Bootstrapped startups and the shit I learn in therapy

Spoiler alert: that $50,000 monthly revenue goal that I mentioned last month? We hit it this month!

This might make it seem like we should all be dancing and looking at growing again. Not quite… almost $10,000 of our revenue this month came from a project that we made very low margins on, and we also had two contractors we had to pay, so our expenses were even higher than usual.

In addition, our sales leads have slowed down lately. So instead of celebrating, I’ve spent most of the past few weeks stressed about where our next project is going to come from.

This is the life of a founder. Part of me says I should loosen up a little and enjoy the moment. Two years ago I would have never thought we’d be at a point where we could make $50,000 per month! But, our expenses have gone up with that. We now have two new people whose paychecks depend on my making sure we have more $50,000 months in our future. As you achieve success, you keep ratcheting up your own expectations. It becomes tough to figure out where to stop.

Note: On October 12th we changed the way we were recording our finances, which means we actually came ~$2,000 short of our revenue goal. We're leaving this article as is to show that we make mistakes, and because the core message is unchanged. It does make the title even more relevant.

To combat this, we’ve changed our goals for Q4. In Q3 we thought we wanted to keep aggressively shooting for growth. For us, that means hiring more people so we can bill more hours. But this quarter we’ve decided to instead focus on making sure we can consistently maintain our current status and improving the mechanics of our business.

Our goals for this quarter are:


Improve profitability so we can launch a new product in Q1 of 2019.

Key Results:

  1. Close 5 Roadmapping Sessions or $100,000 in new business.
  2. Hit a Lead-to-Roadmapping-Session conversion rate of 25%.
  3. Line up 9 meetings with potential referral partners.
  4. Average fewer than 2 projects per day per person.
  5. Average fewer than 1 critical bug per month across all projects.

Our hope is that this will reduce the stress on all of us, as well as free up time and mental energy to create new info products, which in turn will help us further improve the mechanics of the business. But more on that in a later report...

💵 Revenue

Our revenue for the month of September was $53,546.00. I spoiled it a bit, but… we hit our monthly revenue goal of $50,000! We’re currently on track to hit it in October as well, and we’re $5,000 off in November based on our current projections.

One thing we’re still trying to figure out is how to balance sales with cash flow. For the time being, we’re including approximate cash flow in these reports because that’s what we track in our financial spreadsheet and what we base most of our decisions off of. So the revenue included in these reports is typically for work done the month before, although as I’ve previously mentioned we’re starting to shift our terms.

We also had two checks come late last month, so they technically came in October, but we included them in our September revenue. One of those checks was for the next four months too, which complicates things even more!


💰 Expenses

Our expenses jumped again in September to $46,570.55. 😱Thankfully, $10,000 of that jump was from two contractors we hired to help out with some extra work on a couple of projects, so next month we won’t have that extra expense.

Still, in a month that should have been a huge celebration in terms of income growth, we only made about $7,000 in profit. While $7,000 is nothing to sneeze at, that needs to be improved if we’re going to hit our financial goals and start growing the team again.


👥 Revenue per client

In September we had 8 clients, which made it a busy month for us! Our largest client made up 33% of our revenue. An interesting thing to note is that they asked to pay for the following month up front while paying their previous month’s bill. I’m often scared to ask clients to pay upfront, pay a deposit, or start later than they ask for. But so often, when you just ask, clients are happy to do it. The best clients understand that it’s a partnership, and it’s in their best interests to help you grow your business.


👨💻 Number of employees

Nothing too exciting to report here, we still have six core team members. We have five full-time employees:three of whom are part-owners and one who is a contractor we work with to write our newsletters and two blog posts each month. We also have one contractor we recently started working with at a small scale to help us organize our finances.

📈 Recurring revenue

In the month of September, we had $36,500 in “MRR,” which made up 68.4% of our revenue. Again, it’s hard to figure out exactly what to classify as recurring and non-recurring. We treat all new projects like new recurring revenue but know that most will churn or drastically reduce their pricing tier after the MVP.

Of the $36,500 MRR we had ~$14,500 of what I would consider true MRR. These are all clients who are past the initial development phase and are at a low risk of churning.


📊 Revenue per employee

Our revenue per employee in the month of September was $10,667. There’s a big caveat, however. We had two contractors helping out part-time. If we can consistently hit numbers like this without the help of contractors, then we’ll be in a great place to start growing again.

💸 Salaries

No big changes here either, although there will be two small changes next month that I’m excited to share. Our current salaries are:

  • Andrew Askins (Partner / CEO) - $49,200 year
  • Austin Price (Partner / Designer) - $49,200 per year
  • Kevin Hoffman (Lead Developer) - $61,800 per year
  • Garrett Vangilder (Developer) - $70,200 per year
  • Jerry Hardee (Developer) - $70,200 per year

One thing I would love to do is break down my personal budget for you all, so you can see where that money goes. Would that be interesting?

🏃 Fitbit

This was a really bad month for me in the Fitbit leaderboards. I came in 3rd in one category and 4th in two others. In my defense, I did forget to charge my Fitbit for several days. But I also went on a 16-mile backpacking trip and still managed to lose out. Also, Jerry (Jay) has shot up in the ranks since he moved to Mexico City.


What other questions do you have?

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

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