How Summer Health Uses Basis for Planning and Analytics

Forecasting and watching runway

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Summer Health is a seed stage telehealth startup that helps new parents text with pediatricians to get answers any time they have a question.  

Companies at the seed stage need to use forecasting to budget out product initiatives and to manage cash runway to make sure that they have enough funds to achieve growth milestones, usually revenue metrics and product development progress, that will allow them to raise the next round of funding. 

Matthew Woo, co-founder and Head of Product explains, “You need to forecast to make sure you give yourself enough time to go through the iterations as you figure out the business. You also need to watch runway closely as cash is critical.”

Most seed stage startups use an accounting firm for bookkeeping and tax preparation, but financial planning duties often fall on a fractional CFO or one of the co-founders. In this case it was Matthew. 

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Overcoming Excel limitations

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Matthew initially created models in Excel, but he explained that the spreadsheets became “too tedious to maintain” and he moved to an FP&A tool offered by their spend management platform which introduced a whole new set of problems. 

The platform was completely self-serve which meant that Matthew had to teach himself how to use it, but he never felt comfortable using the tool: “I spent tens of hours just studying the documentation learning how to write formulas and manage models but I still never felt like I had actually mastered it.”  

The new tool had unreliable data integrations that would often break and force him to redo hours of work each time they failed: “The connections would stop working and their fix would be to unlink and relink our financial accounts which would wipe out all the previous history and all of the categories we had set in the past.” 

The company needed a more reliable tool and Basis came out as Matthew’s top choice. He explains, “Basis won because we wanted a tool that can pull in live transactions, something as easy to use and flexible as Google Sheets, but more robust so we don’t have to worry about accidentally breaking cells or wiping out the entire mapping history.”

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Working with Basis

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Getting Basis up and running was a simple process according to Matthew: “Our customer success manager asked me about the business to get the full picture and nail down assumptions, growth rates, and drivers. She built a base operating model and also pointed out areas where we needed categorizations in QuickBooks.” 

“I spent another one or two hours trying things out and reading through the knowledge base and that’s all it took for me to feel completely comfortable with the platform.”

Matthew uncovered another benefit during the Basis implementation process when he discovered that he could connect to multiple GL accounts and automate the consolidation process for significant cost savings: “Our accounting service was charging us an extra $1,000 a month for consolidation, so that saves us thousands of dollars in accounting costs each year.” 

He currently has two models for Summer Health, “one is just more of historical projection forward, and the other is a driver-based growth model.”

The growth model includes revenue drivers such as advertising spend, cost of acquisition (CAC), and expense drivers such as the cost of physician resources to project how our COGS will increase as we add more customers.

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Scenario planning

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Matthew created a base case, best case, and a worst case scenario for planning. “When you have a rolling forecast, you can see how you’re tracking against each scenario month by month or quarter by quarter. Are you missing or hitting certain milestones? Having that information lets you do more course corrections, faster.” 

Basis automatically updates the actuals and performs the variance analysis for each metric which saves Matthew hours each month on maintenance and upkeep. 

Instead of updating numbers, he can jump straight to analysis. He takes a closer look any time a projection versus actual is out of bounds by a significant amount: “Is this a permanent trend or just a temporary spike? If it's a permanent trend then we'll have to take that into consideration and see how that affects our trajectory.”

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Dashboards and reporting

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Summer Health uses Basis dashboards to automatically collect important metrics and present them in an easily digestible format.

"Our customer success manager created our first dashboard which was super helpful,” explains Matthew. “Then I created another one where I could see ARR over time, and that was pretty simple. I just dragged in the metric and selected the chart type."

Matthew particularly appreciates being able to pull in data from different sources and even combining data into custom metrics. “What I really like about the dashboard is that you can bring in the drivers, the items that drive impact in terms of revenue and costs. You can pick any metric from the worksheets, even ones that you construct using formulas, and drop it in.” 

He has also saved hours of preparation time that he used to spend gathering metrics for board meetings: “We have a board meeting every quarter. We take a screenshot of cash in the bank, the ARR graph, cash runway, and other KPIs in Basis. Then we just put that into the deck as our ‘State of Business Financials.’”

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Sharing and collaboration

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Switching to Basis has also allowed Matthew to bring more people into the planning process for collaboration and share more data with the team. 

He wasn’t able to expose the model to employees with his prior tool because it didn’t have granular permissions: “You either had access to everything or nothing. We're really transparent in most things, but sensitive data like salary information should stay private.”

Basis lets us set view and access permissions for every model, dashboard, or report.

"Now I can give my operations person, who needs to model a lot of costs, access to parts of the model in Basis, and give him the ability to set up dashboards and track actuals. It's a really great way to collaborate with your own team members to help deliver the most accurate and comprehensive models."

The platform has become an indispensable tool for Summer Health, according to Matt: “Basis is essential for keeping our business on track. It makes it easy to plan out different scenarios, see how we’re doing, and then be able to course correct quickly.”