Bootstrapped startups and the shit I learn in therapy

The bad news is… numbers are hard.

We’ve been sloppy with our accounting for a long time.

We knew we were sloppy, so last year we worked on cleaning up our official company books and set up the projections and cash flow spreadsheet that we’ve been using for these reports. Thanks to a few long nights Austin spent pouring over Quickbooks, we got our books mostly fixed.

For a while, the spreadsheet worked wonders. It helped us stay on top of how much cash we had in the bank, where our money was going and create some projections for the first time. This helped us make tough decisions about raising our salaries and hiring new people.

The problem is we weren’t updating our projections with the actual cash. We also didn’t know how best to handle upfront cash payments that we get from certain clients. And many of our clients are on different payment schedules, simply because we’ve experimented with our terms over time.

This meant our spreadsheet was a mess. Which is not what you want from the tool driving most of your company’s financial decisions.

The good news is… we have help now!

A few months ago we hired Startup Financial to help us get everything in order and advise us on financial decisions. Chuck has been awesome at helping us make sense of things.

Together we’ve found a nice middle ground for our spreadsheet. It still has the visual components we need to make sense of all the numbers as non-finance founders (yay color coding!), while still being… you know… accurate.

What we've changed, and what it means for our Open Agency reports

From now on, we will record projections and actuals in our financial dashboard spreadsheet based on cash only. This means if we get a check for $50,000 that covers four months of work, we’ll only count it in the month it’s deposited. If we are slow to deposit a check and it doesn’t get done until the next month, those numbers will get recorded in the month where the money hits our bank account. Likewise, we’ll be reporting cash numbers only.

When there are unusual events, I’ll do my best to explain them. But this gives the most accurate depiction of our actual business.

The truth of running an agency is that we don’t collect money via nice, simple recurring credit card payments like a SaaS business. So sometimes human error makes weird things happen. As for past reports, I’m going to leave them as-is with a link to this report explaining the changes. Being transparent means showing our mistakes as well as our successes.

💵 Revenue

In the month of October, we brought in $64,685 of revenue. $20,000 of that revenue came from a client who was paying upfront for 4 months of work. An additional $5,000 came in, but wasn’t deposited until November, and so will be counted then.


As you can see in the graph below, the discrepancies between the projections in our old financial dashboard and the actual cash we had coming in were pretty huge a couple of months. This demonstrates how important it is for us to be more diligent moving forward.

You can see we were actually fairly accurate at the beginning of the year and the overall numbers are pretty close. But we had large client payments coming in when we weren’t expecting them over the past few months which contributed to the large discrepancies.


💰 Expenses

Our total expenses for October were $36,383. Despite our accounting changes, our expenses are still fairly accurate. Our main expenses are salaries and rent, with a decent chunk of money going to software and content marketing.


👥 Revenue per client

In October we had 6 total clients with 3 clients who accounted for a little under a third of our revenue each. Our goal is to continue to grow the number of smaller clients we have to form a strong base of consistent revenue.


👨💻 Number of team members

We have 6 team members and 1 advisor. We still have 5 full time employees - all design and engineering except for myself. We are also working with Laura Bosco who runs our content marketing. Then we’re working with Chuck Alsdurf at Startup Financial to advise us on finances. He’s in our Slack group so he's basically a team member.

📈 Recurring revenue

In October we had $5,000 of monthly recurring revenue.

Along with changing the accounting for our financial dashboard I also want to change what we classify as recurring revenue. Up until now, I’ve counted our large contracts that have an end date towards our recurring revenue because they’re structured as a flat monthly fee, albeit one that will almost definitely end at a set point in time. I’ve also counted an arrangement we have that’s hourly and fluctuates each month.

Moving forward I will only be counting flat monthly fees that are based on an ongoing contract. This better reflects where we are with this goal right now.

📊 Revenue per employee

Our revenue per full-time employee was $12,937 in October. This is close to the sweet spot where we’d like to be every month, although it was inflated this month because of a large check from one client who paid up front for four months of work.

💸 Salaries

I have some exciting news regarding salaries! We increased Austin and Kevin’s salaries to $60,000 and $72,000 per year respectively.

Kevin is our lead engineer and has taken on more responsibility with our new hires, so we really wanted to increase his salary. Originally we were planning on increasing all three of ours to the same level. But Austin and I looked at our projections after we hired our two new team members in August and decided we’d rather keep our salaries lower for now while we focus on improving profitability. We’re the largest shareholders, so we stand to benefit the most if the company is successful.

We kept my salary the lowest, in part because I feel like it’s my responsibility as CEO to make sure everyone else is paid first. But we also wanted to experiment with commission-style bonuses to see if we could game my motivation a little bit. So we gave me a $2,000 bonus for the sales work I’ve done so far this year. We also agreed that if I can close 5 Roadmapping Sessions or $100,000 in new business before the end of the year then I’ll earn an additional $2,000 bonus.

Side note: the flat tax on bonuses sucks.

So far I’ve closed 4 Roadmapping Sessions, although we also made that a Key Result for Q4 so it’s hard to tell which factor is the bigger influence.

  • Andrew Askins (Partner / CEO) - $49,200 per year + $2,000 bonus
  • Austin Price (Partner / Designer) - $60,000 per year
  • Kevin Hoffman (Lead Developer) - $72,000 per year
  • Garrett Vangilder (Developer) - $70,200 per year
  • Jerry Hardee (Developer) - $70,200 per year

One thing I’ve been thinking about recently is developing salary tiers. Up until now, we’ve paid all positions roughly the same, and our amounts were basically just as much as we felt like we could afford. As we grow we’ll need to hire different positions, and will have to think about creating distinct salaries as well as giving people room to move up. This will be an interesting challenge to face.

What other questions do you have?

If you made it this far, thank you for reading the fourth month of our Open Agency project! If you have any questions or feedback, let me know.

One thing we’ve been trying to find for a long time is an easy way to do capacity projections. This would let us run multiple scenarios as we’re scheduling new projects or considering implementing new policies. Is this something people would be interested in reading about? Capacity is one of the biggest challenges in running a service business.

Note: Sad news… I lost my fitbit at the gym and Jerry’s broke once he got to Mexico. So I think we’re going to have to kill the Fitbit section of our reports for the foreseeable future

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