In this episode we dive into annual planning. All companies need annual plans, but most companies don't know how to build great plans. What does a great plan look like? How do you make sure your team believes in your plan? We are here to help! In this episode we answer questions including:

• What should be part of an annual plan?
• How do I get my team bought into my plan?
• How aggressive should our annual goals be?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: What should be part of an annual plan?
Revenue is the centerpiece of startup annual planning. Goals that directly tie to revenue include: Distribution, Engagement, and Churn.

Other goals that correspond to revenue include:
- Product milestones, particularly those that correspond to features customers want.
- Launch dates.
- Runway and budget.
- Hiring.

Most importantly – all these lower level goals should clearly impact the higher level goals like revenue – so don’t agree on a launch date for a new feature if you do not also expect it to drive a meaningful increase in revenue.

Before you start your annual planning, make sure to align your goals with the reality facing your startup.
- For a pre-revenue startup: the goal is to start growing.
- For a startup that has validated demand: the goal is to accelerate growth.
- For a startup that recognizes that something critical is not working: the goal is to validate that next major hypothesis.

Q2: How do I get my team bought into my plan?
Ambitious goals require better performance across multiple teams. You need them to work together instead of pointing fingers.

Start with an objective evaluation of your metrics. How’s your pipeline? How are your conversions? Anything that is not performing well enough needs to improve, regardless of function.

This is where great communication and leadership ability really shines. An ambitious goal requires that you convince others to do great work. Telling people to do the work is easy. However, motivating people to want to do the work is a different story entirely. You need to galvanize all teams around a big goal.

Consider different ways to deliver your motivating message. For example, if both teams need to improve performance in order to achieve your goal (which is likely), then craft a plan that focuses on ambitious targets where you are going to “test assumptions” about ways you can unlock even greater performance. Testing an assumption can unify folks around a common goal instead of pointing fingers.

Q3: How aggressive should our annual goals be?
Investors invest in growth. 3x growth is an accurate benchmark for what investors expect for a startup. However, the business needs to grow on its own; you can’t always push it. If that growth is not possible, you might just not be a venture-backable company. Depending on your industry, you might have different goals. Talk to your investors!

As an alternative, set a realistic goal: get profitable.
- Cut costs.
- Raise prices.
- Focus on your most engaged customers.

That way, you don’t need to raise or at least you won’t need to raise urgently.

In this episode we dive into competitive advantages. Everyone knows they need them, but what are they? How can you have competitive advantages when you are just starting out? What happens if you lose them? We are here to help! In this episode we answer questions including:

• What competitive advantages can you have when you first start?
• What happens if we lose our competitive advantage?
• How can we turn one advantage into many?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: What competitive advantages can you have when you first start?
Competitive advantages evolve over time. However, some may appear on day 1. For example, a founder with deep technical expertise can offer a unique product. Furthermore, a founder with an established brand can bring an existing audience to sell to. Having an existing distribution channel – and brand name early customers to provide social proof – helps fortify an early distribution advantage.

While these advantages are helpful, the key is to continuously understand your customers and validate their needs.

Q2: What happens if we lose our competitive advantage?
Advantages are often short-lived, especially as your competition learns from you and copies your advantage.

A competitive advantage offers a head start, but the goal is to transform that head start into ongoing customer engagement and product development that solve your customers' problems and exceeds their expectations. Thus, an enduring advantage comes from constantly "talking to users" and building products they love.

Building a talented and committed team is also key. If you can keep talented folks working at your company longer than the competition, that is an advantage.

Q3: How can we turn one advantage into many?
Your product being the "best" is rarely enough. Founders must stay tuned into their customers' needs while understanding why prospects choose the competition. If people are buying solutions to address their problems, that's already good news! Now you need to understand how to assure that customers consider your startup during the buying decision.

Test new approaches to better communicate the value that your product provides prospective customers. At the same time, complete "postmortems" with lost prospects to understand why they chose your competitor.

The more time you spend talking to customers (prospective buyers, existing buyers, and those that you lost to the competition), the faster you can unlock new advantages.

In this episode we dive into raising extensions and bridge rounds. Many companies are looking to these as ways to extend their runway, but they can be complicated. How do you go about raising these kinds of rounds? We are here to help! In this episode we answer questions including:

• What is the difference between an Extension and a Bridge round?
• How do I talk to my investors about an Extension?
• What happens if one of my investors won't participate?
• How much should you raise for an Extension?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q0: What is the difference between an Extension and a Bridge round?
Extensions and bridge rounds are the same: you’re raising a smaller amount before the next priced round, instead of an actual priced round. There are 2 reasons to do it: a position of strength or weakness. Weakness is the most common situation and you will see people use the term "bridge round" more often here. The term "extension" sounds better, so you should always use that.

When pursuing this type of round, usually you have not grown as fast you would like and thus need more time to hit the milestone needed for the next round. That time requires a little more money.

When pursuing an extension from a position of strength: you have grown very quickly, your existing investors are desperate to add more to their investment and you only need a relatively small amount to skip the next round completely.

Q1: How do I talk to my investors about an Extension?
You really don’t want this to be the first time they hear the news. Make sure you send regular monthly updates to your investors. This makes a huge difference in investors' willingness to help. Make a basic plan first, with the projections and expected outcomes: the extension should prepare you for a great priced round or liquidity event. Then, contact your friendliest folks first and build momentum.

Investors say "no" via email all the time to founders. It is important to break through the noise. Call your investors or meet them in-person to ask for their participation in the extension.

Q2: What happens if one of my investors won't participate?
This is a very common problem. Close the yeses now. A SAFE is one of the more common funding methods for this type of round. Then, you have to decouple the dependencies. Does this investor have real concerns and obstacles? Does this investor just not have the cash to allocate to the extension?

If you cannot get this investor to participate in the round, start rallying new investors. Consider alternatives such as crowdfunding, too.

Q3: How much should you raise for an Extension?
What's your next milestone? Agree on that first. Then: how much cash do you need to reach your next milestone?

Aiming for 12+ months of runway is not a bad way to frame it, but milestones are more important. Is there a critical revenue milestone that you are approaching? Is there a key growth milestone that this extension can help you achieve? Investors want their cash to be fuel for reaching major milestones. Identify the right milestone, and map out how much cash you need to reach it. With that number in hand, remember that you almost always need more funding than you think to reach a given milestone.