WELCOME TO ISSUE NO #04

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📆 Today’s Rundown

Happy Saturday! This week I’ve compiled some amazing resources that will definitely impress you.

Let’s break it down in this week’s issue.

• 💰 How'd you come up with my quota? This one’s for Sales pro’s

• 👉 12 hard truths every SaaS founder and CFO should read

• 🧐 Discover: 30 Top Finance & Accounting LinkedIn Creators

• I’ve partnered with Wall Street Prep and Wharton Online to bring you an incredible opportunity to save hundreds of dollars and build your FP&A career. Check out this a one-of-a-kind, theory-meets-practice, FP&A certificate program. Details below.

• My friend Bojan Radojicic launched a value-packed Financial Modeling Course and his students are loving it. So if you’re looking to elevate your career, check it out below.

• I’d love to get your thoughts on this week’s poll. Share your thoughts below!

👇️ Watch: 5 Interesting Learnings from DropBox at $2.5 Billion in ARR by Jason

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"How'd you come up with my quota?"

Today, let’s set aside the complex algorithms and statistical models typically used to optimize sales organizations and compensation structures. Instead, I want to share three straightforward, experience-based rules of thumb for structuring your sales teams. These aren’t backed by heavy data, but they are honed by real-world application and a fair bit of gut instinct.

1. One-Third of Your Sales Reps Should Carry Individual Quotas

2. A Rep’s Quota Should Be At Least 5x Their On-Target Earnings

3. Plan for 80% Quota Achievement

Picture this: in a typical sales "pod," you have one quota-carrying rep. This rep is your frontline warrior, tasked with clinching new deals. Supporting this rep is a team that includes a manager, a system engineer for technical details, and a business development rep who helps generate leads. This structure scales up, with managers overseeing several reps, each supported by system engineers and SDRs, and so on up the hierarchy to the VP of Sales.

But here’s the catch: only about one-third of your sales force should actually be quota carriers. Why? Because having fewer quota carriers suggests a potentially bloated team structure where too many are feeding from the pot but not enough are contributing to filling it.

Let’s delve into the nitty-gritty of compensation. Say a rep is on a 50/50 plan with $100K base and $100K variable, totaling $200K in on-target earnings. At a minimum, this rep’s quota should be around $1 million. This setup ensures that their contribution margin significantly benefits the business. Problems arise when quotas are not proportionately high compared to salaries, creating a no-man's land where the business neither loses nor gains much financially. This is particularly risky when new reps are still ramping up, a process that can take months without generating immediate revenue.

Realistically, not every target set will be hit. That’s why it’s prudent to plan for 80% achievement across your sales teams. This planning should align with three different forecasts: the internal operating plan, the board’s expectations, and, if applicable, the public street plan. Your operating plan should be the most ambitious, allowing for strategic bets and innovations, while your board plan should provide a buffer for underperformance against these high expectations.

Moreover, it's wise to slightly over-deploy quotas at each level of the sales hierarchy to accommodate factors like employee turnover, which is typically high in sales roles. Some attrition is normal, as reps might leave if they see they’re not on track to meet their targets, or management may decide to cut underperformers.

While these rules are less formal, they are practical and tested in the field. They can guide you in creating a lean, effective sales organization that not only meets its targets but also drives significant business growth.

Until next time, keep strategizing and watch your sales soar!

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12 hard truths every SaaS Founder and CFO should read

In the fast-paced world of SaaS, the road to success is lined with its fair share of challenges and learning curves. Today, let’s discuss some hard truths that every SaaS founder and CFO should consider—a little reality check that could guide you towards more effective and sustainable growth.

1. When your top performers leave, it’s a chance to introspect rather than point fingers. What can your organization improve?

2. It’s less about remote vs. office and more about trusting your team, regardless of their physical location.

3. Being resistant to feedback can cripple your ability to adapt in the ever-evolving SaaS landscape.

4. Ensure your financial choices mirror your company’s core values, or your team will notice the mismatch.

5. Diversity should be visible not only in your team but also in leadership roles and decision-making processes.

6. Skimping on funding crucial departments is not lean management; it’s a gamble on your startup’s future.

7. A negative internal culture can tarnish your product and customer relationships.

8. In SaaS, where service is key, happy employees lead to satisfied customers.

9. Micromanaging, especially in finance and product teams, can quash creativity and innovation.

10. Keep your best talent by ensuring their personal growth aligns with your company’s scaling journey.

11. Leading through intimidation can stifle creativity and problem-solving within your teams.

12. If you don’t compensate your team fairly, rest assured, your competitors will.

These insights serve as a reminder that placing your people first not only enhances your workplace but also propels your SaaS business towards sustainable success.

Reflect on these truths as you navigate your leadership journey. Adjusting your strategies in these areas can significantly impact your company’s morale, innovation, and overall growth.

If you’re looking to elevate your career, check out The Financial Modeling Course by Bojan.

This is the method that made Bojan and other students go from misunderstood analysts to respected finance leaders.

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