Three months to prove it: what we look for when the numbers are early

Three months is not long enough to finish the business you build. It is long enough to know whether it is being built. Revenue at month three is usually small and often nothing, because the fees that will arrive have not yet cleared their clawback periods. So a backer does not read revenue. A backer looks at effort, honesty and learning, and at whether the early numbers describe a slow start or a wrong bet. This article says what that looks like from the other side of the table, and what happens if it is not working.

Effort, measured in things that can be counted

Effort is not hours. It is approaches made, conversations had, first meetings held with the right type of buyer, and proposals sent. These were in your one-page plan as weekly numbers. By month three there are twelve weeks of actuals to set against them.

The first thing a backer looks for is whether the activity happened. Not whether it worked, yet. Whether it happened. A desk that made the approaches and held the meetings, and has nothing signed, has a problem worth solving. A desk that did not make the approaches has a problem a backer cannot solve.

The second thing is whether effort went where the plan said it would. If the first target type was supposed to get most of the quarter and the third type got it instead, that is either a good reason or a bad sign, and you should know which before anyone asks.

Honesty, especially about bad weeks

Every desk has bad weeks. The question is what the weekly report said about them. A report that shows a week of nothing is worth more than one that fills the week with activity that did not quite happen.

A backer will check, not out of suspicion but because the whole deal depends on trusting the numbers. The monthly allowance is paid on trust. The profit share is calculated from numbers you report. The shareholding at $40,000 of total profit is a milestone measured from your books. If any of those numbers were dressed up, the deal ends, however good the desk might have been.

Honesty also means saying early when you think the plan is wrong. A partner who says in week six that the pricing is not landing is doing the job. One who waits to be asked in week twelve is not.

Learning, shown by what changed

The third thing a backer reads is the difference between the plan in week one and the plan in week twelve. If they are identical, either everything worked, which is rare, or nothing was learned.

Learning shows up as specific changes with reasons. The sentence was tightened because buyers kept asking the same question. The second target type was moved up because it answered faster. The proposal was shortened because the long one was losing. Each change should have a date, a reason and an early result. That is what a real track record looks like at three months, before the money arrives: a list of things tried, kept or dropped, in the order they happened.

A slow start or a wrong bet

These look the same on the revenue line and different everywhere else.

A slow start is a desk where the activity is happening, the meetings are with the right people, the conversations are moving and the only thing missing is time. Conversion rates are near what the plan assumed. The first proposals are out and some have come back with questions, which means they are being read. The clawback periods on the first fees have not passed, so nothing has been paid out, but the pipeline is real and can be shown. A slow start gets more time, usually without much discussion.

A wrong bet is a desk where the activity is happening and nothing is moving. Meetings with the chosen buyer are hard to get. Those that happen do not lead to proposals. The sentence does not land, or lands with people who have no budget. Rates are far from the plan and not improving. A wrong bet is not a failing of effort or character. It is information, and it means the plan, not the operator, must change.

The worst case is neither of these. It is a desk where the activity did not happen. That is not a slow start or a wrong bet. It is a decision, already made, by the person who did not make the calls.

How a reset conversation goes

A reset conversation happens when the numbers at three months say wrong bet. It is not a performance review. It is two partners looking at twelve weeks of actuals and deciding what to change.

It starts with the numbers, in plain terms, with no softening on either side. Then the question: which part of the plan was wrong. The target type, the buyer, the offer, the price, the channel. Usually it is one of these, and usually the partner already knows which. Then a new one-page plan is written for another defined period, with new weekly numbers, and both sides agree it.

Sometimes the reset conversation ends the other way. The partner has learned that they do not want to run a desk, or the backer has concluded that this market will not pay for this offer. That is said directly, and once. If it stops, the partner keeps every monthly allowance payment and every profit share payment they have received, and owes the backer nothing. The company, the tools and the back office were the backer’s cost and remain the backer’s. There is no debt and nothing to repay.

We say no to most things and quickly. We also stop things cleanly when they are not working, because dragging a wrong bet into month nine serves nobody.

The short version

• Effort is counted in approaches, conversations, meetings and proposals, against your plan.
• Report bad weeks as bad weeks. The deal runs on numbers that can be trusted.
• Show what changed between week one and week twelve, and why.
• A slow start has real activity and real conversations, and gets more time.
• A wrong bet has real activity and nothing moving, and gets a new plan.
• A desk with no activity is neither, and is the one outcome a backer cannot help with.
• If it stops, you keep what you were paid and owe nothing.