P’unk Avenue

Alex Gilbert

As a co-founder of P'unk Ave, Alex (a proud South Philadelphian) has both overseen and contributed to the development of our biggest projects.

Published

Thu, Oct 16 2014

    • Heart monitor
P’unk Avenue is a cash flow business. Money comes in as we complete projects for our clients, and goes out in the form of payroll, health insurance, rent, supplies, and services. We are able to keep our doors open each month as long as the amount of billable work completed by the team exceeds the amount of our overall expenses.
 
So how do we stay on track with completing that billable work? We have written before on our autonomous team structure and how we rely on the teams to be responsible for managing their own projects. Over the years we’ve evolved how the teams work, and one critical thing we’ve learned is that we can’t make this autonomous model financially sustainable without equipping everyone on the team with the information to make good decisions. In order to do that, we have evolved a few key rituals around sharing financial information.
 

Every quarter: looking at the big picture

When we hold our quarterly State of P’unk meetings, we set aside time to focus on the big picture financials. As part of this, everyone on the team sits down to look closely at the answers to the following questions:
  • How are we doing at bringing new projects into P’unk Ave?
  • How healthy is our pipeline of potential projects?
  • What are our monthly gross revenues from active projects?
  • How accurate is our ability to project these monthly gross revenues?
  • How’s our average monthly revenue compared to average monthly expenses?
  • How much project work are we able to invoice each month?
  • Based on our current (and projected) expenses, how much do we need to invoice each month to remain successful?
  • If you add everything up, what’s our projected cash flow based on all active projects?
We have been evolving the metrics that we track and present to the team, always trying to keep the right balance of detail and accessibility. We use QuickBooks Online to manage invoicing and track financials, a massive Google Docs spreadsheet that helps us estimate revenues for active and upcoming projects, and Numbers and Keynote to pull everything together and make the data digestible and clear.
 
The answers to these questions serve to paint a picture of the coming months and help us set and communicate financial goals for the teams to work towards.
 

Every month: sharing the pulse of the cash flow

The majority of the projects that we work on at P’unk Ave are for a flat fee. In these cases, we get paid when we reach certain milestones in the process: receiving design approval for a set of templates, training a client team on the CMS, launching a website, etc. First, our teams set the schedules for the projects they are responsible for. Then, we build our revenue projections for the overall company by mapping all project milestones and their associated fees out over time. When things go as planned, the total projected fees for the work we all expect to complete in a given month should meet or exceed our total monthly expenses.
 
We know things are really firing on all cylinders when the total amount that we invoice in a month actually meets what we had projected for it. To stay on track with that, we started sending out a monthly message to the team that summarizes what we are expecting to complete that month and shares the financial implications: “Here are the milestones we are targeting for this month. Here is the total amount we hope to invoice by completing these milestones.” This ritual is an opportunity for the teams to strengthen their commitment to the work they are responsible for and helps each person understand how his or her individual productivity directly impacts the cash flow of the company.
 

What do we get out of it?

Why go to such trouble to design a system around sharing this information with the entire company? One of the core values of P’unk Avenue is autonomy. We believe that in the right environment, and equipped with the right information, it is the individuals on the teams that have the best ability to make important decisions about their projects and their own time management. These decisions include: 
  • How hard should we nudge a client to do a final review so we can launch their project?
  • Do we need to consider rescheduling an internal design review so that we can stay focused on a project that is near the finish line?
  • Should we pursue this project due to its alignment with our values, even though we know it’s not a very large budget?
  • Should we reach out to another team at P’unk to help us get over a final hump to reaching a critical milestone?
  • What should I be focusing my energy on today?
Sharing the financial pulse of P’unk Avenue with our team members makes it possible for them to have this autonomy without losing sight of the bottom line.
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