Futureworks Incubator’s Finance & Operations Workshop at Brooklyn Fashion + Design Accelerator from SecondMuse on Vimeo.

Elli Papadopoulos from Skopos Collective, Alek Marfisi from Upwind Strategies and Ulas Neftsi from Baruch led a recent workshop on finance and operations for startups. Incubator company and Urban-X grad WearWorks was the featured guest, and founder Keith Kirkland shared valuable insight into the everyday financial life of a startup. Above is a video of the workshop; below are lessons and pictures. Also, check out the workshop presentation and a very useful financial budgeting spreadsheet (page 51) here.

6 Essential Finance and Operations Lessons

1. Finance projections aren’t just about money. They’re tools for investors and for your company to inform decision-making across the board. How do you distribute a product, build a Website, create partnerships?
2. Make sure you are modeling out your customer acquisition costs. A $3,000 sale is great, but not so much if it cost $5,000 to catch that sale.
3. Some important acronyms:
   • EBITDA = Earnings before interest, taxes, depreciation and amortization
   • COGS = Costs of goods sold
   • Mezzanine Debt = A convertible note that converts to equity once milestones are met

4. Questions to ask yourself:
   • Do I have money for tomorrow, for next week, for next month, for next year?
   • Do I accurately know my burn rate?

5. Five important financial categories you should be tracking:
   • 1. Revenues
   • 2. Expenses
   • 3. Assets
   • 4. Liabilities
   • 5. Equity
   • Revenues + Expenses = Income Statement
   • Assets + Liabilities + Equity = Balance Sheet
   • Revenues + Expenses + Assets + Liabilities + Equity = Cash Flow Budget

6. Be comprehensive in addressing your expenses. For example, WearWorks’ Expenses include:
   • COGS of inventory, packaging, fulfillment & distribution, freight & customs & duties
   • Executive compensation
   • Salaries and payroll taxes
   • Rent
   • Product development/R&D
   • Marketing, advertising, promotions
   • IT & cloud services
   • Credit card commission fees
   • Insurance and professional fees (legal, accounting etc)
   • Office supplies
   • Telephone, cable, WiFi internet
   • Travel