How we'll create a $100m business in Odoo ecosystem

#7 - Our strategy and draft business development plan.

Mar 27, 2023

Welcome to issue #7 of Odoo Trailblazer, our journey to become the #1 Odoo partner.

I plan to build a $100m business, which I’ll explain soon.

But first, I’m feeling good.

I love to run around every time I visit new places. Last week I was in Mt Fuji (Japan) and then visited my in-law in Indonesia. So I run around lake Kawaguchi and Surakarta, also called Solo.

Before we begin, the following information may interest you:

1) Read a previous issue:

2) Subscribe:

3) Recommend your management team to implement Odoo with us: drop me a message (LinkedIn, gaspard.dessy@portcities.net) or visit our website.

Agenda:

Introduction - why this plan?
Revenue forecast
1. by region
2. by category
3. by solution
Capabilities analysis
1. Delivery team
2. Sales Efforts
3. Innovation Capability
Conclusion

1. Introduction - why this plan?

In the previous issues, I explained how we reorganized our business by region and how we set the targets for our teams.

We did it, and my colleagues challenged me:

"Gaspard, what is your vision?"
"Do you want to invest in developing [this country]?"
"Shall we make high profits or prioritize business growth?"

These questions matter as they impact hiring and investment decisions and how to set the right objectives for each team member. To be the #1 Odoo partner is not enough; we need a more precise strategic plan. At least to answer more precisely, “where are we going and how?”

I previously defined one of the key criteria to be #1 as the yearly revenue. So I started the strategic planning process by defining an ambitious goal: $100m in annual revenue. And then, I could start drafting a strategic plan to achieve it.

We first break down this revenue per region by category and solution. Then, we use it to estimate what sales, delivery, and innovation capabilities we need to build.

2. Revenue forecast

2a. Revenue forecast by region

We plan per region to know where to invest in developing the sales and delivery teams.

My key proposals:

Don't open new offices
Invest more in strategic countries

How do we decide which countries are strategic for us?

We analyze the following criteria to estimate how fast we could grow:

A) How big is the market? nominal GDP
B) Is Odoo well known? # of Odoo partners
C) DX opportunity? Our assessment of the current state of enterprise software and space for Odoo to grow.
D) How high is the sales price adjusted to other costs?
E) Our current business size, as we expect a lower growth % in larger businesses
F) Easy market for us: language, culture, location, etc.

We summarize our results in the table below (each country represents our branches):

The higher the number, the higher the potential % growth

Based on this analysis and our current revenue & sales, we planned the monthly forecast end of the year and then for each following year.

All figures are in thousands (000's) of US dollars

We tried a realistic scenario to reach $100m in annual revenue or $8.3m monthly.

2b. Revenue forecast by category

We plan per type of category and solution to know what team we'll need to develop.

My key proposals:

Keep our focus on implementation
Grow our other Odoo-related service

We tried to break down our final yearly revenue of $100m by categories to analyze how to develop the delivery team & capabilities.

Consulting: digital transformation roadmap, ROI analysis, business analysis, ERP strategy - $10m
Implementation: end-to-end implementation services of IT solutions - $50m
Support & Maintenance: helpdesk, functional & technical support, and maintenance of the software - $15m
Cloud, Licenses & commission - $15m
Outsourcing: act as a subcontractor for other Odoo partners and consulting firms - $10m

2c. Revenue forecast by solution

My key proposals:

Don't start implementing other ERP; keep 100% focus on Odoo
Leverage our expertise in the midmarket and corporate, then scale up
Keep innovating for the Odoo ecosystem.

We expect that the $100m annual revenue in 7+ years will come from advising on, implementing, maintaining, and reselling the following solutions:

Integrated business software: Odoo - $65m
Cloud & Infrastructure: GCP, AWS, Microsoft Azure, Digital Ocean..., - $10m
Data solutions & BI: $20m
Mobile app & custom: $5m

3. Capabilities analysis

3a. Delivery team

We can combine the data from the three previous analyses to compute the delivery team we need.

For each revenue category, we know by experience how much percentage our local office and Center of Excellence will do, respectively.

We can deduct that the revenue from our local consultants will be $44.5m and $40.5m by our Center of Excellence, or 44% and 40% of our revenue, respectively.

Based on the revenue per country, we could estimate our average revenue per consultant in 8 years and see how many consultants are needed for our local teams and from our Centers of Excellence.

Then if we combine it with the breakdown by solution we know, we can plan the team to develop by expertise.

Analysis & risks

Team development: obviously, the challenge isn't only to hire this team but also to plan the training and quality control systems to ensure we keep improving both in size and quality.
Significant increase in revenue per staff: we assume a high increase in revenue per staff compared to today, but three reasons could explain it:
1. Price increase: (1) inflation, (2) increase of salary and sales rates in the Odoo ecosystems, and (3) higher salary and sales price raise for offshore consultants (because the gap between rich and developing countries is getting smaller each year)
2. We get more mature as a business and could afford to increase the price.
3. We manage our business better and increase our billable ratio.

3b. Sales Efforts

Our forecast per region can help us to estimate the sales & marketing efforts to allocate in each country but also need to segment based on what services and solutions we sell.

I’ll prepare a few hypotheses to assess what sales & marketing capabilities we need to develop.

Hypotheses:

Rely on existing clients to generate 50% of projects. Based on historical data of our mature branches, we can generate 50% of consulting engagements from existing clients.
Capability to generate 30m in yearly 'NEW SALES' through consulting and implementations. We need the sales & marketing capabilities to generate $ 60m of consulting and implementation revenue, and half should come from new clients.
Capability to generate $ 5m in yearly “NEW SALES” through outsourcing. Outsourcing is the services and expertise from our Centers of Excellence that we will sell to other Odoo partners. It has a different sales approach and market, so we must create a dedicated sales team.
Capability to generate $ 12m in yearly “NEW SALES” through cloud, software & support a year. This is, by nature, a recurring revenue, so we assume that 80% of the previous year's clients will stay. We expect this revenue stream to grow almost 100% annually, so we still need to find 60% or $ 18m of new sales annually. As these are often a byproduct of consulting and implementation projects, we assume that the $ 30m of new customer sales will generate $ 6m of new recurring revenue.

I use “NEW SALES” to speak about sales to newly acquired clients.

The next step is to prepare a plan to grow our sales & marketing capabilities.

4. Conclusion

I have outlined the initial phase of our strategy to establish a $100 million enterprise, but this is merely the beginning.

Limitations & next steps:

I’ll need to work with the teams to go into the detail and challenge all aspects.
Plan innovations to stay competitive and efficient: keep improving our data solutions, corporate expertise, etc.
Prepare a detailed sales, operations and finance plan to forecast how we can maintain this growth while generating profits and cash.
Create a financing plan if external money is necessary.
Finally, the goal is not to make a final strategic plan but a roadmap to follow that we will review time and time and change when needed.

My final thoughts:

Grow as-is: growing our current organization quickly to $ 100m seems realistic on paper without developing new markets or services.
Simplify & execute well: developing the delivery and sales capabilities will be challenging. To succeed, we must keep our business simple and execute perfectly.
Efficiency will be key: growing fast costs money, so we must spend wisely and optimize performance. Even if we want to raise external money, we must demonstrate a strong performance to potential investors or lenders.

If you've any recommendations for improving this newsletter, feel free to leave a comment or contact me directly.

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