I see this pattern every single financial planning season. I’m seeing it right now. And honestly, it drives me absolutely crazy.
A founder shows me their plan for next year. It looks reasonable at first glance. Growth targets seem achievable, albeit a bit aggressive. Hiring plan makes sense, more or less. Again, a little aggressive, but makes sense. But then I look closer at the quarterly breakout, and there it is, like clockwork:
Q1: $500K
Q2: $600K
Q3: $900K
Q4: $1.5M
Or some variation of this “hockey stick in Q4” nonsense.
And when I ask about the cash plan? “Well, Jason, we’ll be at about $2m in the bank by September, but then the Q4 revenue hits and we’ll finish the year with $1.5m and 24 months of runway.”
This isn’t a plan. This is hope and prayer wrapped in a Google Sheet.
I see founders do this all the time, but more and more often these days, I see VPs of Ops and Finance build these plans to make founders happy. And the founders don’t test them. They just present it and hope the Prayer Plan works.
It almost never does on cash at least. They almost always overspend.
The Fundamental Problem: You’re Planning Backwards
Here’s what’s actually happening in most startup financial models right now:
You’re building a C-10 plan for your revenue (maybe you’ll hit it if everything goes perfectly), funding it with a C-90 expectation on cash (assuming the high-end revenue actually materializes), and then acting surprised when you run out of money in October.
That’s completely backwards. And it’s going to kill your company.
The framework I’ve written about for years is C-90, C-60, and C-10 planning, where C stands for “Confidence” – the odds you think you can hit each plan. But most founders are applying this completely wrong when it comes to the intersection of revenue planning and cash management.
More on how to build those simple plans here. You don’t even need a CFO or CFA to do it:
What You Should Actually Be Doing
Here’s the right way to think about this, for our core plan for the coming year and/or next 12 months:
Build a C-60 Plan for Top-Line Revenue
Your base operating plan – the one you use for goals, hiring, and running the business – should be a C-60 plan. A plan you have 60% confidence you can hit. More than 60%, and you’re not pushing hard enough. Less than 60%, and you’re setting everyone up for failure and disappointment. And roughly, roughly, that C60 plan should tie to the growth you’ve seen the past 3-4 months. The last 4 months average.
But here’s the critical part that everyone misses: this C-60 plan cannot have magical Q4 growth that’s 3x your Q1-Q3 run rate. Not unless you are already seeing that acceleration.
If you’ve averaged $500K/month in new bookings for the first nine months, your Q4 plan cannot be $1.5M just because “deals always close in Q4” or “the big enterprise deals will land.” Maybe they will. But that’s not a C-60 plan – that’s a hope-and-prayer plan masquerading as financial planning.
If you are seeing 10% month-over-month growth the past 4 months, and it seems stable, then by all means roll that forward 12 months into your base plan for next year. But if you’ve grown 5% a month the past 5 months, you simply cannot model that into your plan for next year. You can hope. You can create a stretch plan and pay big bonuses if you hit it. But you can’t model it as your operating plan, and you especially can’t model it for your cash burn.
A real C-60 plan is linear-ish. It accounts for seasonality you’ve actually seen in your business (not seasonality you’ve heard about). It reflects the actual sales capacity you’re building, the actual pipeline you can see, and the actual close rates you’ve experienced.
Build a C-90 Plan for Cash
This is where founders completely flip the script, and it’s costing them their companies.
Your cash planning should be conservative. Way more conservative than your revenue planning.
Why? Because running out of cash is binary. You either have cash or you don’t. You can miss your revenue target by 20% and live to fight another day. You cannot miss your cash planning by 20% – you’re dead.
So here’s what you need to do:
- Take your C-60 revenue plan and cut it by 20%. That’s your C-90 revenue scenario – the pessimistic case where things don’t go as well as hoped.
- Keep all your costs the same. Don’t magically reduce headcount or cut marketing spend in your model. Keep the burn where it is.
- Now look at your Zero Cash Date under that scenario. That date needs to be at minimum 16 months out, and frankly I want to see 18-24 months.
If your C-90 plan – where revenue comes in 20% lower but expenses stay the same – doesn’t give you sufficient runway, you need to either cut costs now or raise more money.
You’re saying “I’m only 10-20% confident that cash will run this low, because I’m confident revenue won’t miss by this much.” But you’re planning for it anyway, because the downside of being wrong is catastrophic.
The Q4 / 2H Revenue Trap
Let me be even more specific about the Q4 planning problem, because this is where I see the most egregious hope-and-prayer planning.
Everyone wants to believe Q4 is magical. And sure, there can be some end-of-year budget flush. Some deals do accelerate. But here’s what actually happens:
- Your Q4 hires don’t produce in Q4. That VP of Sales you’re planning to bring on soon? They’re not closing deals in Q4. They’re ramping. Their deals close in Q2 next year.
- Enterprise deals slip. That “definitely closing in November” deal? It’s closing in February. After the holidays. After their new fiscal year starts. After the new VP reviews all pending deals.
- Your team is exhausted. You’ve been grinding all year. Q4 has holidays. People take time off. Customers go dark in December.
Yet somehow, your plan shows Q4 bookings that are 2-3x your Q1-Q3 average. How? Usually the answer is: “Well, we’ll have more reps fully ramped by then.” Maybe. But that’s not a C-60 plan.
What a Proper Plan Actually Looks Like
Here’s what I want to see when a founder shows me their plan:
Revenue (C-60 Base Plan):
- Q1: $500K
- Q2: $600K
- Q3: $700K
- Q4: $850K
Notice how it’s growing, but growing linearly based on the actual ramp of the sales team and realistic pipeline conversion? That’s a real plan.
Revenue (C-90 Downside Plan):
- Q1: $400K
- Q2: $480K
- Q3: $560K
- Q4: $680K
This is your cash planning scenario. Cut each quarter by 20%.
Cash Management:
Now take that C-90 revenue plan, keep all your planned expenses, and calculate your Zero Cash Date. If you don’t like that date – if it’s less than 16 months out – you need to either raise more money now or cut your burn rate today.
Don’t wait until Q3 to “see how Q2 goes” and then decide whether to cut. That’s too late. You’ll be in panic mode, cutting from a position of weakness, and probably cutting muscle instead of fat.
The Real Confidence Matrix
Let me make this crystal clear with a simple matrix:
The Hardest Conversation You Need to Have
I know what you’re thinking. “But Jason, if I show investors a linear plan with no Q4 acceleration, they’ll think we’re not aggressive enough. They want to see the hockey stick.”
First, any investor who’s been around the block has seen a thousand Q4 hockey sticks, and they know 90% of them are fiction. What sophisticated investors actually want to see is that you understand the difference between your base plan (C-60), your stretch plan (C-10), and your conservative cash management plan (C-90).
Second, and more importantly: your primary obligation isn’t to show investors what they want to see. It’s to not run out of money.
If you run out of cash in November because your Q4 didn’t materialize, you don’t get to go back to investors and say “our C-60 plan was actually a C-10 plan in disguise, can we have more money?” You’re dead. The company’s dead. Everyone’s unemployed.
How to Actually Build These Plans
Let me give you the tactical playbook:
Step 1: Build Your C-60 Revenue Plan
Start with an L4M model – just average your growth rate in revenue for the last 4 months and roll those average growth rates forward. Adjust for known changes (new reps ramping, new product launches, etc.) but be honest about timing and impact.
This should feel like a plan you’re slightly more likely to hit than miss. Not comfortable, but achievable.
Step 2: Verify It’s Really C-60
Look at the quarterly breakout. If Q4 is more than 30% higher than Q3, you’re lying to yourself. Either your Q1-Q3 is too low, or your Q4 is too high. Fix it.
Ask yourself: “If I missed this plan, would I be surprised?” If the answer is “no, I wouldn’t be shocked if we came in 20% lower,” then it’s not a C-60 plan. It’s a C-30 plan pretending to be C-60.
Step 3: Build Your C-90 Cash Plan
Take that C-60 revenue plan and cut revenue by 20% across the board. Keep every dollar of expense the same.
Calculate your Zero Cash Date. If it’s less than 16 months out, you have three options:
- Raise more money now (before you need it)
- Cut burn rate now (cut contractors, delay hires, reduce marketing spend)
- Accept that you’re taking on serious risk of running out of cash
There is no option 4 where you “hope Q4 is better.” Hope is not a strategy.
Step 4: Build Your C-10 Stretch Plan
Now take your C-60 plan and increase revenue by about 20%. This becomes your stretch plan, the one you pay big bonuses for hitting. But nobody’s base compensation or job security should depend on hitting the C-10 plan.
This is the plan where Q4 does have that acceleration. Where the enterprise deals do close early. Where the new product does gain immediate traction.
But you’re not banking on it. You’re hoping for it, working toward it, and rewarding the hell out of the team if they pull it off.
The Monthly Cadence That Keeps You Honest
Here’s the discipline that separates the companies that make it from the ones that don’t:
Every month, update your Zero Cash Date.
Not your revenue forecast. Not your hiring plan. Your Zero Cash Date.
Take your actual revenue from last month. Your actual expenses. Your actual cash balance. And project forward with realistic (C-60-ish) growth assumptions.
If your Zero Cash Date is moving closer instead of further away, sound the alarm immediately. Don’t wait for Q2 to end. Don’t wait to see if that big deal closes. Sound the alarm now and take action.
Action means:
- Cut discretionary spending immediately
- Delay non-critical hires
- Start fundraising conversations (which take 4-6 months minimum)
- Have hard conversations with the team about the business
The founders who survive are the ones who take action when their Zero Cash Date moves from 16 months to 14 months. The founders who die are the ones who wait until it moves from 6 months to 4 months.
Why This Is Even More Critical Now
Look, I’ve been in SaaS for almost 20 years now. I’ve seen multiple downturns, multiple “funding winters,” multiple “return to basics” moments.
This moment – late 2025 – is different in one critical way: capital is available, but it’s expensive and it comes with strings.
You can probably still raise if you need to. But you’re going to give up way more of your company than you would have two years ago. You’re going to face way more scrutiny. You’re going to have to hit way higher bars on efficiency metrics.
Which means the cost of poor cash planning isn’t just “we’ll raise a bridge round.” The cost is massive dilution or, more likely, a cram-down round that destroys your cap table and your employees’ equity.
So the C-20 cash planning I’m advocating for isn’t paranoia. It’s prudence in an environment where running out of cash is more expensive than ever before.
The Bottom Line
Stop building financial plans on hope and prayer.
Build a C-60 plan for revenue that’s actually realistic, that doesn’t magically hockey-stick in Q4, and that you’d be willing to bet your company on (because you are).
Build a C-10 or C-20 plan for cash that assumes revenue disappoints by 20% but burn stays the same, and make damn sure your Zero Cash Date is 16+ months out under that scenario.
And if you don’t like what you see when you build that C-20 cash plan? Cut your burn or raise more money today. Not in Q3. Not after you “see how Q2 goes.” Today.
Because here’s the thing that every founder learns eventually, either the easy way or the hard way:
Revenue targets are negotiable. You can miss them and live to fight another day.
Running out of cash is non-negotiable. You either make payroll or you don’t. You either have runway or you don’t.
Hope and prayer might work for your stretch plan. But for your cash plan? You need cold, hard, conservative math. And you need it today.
Want to see how your plan stacks up? Take your current financial model, cut revenue by 20%, keep expenses the same, and calculate your Zero Cash Date under that scenario. That number – not your optimistic revenue forecast – is what’s going to determine whether your company survives to next planning cycle.
