The King
"Cash is King", this is always true.
First off, I enjoy Johnny Cash more than Elvis, so that should be enough to prove my statement right there. I do like Elvis, but the Long Black Veil is in its own league.
"Cash is also King in your startup"
Having a set of linked financials is a must have for us. I've listned to a lot of successful entrepreneurs and investors argue both sides of the 5 year projection battle, but when it comes down to it, planning a startup is facilitated by your linked financials.
What you need
For each of the next 5 years: income statement, cash flow statement and balance sheet. Also, summary and assumptions worksheets. Everything should be linked so that you (or a potential investor during diligence) can use the data on the assumptions tab as levers that flow through your other worksheets. Think of how incredibly useful this is in working through different scenarios for your business model.
Oh, don't forget another sheet that anchors your assumptions into reality by citing credible resources.
[Back to Cash being King]
Once the hard work of setting these up is complete, you can pull the levers yourself and check out the viability of your plan as it ripples through your worksheets. Where do I spend most of my time? Right, the cashflow statement.
As a business owner, what do I want to know most? Do I have enough cash to continue to take over the world...er, I mean "to execute on my plan" ;)
The income statement is important to see how we're doing based solely on revenue, but my cashflow helps me to determine how much outside investment I need, and where it is best allocated.
Here is a resource to download a financial templates:
It may be exciting and anti-establishment to work by your gut, but when planning a sales & marketing effort, it's important to see how your decisions will play out.
So, sit back, listen to Johnny & June Carter sing Jackson and dig in.
It'll be fun. https://www.youtube.com/watch?v=nzhzCF77GDo
1 comment:
$.02
Just kidding!
Your posts keep getting more entertaining, and I love it. It's actually fun to read about business cash flow statements when you put it this way!
Johnny Cash or Elvis? Can I have both please?
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