The Basics
Total money coming in from sales
Revenue
The total $ you'll earn from a customer over time
Customer Lifetime Value (CLV)
How fast you're spending cash. Ex: We are making $5k in revenue but spending $12k in expenses each month we'd have a $7k per month____________
Burn Rate
When revenue = Expenses
Break Even Point
A wealthy individual who provides capital to a startup in exchange for equity
Angel Investor
All costs to run the business
Expenses
What it costs you to get one customer - calculated by the total sales and marketing expenses incurred during a specific period divided by # of customers you had during that period.
Cost Per Acquisition (CPA)
The owner's stake in the company; or the value remaining after liabilities are subtracted from assets
Equity
A measure of a company's financial performance before Interest taxes, Depreciation and Amortization
EBITDA (earnings before interest, taxes, depreciation, and amortization)
A loan that is partially guaranteed by the U.S. Small Business Association with the actual loan provided by a bank or other lender
SBA Loan
What's left after all expenses
Profit (Net Income)
The % of people that you have a sales call with that sign a contract or buy from you.
Sales Call Conversion Rate
A form of debt that can convert into equity at a later date, often with a valuation cap and a discount
Convertible Note
The process of estimating a startup's financial worth, which is crucial for raising capital by determining how much equity founders give up for investment. Unlike public companies, this value is a negotiated estimate agreed upon by founders and investors.
Valuation
Type of funding provided by firms or individual investors to startups and small businesses with high growth potential in exchange for equity stake or partial ownership in the company
Venture Capital
% of Money left after Direct Product Costs (or cost of goods sold/COGS)
Gross Margin
The process of making updates to your website to improve the % of people who visit your website that actually make a purchase or become a "lead"
Conversion Rate Optimization
An agreement that gives investors the right to future equity
SAFE (Simple Agreement For Future Equity)
Profit & Loss Statement (P&L)
Funding source where firms raise capital from investors to acquire or take stakes in private companies.
Private Equity
The % you get when you divide your profit by your revenue.
Profit Margin
The average time it takes to move a lead from the first contact to closing a sale
Sales Cycle Length
For example: If we have $100k in the bank, but our burn-rate is $10k per month, we have 10 months of______
Runway
Financial report that shows what a company owns, what it owes, and the owners' stake at a single point in time.
Balance Sheet
The process of starting and growing a business with minimal external funding, relying instead on personal savings, initial sales revenue and careful management of cashflow.
Bootstrapping