxes Semi-Annual Tax planning Q uarter
138. Year End Close Staff Retreat Owner Retreat Year
139. Optimized for Sustainability and Sleeping at Night
140. What are you optimizing for?
141. OPS Cadence Exercise
142. Short Break
143. Studio Operations & Forecasting FORECASTING
144. image credit: http://thedealnewsroom.tumblr.com/post/123030031822/quantum-energy-co-founder-you-can-make-money-at
145. What we think of as magic is what we have yet to completely understand.
146. Forecasting is more of a discipline then it is magic.
147. Discipline > Motivation
148. Three simple steps.
149. Step 1: Measure Yesterday Step 2: Predict Tomorrow Step 3: Grade and Adjust
150. Step 1: Measure Yesterday
151. The first step in developing this superpower is to be able to measure what happened yesterday.
152. You have to get this right.
153. Metrics
154. Capacity
155. Utilization
156. Step 2: Predict Tomorrow
157. How many hours, on which projects during the week, and time out of the office.
158. This is a team effort.
159. Forecasting is an operations exercise, not a project management exercise.
160. Develop a forecasting cadence.
161. I think weekly works best.
162. Monday Tuesday Wednesday Thursday Friday Timesheets due at 9:30 am Forecasting updated before close of business
163. Step 3: Grade and Adjust
164. Using letter grades.
165. Ask good questions.
166. Accuracy vs Precision TAN GEN T!
167. It is really that simple…
168. It is really that simple… Except it’s not.
169. Bring on the pain.
171. Start with a small group.
172. Stick with it.
173. Wear in the rut.
174. Celebrate the small wins.
175. Rolling it out to the team.
176. Remember the humans.
177. Transparency
178. Clearly setting expectations.
179. What gets measured gets done.
180. Forecasted Work vs Actual Work
184. 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
185. No one will watch things more closely than the humans being measured.
187. Where we are now.
188. The truth about time.
189. Step 1: Measure Yesterday Step 2: Predict Tomorrow Step 3: Grade and Adjust
190. PM Buddy.
191. Operations Team
192. 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
193. It takes a team to not be needed.
194. PEOPLE WHO WORK 
 ON THE BUSINESS. PEOPLE WHO WORK 
 IN THE BUSINESS.
195. LEADERSHIP TEAM OPERATIONS TEAM OUTREACH TEAM
196. DIRECTOR OF PROJECTS DIRECTOR OF HUMANS TECHNICAL DIRECTOR CREATIVE DIRECTOR
197. Accountant
198. To not be needed at Sparkbox. Goal
199. The biggest risk to Sparkbox. TAN GEN T!
200. Studio Operations & Forecasting OUTCOMES
201. Forecasting Cashflow
202. Micro-Cash flow
203. 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
204. Most of our costs are fairly consistent and predictable.
205. This may be the single biggest win.
206. Accurate Sales Report
207. Future Available Capacity
208. Good forecasting helps with current negotiations.
209. 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
210. Accurate Forecasted P&L
211. Micro-Cash flow
212. Micro-Cash flow
213. When to Hire
214. When you can accurately forecast cash and future needs, these decisions become much easier.
215. Winning in business is when our capacity for sales is bigger than our capacity to do the work.
216. Being ready for slower times.
217. Shovel-Ready Tasks
218. Q4 2016 Story
219. Estimating New Projects
220. Estimating software projects at the beginning is irresponsible and impossible.
221. Reason 1: Estimating software projects is impossible because: Clients are really bad at describing their actual needs.
222. 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:
223. 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:
224. But…
225. We can compare future estimates to projects in the past that feel the same.
226. People Over Process
227. Embrace your staff’s super powers.
228. Clearly set team expectations.
229. There are no shortcuts.
230. 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.
231. Accept the fact that you will be completely wrong about things that you are sure you learned.
232. Rob’s two basic rules for happiness in business:
233. Life is too short to work with people you hate. Rob’s two basic rules for happiness in business: Rule 1:
234. 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:
236. THANKS! @robertharr rob@heysparkbox.com