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October 31, 2017
Video Recap & 6 Essential Lessons from the Futureworks Finance & Operations Workshop at BF+DA
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
- 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?
- 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.
- 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
- 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?
- 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
- 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
- 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