What are three things you should know about finance before starting?

Oliver Hutaff / November, 2017


Oliver Hutaff, CFO/COO at Electric Imp explains three things to consider on the financial side before starting your business.

Video Transcript

What are three things a startup founder should know about finance before starting?

So for a startup founder, I think that three relevant things they really have to know about financing. The first one certainly is cash flow. Startups are depending on how much cash they have and how long it’s going to last them.

I think the second thing is that they need to know about financing is it harder to raise money and it takes longer than everybody thinks it will for the first time out. They need to plan for surprises and hiccups and bumps in the road because they always happen. You don’t want to plan for perfection when you’re planning cash, you want to be thoughtful about it and make sure you’ve left yourself plenty of buffer.

Then the third piece of it from an entrepreneur standpoint is, they got to know how to budget appropriately, not necessarily for a P&L but in terms of where to make investments. What’s a good investment, what’s going to pay off in the end and is it ‘I’m getting an economic positive return out of this’ or is this ‘I’m doing this because I’m trying to build my market, I’m trying to build the brand or doing something else or I’m not going to get a financial return’, but it’s a necessary investment in terms of how do I build this business and grow it to the next stage.



Next Up

How should you plan your cash management?

When and how should you start with accounting?

Let’s Talk Finance & Taxes — What Every Startup Needs to Know

What are the key metrics that the management team should focus on?

How should you prepare for due diligence?

Join the Startupedia Community

Connect with VCs and unlock vital startup advice!