Bootstrapped startups and the shit I learn in therapy

Once a quarter for the last two years, I’ve written a post sharing our financials with the world and reflecting on them in public.

This time, reflecting on the last 3 months without talking about the present or the future feels oblivious. The numbers paint a rosy picture of a profitable company ready to grow, even if the goals show that we’re still figuring out how to prioritize and stay focused as leaders.

But that’s completely ignoring the elephant in the room. At the end of March, the entire world changed around us and is still changing.

Guy Raz asks every entrepreneur at the end of an episode of “How I Built This” how much of their success can be attributed to luck and how much to skill or hard work. Nearly every entrepreneur answers that there’s a mix of both, and the more humble (and realistic) say that luck plays a huge role.

This is one of those times that underscores just how much of a role luck plays.

Yes, we made huge improvements to our processes last year, built strong client relationships, and made sure we were running a profitable business with good cash flow. All of those things are helping us now.

But we’ve also been incredibly lucky so far (knocks on all the wood in sight). We’re hoping it stays that way while doing everything we can to prepare for the worst.

🎯 OKRs

Objective: Grow the pipeline & improve the client experience so we can grow the team in Q2

Key Results:

✅Marketing: Increase people on the website by 15% and organic traffic by 25

❌Sales: Do 4 roadmapping sessions in Q1

❌Product: Conduct an accessibility audit for every project & hold a training session

✅Diversity & Inclusion: Hold a diversity & inclusion training session

❌Client communication: Create & document a process for important moments in client experience

For the past several quarters, we’ve consistently struggled to hit our OKRs. You should be setting your goals hard enough that they stretch you, but not so hard they’re impossible to beat.

But I don’t think the problem has been goal setting, it’s more a lack of focus. I’ve been trying to think about how we can create additional incentives to help us overcome that.

💵 Revenue

In the first quarter, we made $206,832 in revenue and $44,739 in profit.

There was some fluctuation due to late payments. One of our bigger clients was raising a round, and the money took a while to come through. But all in all, it was a solid quarter and we planned to push for more growth.

At the beginning of the year, we set a goal of hitting $1 million in annual revenue while maintaining a 15% profit margin. To hit the $1M mark, we need to increase our revenue by almost 30% for the next 3 quarters.

We started the hiring process at the beginning of March but decided to hit pause. While most of our clients are safe for now, we’ve seen sales slow down. At least half of our leads have changed their plans due to the pandemic.

💰 Expenses

Our expenses for the first quarter were $162,093 for an average of $54,031 per month.

We tripled our marketing budget at the beginning of the year. We brought on a new team member to help with marketing strategy and content promotion, and are going to start spending on paid advertising. For right now, we have no plans to reduce our marketing spend, although we are going to adjust the content we’re creating to fit the world around us.

We also gave Austin and I an overdue salary increase to $84,000 per year, and have raises planned for the rest of the team starting in Q2. We plan to follow through on those as well, they won’t make a huge difference to our runway.

I included a breakdown of our expenses across the 6 categories we track. As you can see, the costs of running an agency are almost entirely salaries.

👥 Website traffic

One of the metrics we’re focused on this year is website traffic, so I’m going to start including a report on those numbers as well. In Q1 we had:

  • 4,845 users (2,578 organic)
  • 6,369 sessions

It’s a relatively small amount of traffic, but we only work with a handful of clients each year. It will be interesting to see how these numbers are affected by the pandemic. One of our goals is to grow organic traffic by 15% in Q2, which will be difficult. It was down by about 18% in March, and we’re currently on track to hit about 90% of our previous high.

👨💻 Number of team members

We grew the team at the beginning of the year! We now have 9 Kritters working with us.

Daisy Quaker joined our marketing team part-time to lead strategy and content promotion. I found Daisy through a case study she wrote and we quickly hit it off. It was obvious to me that she knows her stuff, and could be the missing piece Laura and I need to help us scale our content marketing efforts. I’m super excited to see where she takes us this year.

💸 Salaries

We made two changes to salaries in Q1. First, we increased Austin and I’s salaries as co-founders to $84,000 per year. Second, we increased the base pay for an entry-level developer position by $3,000. With the comp model we’ve built, that pay raise flows up to all of the salaries above it (this didn’t go into effect until April 1). We want to continue to increase wages as we grow and become more profitable until we’re paying on the upper end of market rates.

🧠 Mental health

If you compare the first quarter of this year to the first quarter of last year, it’s like night and day. There will always be challenges. We still have a lot of room to improve our processes; we’re continuing to get better at planning. We’re actively working on improving client communication and setting boundaries with clients. But I’m thrilled with the progress we’ve made.

What’s next?

I’ve written about our initial reaction to the pandemic, and how I’m leading Krit through this time of crisis. Our objective for this quarter is to future proof Krit and diversify our revenue.

What does that look like in practice?

Right now I’m focused on making sure all of our current clients are taken care of and working with a couple of new prospects. We’re continuing to invest in content marketing, but leads have slowed down a bit and been harder to close. So we’re also starting to test paid advertising and a cold email campaign to fill in any potential gaps in the short term.

The diversifying revenue piece is going to be tough. We’ve talked before about wanting to develop books or courses, but those take a TON of time to create and market. Most likely (even if we knock it out of the park) they won’t make a meaningful dent in our revenue anytime soon. But this whole thing has shown us it’s good to diversify, and there’s no better time to start than now!

Through it all I’m trying to remind myself of one of our most important values: balance.

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