keep. it. simple.
If you’re overwhelmed, confused or just plain terrified of delving into your startup’s finances, Simple Startup is here to help.
(money in, money out)
Don’t let the above term worry you. Financial management is no more complicated than your childhood piggy bank i.e. if the piggy bank is empty you can’t buy your comics or candy unless you are able to persuade the convenience store manager you can pay him next week or you can persuade your parents to give you an advance on your pocket money.
The basics of financial management is therefore making sure your business collects enough cash from its clients to cover all its bills in a given period. We help you gather this information in suitable (and easy to use) systems and then we analyze the health of your company’s short term cashflow so you know what bills you can afford to pay and when.
Business Model Analysis
(the nuts and bolts of your business)
We help you think through your business model, asking you a ton of simple questions so we can answer more complex questions such as:
- How much does it cost to acquire and serve a new customer? (including marketing, your teams’ time to sell to them etc)
- How much does it cost to service that new customer or similarly how much does it cost to produce each product in your product line? (from the admin side to the real cost of your products or services)
- What is the typical lifetime of your customers and how much do you expect to generate from each of them? (Are they one off purchasers? Will they buy from you for a lifetime? How can we make sure they buy more than once?)
This analysis is often referred to as your Unit Level Economics (jargon alert!). Having this information at your fingertips will ensure you truly understand your business which will not only make you feel empowered and alert but will also help you to make better and more informed management decisions.
(gazing into a financial crystal ball)
No, financial modeling isn’t Cindy Crawford covered in dollar bills! Financial modeling is particularly useful when you want to consider the future of your company’s finances and understand how to turn your vision a reality.
Perhaps you’ve been operating on a shoestring budget for a while and are wondering how you can afford expansion. You know you need to raise some money but how much do you need and when do you need it?
Simple Startup works with you to prepare a set of projected financial statements / proformas (that you understand) to determine the answer to these questions. We will work with you to translate your vision into a fully customizable and adjustable (by you!) financial model that shows when you have a cashflow problem and how big that problem is. This in turn allows us to work together to decide how much money you need to raise and when.
(finding that sugar daddy)
Once you know how much money you need and when you need it, the next step is to understand what kind of capital (wonga/cash/monaaay) will be most appropriate to raise. While the interest on a loan (debt) together with set up fees sounds expensive, selling ownership (equity) in your company could come at a considerably higher price in the long run.
If selling equity is preferred, we’ll need to have an understanding of the value of your business to determine what proportion of ownership you need to give up to satisfy your company’s cash needs. In addition, it is crucial to to understand how the terms of the equity investment (option pools, warrants and preferred stock – jargon, jargon, jargon!) continue to dilute your ownership into the future. Conversely, if you are looking to get a business loan, you will want to know if your company’s expected income can cover the loan obligations and interest payments.
The Simple Startup Finance team will work with you to overcome all of these eventualities and ensure you are best prepared to tackle these challenges.