It’s no secret that I’m a financially-challenged person. I shy away from budgets and numbers and anything that has to do with managing money. Sounds irresponsible, but it’s not that so much as the type of person I am. And, I don’t think I’m alone. If you’re an entrepreneur, however, financial know-how is essential to you startup success.
Here’s the Deal
If you’re running a startup, chances are you’re ambitious, driven and creative. But, that doesn’t mean your financially savvy. Many VCs are finding that startup founders are developing amazing, disruptive technology, but are having trouble with basic financial set-ups for their business, like their monetization strategy. Needless to say, this is not good.
What You Need to Know
- Bottom line – This is your net income and net earnings
- Gross margin – This is a percent of your company’s total sales revenue after subtracting the cost of production.
- Leverage – The amount of money you borrowed to start your business. If you’re “highly leveraged” you have a lot of debt and investors usually run the other way.
Check out Jed’s other essential financial terms here and make sure you don’t make a fool of yourself the next time you’re talking shop about your startup. This goes for me too. I’ll be expanding my financial vocabulary tonight.