Challenge2–NextYear’sAnnualReporttoInvestors
Challenge2Focus:
•Writeuptodaythebestyear-endresultsyoucanaccomplishonyourventureasifitisalreadynextyearandyou’veachievedgreatsuccess.
WhatyougetbycompletingChallenge2:
•Clearanddoable-with-a-stretchyear-endprogresstargetsin(1)marketand customer, (2)teamand(3)productdevelopmentthatincreasethevalueofyourventure.
•Abilitiestodefineandshareyourventureprogressandneedsinresulttermsthatinvestorsvalueandusetoinvesttheirsupport.
ResourcesincludedwithChallenge2:
A.How BestYearEndResultsHelpInvestorsandFoundersCreateValue
B.FiveTipsforDraftingNextYear’sAnnualReportToday
C.Example:ThreeSampleAnnualReports
ChallengeGuidelines:
1)WriteyourReporttoyourinvestoraudienceasiftheyhadalreadyinvestedinyour venturethisyearandareequallysharinginyoursuccess–they’rewhoyou’retrying toimpressandgetexcited;
2)Usethepasttenseinwritingyourreport–asifyou’respeakingfromJanuaryofnextyearandlookingbackonwhathasalreadysuccessfullyhappenedthisyear(e.g.we achieved...,wemade...,wecreated...,wehired....etc.);
3)Shareyourventure’shighestprioritysuccessfirst–whetherinproduct,incustomerandmarket,orinteamachievements–andbesureto offerphysicalevidencethatprovesyoursuccess.Refineallevidenceintoclear,measurableandobjectivelyobservableexamples;
4)BeconciseandclearbykeepingtheReporttoonepage–donotuseacronyms,jargonoranythingelseyourmomandinvestorswon’tunderstand,especiallyifyour momisalreadyaninvestor. Bulletsand/ornumberedparagraphswillworkfine;and,
5)Keepyourreporttojustonepage–again,condenseyourmostimportantsuccesses intoonlyonepage(seeGuideline#4).
Challenge2–ResourceA.
HowBestYear EndResultsHelpInvestorsandFoundersCreateValue
Investorswanttounderstandwhatyourventure’slikelyfutureresultsaretoday.Youcantellinvestorsexactlywhatyourventure’s bestyearendresultswill be –anddo itwiththecredibilityofclearevidence that’sachievable.
Theeasiestwaytoimproveprobabilitiesforbetterfutureresultsistoinventthemtoday.
Putyourintendedresultsinwriting.Writingdownfutureresultsisahabitthathigh-achievingfoundersusetoimprovetheirsuccess.Startwithtargetsasyourexpected bestyearendresultsinthreekeyareasinvestorsvaluemost:
•Product–whatyoumakethathasbenefitspeoplevalueandarewillingtopayfor
•CustomersMarket–individualsinsignificantlysizedmarketsegmentswith purchasingpowerwillingandabletobuyyourproducttogainthebenefitsyouintend
•Team–thetalentedindividualsinyourventureneededtodevelopanddeliveryourproduct,growcustomersandscaleoperationstodominatemarkets
UseyourChallenge1Venture StageSelf-AssessmentWorksheet(ResourceC)tosettargetswithevidenceofsuccessinvestorswanttosupport.Measurableevidencethatcanbequicklysharedandeasilyunderstood(i.e.evidenceyourmomwould understand).Ifyoustilldon’thaveaclueonwhatyourbestyearendresultscouldbe,or howtorevealgrowingvalueinyourventureprogress,thenstartbyansweringthe followingquestions:
1.Whatproductdevelopmentwillyoucomplete?
2.Howmanycustomersand/ormarketsegmentswillyoutargetand/orengagewith yourproduct–howwillthisleadtorevenueorvaluationgrowth?
3.Whoonyourteamwilldriveyourprogressasneeded–willyouneedtoaddmore talentinordertomakeyear-endresultshappenontime?
Asyourefineyourbestyearendresultsintoclearandmeasurableevidencemakesure they’resignificant.Investorswillfocusonyourmostcompellingachievementsinterms ofhowwellthoseresultsgrowvalue.Asyoubuildpositiveexpectationsfocusedonclearlyobservableprogressofsignificantresultsovertimeyouwillbettermotivate investorstowritecheckstoyourventure:
Successfulinvestorsdon’tcareaboutsupportingbesteffortsorcurrentactivities–onlythebestyearendresultsthatgrowvalueastimegoesby.
Draftyourbestyearendresultsthatgrowvaluetoday–asifthey’vealreadyhappened:thereisnogreatersuccessinvestorscanhelpfounderscreatethancallingoutshotsatvaluableachievementsfirst...andthenhittingthem.
Challenge2–ResourceB.
FiveTipsforDraftingNextYear’sAnnualReportTodayTip1.BeUpbeatandGiveInvestorsCredit
It’simportanttotargetpositivesuccess.Investorswanttoknowhowtheirresourcesdrivepositiveresults–especiallyforanydesiredinvestmentyouhopetogaininthe monthsaheadbeforeyearend.Showthemhowaddedinvestmentsdroveyourbestyear-endresults–givethemclearandcompellingevidencefortheirinvestmentto support.
Tip2.MakeEvidenceObservable,MeasurableandVerifiable
Distillandrefineanyvaguegoalsyoumightdesireintoself-evident,bestyear-end targets–don’tmakeinvestorsstruggletounderstandwhatyouachievedandwhy it’svaluable.Forexample,refinethis cheery,positivestatement...
Weachievedprogresswithourcustomersandgrewsalesalotbyyearend...
...intothisclearlymeasurableandverifiableevidence:
Customersalesdoubled,from$20,000permonthto$40,000permonth,in October...
Allaccomplishmentsyouintendtoshareasdrivinggreatervaluemustberefinedinto evidencethatanybodycouldquicklyunderstandandmeasurablyconfirm.
Tip3.CreateYourPreferredFuturebyValuableResults
Targetonlysignificantachievementsthatincreaseyourventurevalue.Avoidsharing ongoingeffortsoractivities(theyarecosts),butdoshowresultdependenciesacrossallareas,forexample:ifyoudon’tcurrentlyhavemoneytomakeproductprogress,then identifyhowmuchmoneyyouneededandraised,orwhatyoubootstrapped,asoneofyoursignificantachievementsthatthendroveproductdevelopmentresults.
Tip4.HighestValueResultsFirst
Ifproductdevelopmentisyournumberoneprioritybytheendofthisyear,leadoff withproductdevelopmentresultsfirst.Asyoushowhowotherresults(e.g.likeabove moneyraised/bootstrapexample)drovethatprogress,besuretoalwaysinclude customerandmarketdevelopmentsthatimproverevenuepotentials.Leaveoutall insignificantevidence(seetheSampleDraftReportsforexamples).
Tip5.ClosewithVisiononScalabilityand/orExpectedRevenueGrowth
Offerfutureintentionsofbuildingonyourbestyear-endresults,e.g.shareaglimpseofwhatcanbeachievedoverthenextyearthatbecomespossiblebywhatyou accomplishedthisyear.Don’tforgettoalignthoseintentionswithdrivingrevenuegrowth...ifyouwanttokeepinvestorsinterested.
December31,2018 DearInvestor:
AnnualReporttoInvestors
PartThyme,Inc.
We’reexcitedtosharethatPartThyme,Inc.hasnowsuccessfullymatchedskilled workertalenttorestaurantandhospitalityemployerneedsacrossseveralTexasurban marketsduring2018.Ourpart-timeworkers(PartThymers)foundenoughaddedwork toboosttheirannualearningsby10%onaverageandlocalbusinessesgainedenough talentondemandtosimilarlyincreasetheirnetearnings.Herearetheprogress highlightsachievedinourproduct,customermarketandteamdevelopmentsthatmade2018agreatsuccess:
Produ•InAprilwesuccessfullycompletedourweb-appver1.0(atwo-sidedmarketplace
progressw/evidence
andratingsystemthatconnectsskilledworkerswithindustryemployers).We
deployedwith99%uptimeinSanAntonioandquicklyengaged,retainedand convertednewusersintopayingcustomers.
•OurtightinitialmarketfocusonSanAntoniorestaurantandhospitalityworkersand
Customer
Market progress
...w/evidence
businesseshelpeduscreateareferralusercommunity.Referralsacceleratedourcustomerconversiongrowth,valuedfeedbackandalsovalidatedourmonetization strategyofcustomeracquisitioncostsaveraging$0.33each.Weprofitablygainedover200PartThymersand 50 businessesaspayingcustomersduringourfirstmonthofoperationsalone.
•BeinglocalinSanAntonioinfluencedourwinningtheSATechFuel$30kprizein May.WeinvestedthatmoneyintocontinuedgrowthofourSanAntoniocustomerbaseandsuccessfullylaunchedcoreusercommunitiesinthreeotherTexasurban hospitalitymarkets(Houston,DallasandAustin)byOctober.
•Ourteamhiredafull-timesalesandcustomersupportpersoninJune.Thisteam
Team
progressw/evidence
leaderexceededourmonthovermonthgrowthtargets–gainingfrom200to1,600 PartThymersandfrom50to400businesses–withuserconversionsdriving monthovermonthcustomerrevenuegrowthfrom$5,000to$50kpermonthbyyear end.Theteamalsodemonstratedconsistentperformanceineachnewmarket.
WeexpectfreecashflowandteamgrowthtocontinueaswetargetnewusercommunitiesinseveralgeographicmarketsbeyondTexasnextyear,beginningwith NewOrleansandLasVegas.PartThyme’s prioritycontinuestobemonthovermonthrevenuegrowthandweanticipatereaching$200kinmonthlyrevenuesbyJune2018.
Manythanksforyourcontinuedsupport,PartThyme,Inc.
AnnualReporttoInvestors
asofDecember31,2018 DearInvestors,
BeaLoveYogacontinuedtomakesignificantprogressincustomerandmarketdevelopmentduring2018,thankstoyourongoingsupport.Ourhighlighted achievementsincluded:
Customer•Weexpandedourreachintoanestimatedserviceablemarketof800,000pregnant
Market progress
...w/evidence
mommas(fromover4millionnationally)andover1,500newcustomersbought
ourvideoinstructionyogaseriesforpregnantmommas($48.00). Roughly1,200stress-reliefseekersalsopurchasedour21Dayguidedmeditationaudioseries($18.99).Annualgrosssalesfromallproductswereover$100,000forthefirsttime!
•We drovesalessuccessbyestablishinganewAmazonmarketplaceaccountinMarch.FavorableproductreviewscombinedwithoursocialmediacampaigninMaytripledmonthovermonthclick-throughtraffic,drivingcustomerpurchase conversionsto30%onbealoveyoga.com.
Team•Ourteamexpenseforthisannualrevenuegrowthcostonly$10,000(foroursocial
progressw/evidence
mediacampaignandmarketingcontract)fora10xreturnoncashinvested–all
accomplishedwithoutaddingafull-timehire.
•Inproductdevelopmentwecompletedanewe-book30DayYogaPrimer($7.99)
Product
progressw/evidence
andmadebetatestsalesinOctober,withascheduledfullcampaignlaunchon AmazonintendedforJanuary2018.
In2018weintendtobringatleastonenewvideoandaudioproducttomarket,adda full-timemarketingandsalespersontoourteamandtargetmonthovermonthsales growthacrossallproductlines.Ourongoingfocuswillcontinuetobeacceleratingsales inordertobreak$200kinannualrevenuesbytheendof2018.
Blessingsandthankyouforyourcontinuedsupport.Namaste,
BrandyArena,Founder
BeaLoveYoga,LLC
December31,2018
Quickmit,Inc.
DearInvestor:
AnnualReporttoInvestors
QuickmithassuccessfullyachievedgreatprogressinservingK–12independentschools.Theyearbeganwithonlytwocustomersandabetaproducttest,butbyyear- endwehadgreatlyimprovedproductfunctionality,increasedourmarketreachandaddednewcustomersatincreasedpricingonunitsales.HerearethehighlightsofQuickmitproduct,customermarket,andteamdevelopmentsthatmade2018agreatsuccess:
ProducInMarchwedeployedQuickmit’sthirdmajorfeature-set(afully-automated
progressw/evidence
tuitionmanagementmodule)andcompletedover30newfeaturesrequestedby
ourbetapartnershipcustomers(fourlighthouseschools).
- Quickmit’snewmoduleincreasedcustomerrevenuesfrom$50/studentto$360/
Customer
Market progress
...w/evidence
studentperyear.Wealsoexpandedexistingcustomerparticipationtoover250studentsandengaged8newschoolsbyworkingthroughEducationTransformationAllianceandAmericanMontessoriAssociation. Wefinishedtheyearwith400studentsand12schools.
- InMayQuickmitraisedatotalof$250k(viaacombinationofcontestwinnings,
Teamprogressw/evidence
convertibledebtandgrants)andusedthesefundstohiretwoproductsupportstaffinCostaRica(whoacceleratedcustomerdeployments)andhiredtwo engineerswithanadministrator/trainer(whoquicklyon-boardedschoolsand trainednewcustomeradministrators).Teamdevelopmentsreducedouraveragecustomerconversiontimetorevenuefrom8weeksto2weeksandaccelerated ourtop-linerevenuegrowth.
Ourpriorityfornextyearisbringinginatleast12newschoolcustomersthrough industrychannelpartnerships(e.g.Montessori)inordertoreach$100kinmonthly revenuesbySeptember2018.
Thanksforyourcontinuedinvolvement!JoshuaDeFordtheQuickmitTeam