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If You Don’t Know These Financial Basics, Your Startup Will Fail Epically

 

 

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

Jed Simon, CEO of FastPay, an online finance company focusing on digital businesses, says there are 7 basic financial terms all entrepreneurs should add to their vernacular, including terms like:

 

  1. Bottom line – This is your net income and net earnings
  2. Gross margin – This is a percent of your company’s total sales revenue after subtracting the cost of production.
  3. 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.

 

Photo Credits

creativedoxfotos | freedigitalphotos.net

Author : Holly Hutton

Born in the Big Easy and raised in the Sunshine State, Holly has spent the last five years brunching in the Big Apple and bantering with Big Ben. As a wandering writer, techy-in-training, and avid alliterator, Holly has written everything from educational policy and political news briefs to web content and travel blogs. She is thrilled to be a part of the KS team and working with a community of smart, savvy, entrepreneurs on all things startup!

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