In this article Mark describes what 2020 looked like for him and his business, quarter by quarter. He talks about what helped them survive their first quarter and what helped them thrive from their second quarter onwards. Keep reading to learn the secrets to their success.

Living with lockdown

In my previous article I took you back to the beginning of 2020 - a time most of us would prefer to forget. In those few days between February and March we had moved every one of our 700+ people to remote working. We had also made plans with all of our clients to help them weather the crisis. This included agreeing to a number of extraordinary payment terms that we knew would seriously affect our first quarter. But we’d decided to play a long game.

As we rolled through the second quarter of 2020, I had no idea what might happen next. Would clients settle into a routine and begin to invest again or would they remain defensive?

Over this time there were a couple of things that helped me sleep at night. We’d transitioned to a model where we could respond to changes quickly as a team. This was crucial in the world we’d found ourselves in. Nobody knew what might happen in the short term and clients were being very reactive because of this. I also felt good that everybody on the team seemed to viscerally understand that we had to try everything we could to keep the business on track. The drive and passion that accompanied servicing our clients and ensuring work was coming in was palpable. Everybody knew this was make or break.

Clients come back

About half way through the second quarter, good news started to infiltrate the relentless challenges. Many of the clients we had given concessions to were coming back and we began rebuilding teams and starting new teams. Several of our key clients also made good on the promise to grow our portion of their portfolio (at the expense of some of our direct competitors). These two things, and all of the extra work our leadership team put in, actually led us to grow our top line revenue by $50k from Q1 to Q2. This was not the result I had predicted as we went through the quarter and all of its challenges. But as we’d hoped, the concessions we had made along the way showed up in the financials – we had a gross margin for the quarter of 16%. Ideally this would run between 30% and 40% but given the commercial landscape, it could’ve been a lot worse.

By the time we got into the third quarter things had changed dramatically, this time for the better. Many companies had decided they needed to raise their investment in customer-facing technology to keep sales going during the pandemic. This fit perfectly with our model. All of the investments we had made put us at the front of the line with clients as they considered where to put their spend.

Just as clients were rebuilding their teams and new clients were signing up for projects, the concessions we’d given on extended payment terms were expiring. All of these things together drove our revenue to about 5% growth from Q2 to Q3. Again, this is not something I would’ve ever predicted as we went through that quarter.

Planning for 2021

As we moved into Q4, we began creating a plan for what 2021 would look like. The process really demonstrated the strength of the general manager-led regional model we had implemented. All of the five regions did a bottom up forecast by talking with each client and working their pipeline of new clients. We asked each region to build two models:

1. a “base” model which they had close to 100% confidence in, and
2. a “stretch” model which held much lower confidence, but was still possible.

When we added up the models, we came up with a company-level model that had a base of 25% growth and a stretch of 40%. Both of these would put us well over $100m in annual revenue. I think of building a plan this way as bracketing a best and worst case. I am a big fan of this approach as I feel it gives you the most information. I’ve found however that boards don’t like to bracket a plan. Be prepared that when you present a plan like this, the board will adopt the stretch plan as the official one (ours did).

That said, the trends that had worked in our favor continued throughout 2021 and we ended up delivering 46% growth over 2020. Don’t tell your board this though. It will just encourage them to raise your plan.

What I learned

Compared to my previous articles in this series, many covering each year in Nexient’s growth, I’ve sped through 2020. But I think this inherently exemplifies that year anyway. It was a year of confusion, reaction and survival. For most it went by in a blur. The fact that we exited 2020 on top is testament to the previous years' groundwork, the hard work and determination of our teams, the concessions we made for our clients, and a healthy dose of good luck.

Looking back on 2020 this is what I learned:

• Services firms always need to hustle – We had spent a ton of energy building our differentiation and our go-to-market team and these things helped us when the market turned positive, but what really carried us in Q2 was how hard the team pushed. We invested many extra hours talking to clients and prospective clients to see if we could get more billable roles for the team. All great services firms go through periods where they have to hustle to keep the business going in the right direction.
• Playing the long game paid off for us – all of the concessions we had made that led to the 16% gross margin in Q2 paid us back with significantly more business. The business recovered faster than I would’ve ever predicted. We knew we’d have to wait it out for the market to turn and were lucky how fast it did. All the concessions we’d made put us in the perfect position to capitalize on that turn.
• Our GM model was key to predicting growth as we scaled – putting together the plan for 2021 was much easier for me than any previous plan, even though we had significantly larger revenue and a bigger client base (we were now around 50 clients). Having five seasoned leaders each take part of the problem and own it made building the combined plan so much easier.

‍