Disciplined Entrepreneurship Startup Tactics

TACTIC 12Finance: Path to Greatness—Building the Financial Model and Setting Up the Piggy Bank

Entrepreneurs must convince others—and, more importantly, themselves—that they can create a business that achieves significant growth in the first five years. That growth may be a reflection of revenue goals. For an innovation-driven entrepreneurial venture, for example, entrepreneurs may seek to tell a story of how they will grow to $50M in revenue by year five.

To achieve such significant growth, an upfront investment—often referred to as innovation and product development debt—will be needed. The first step in fundraising is determining how much money you want to raise in each round. Your financial plan is a key element in making that determination because it provides an estimated projection of revenues and expenses rooted in the assumptions from your business plan. These assumptions will be based on work you have done while setting your foundations and goals, testing the market, and developing the early product.

In This Tactic, You Will:

• Explore the differences between startup finance and corporate finance.
• Build a financial model that includes your revenue plan, expenses, and staffing plan.
• Explore the assumptions that serve as inputs to your financial model.
• Set up a bank account for your business.

Startup Finance versus Corporate Finance

Startup finance is quite different ...