Get in the habit of producing good financial reports every single month. But you need more than just standard financial reports. You need a Management Dashboard that monitors critical metrics that may not pop out of your accounting reports. These monthly reports are a learning opportunity: What did we think would happen? What actually happened? Why was there a difference? Are we on track to hit our key milestones?
Your cash flow statement shows where your cash is coming from, and where it is going. Sometimes known as “sources and uses of funds,” this financial report is an important complement to your income statement and balance sheet. Investors want to see that you know the difference between your net income and your net cash flow, and that you understand how your business uses cash.
Your income statement shows the performance of your company over a period of time and reveals important information about how efficiently you are running your business. Understanding your income statement, and what it tells you about the health of your business, is critical.
Finance is about more than just money and numbers. Bill builds a strategic “Finance Pyramid” to help you understand how finance underpins your goals and strategies. Through eight critical lessons Bill provides you with the tools of finance you’ll need to monitor and understand your company’s operating metrics, and, ultimately, help you turn your vision into reality.
The details of the Shareholders Equity section of your Balance Sheet are shown in your Capitalization Table, which is maintained as a separate report. The “Cap Table” shows how much of the company each shareholder owns, and in what form — common stock, preferred stock, options, or warrants. Investors will want to look at your cap table to understand how you have distributed your common stock and how you have raised investment capital.
Forecasting is usually the toughest part of startup finance for entrepreneurs. But learning how to forecast and budget are critical. The point is not to try to predict the future. The point is to build a financial model that you can improve over time.
