Thank God We Just Missed Our Revenue Projection

"If you are lucky your high-growth software company will one day miss its revenue projections by a long shot." After you have read this statement.......you will likely conclude that the author is crazy...and you might be right...BUT...I have seen supporting evidence for this sentiment many times over....let me explain.


After a period of sustained revenue growth...all the investors are smiling..." we are going to be rich again" they say. Near the end of the fiscal year...we clamour for next year's financial forecast....how much bigger is this thing going to be and how much richer might I become? The forecast is then produced...it is presented to the board and is spectacular...it makes perfect sense...in fact it even looks conservative. At this point, we are very smart.



The something unexpected happens. The first quarter comes in a little under budget and the second quarter comes in way under budget. Deals seems to get delayed and smaller...prospects are asking a lot more questions...and getting calls returned by them seems to take forever. The prospects then let you know that they are looking at several alternatives and are trying to figure out if yours is right for them. This all sounds so new for a company that seemed to have such clear sailing for the past two years.

Investors become concerned. A mild panic surfaces in the Board meetings..."What is going on here?" However...what looks like trouble is really a clue that investors are entering the playing field they dream of.

What has happened is, in a word, "competition.." Once the market becomes confused it is generally a sign that competition is increasing and thus that others see market potential for a technical solution. It means that this subject is becoming important to a large number of people. The good news is that if you have been in the market for a couple of years before this heating process occurs...then you likely have a great leg up on this competition from a competency perspective and your job then is to show the customer why his needs will eventually require the maturity of your solution. You just have to have enough antacid medication to endure the revenue speed bump for which you didn't predict the timing.

If the revenue speed bump doesn't happen...it is likely, in my experience, that your company will not become a big thing...so....bless the speed bump and don't curse it...