Budgeting & Forecasting

Startups raise capital in tranches and always have to be mindful of their “runway.” The CEO has the important task of building and maintaining investor confidence in the business to ensure the ability to raise subsequent rounds. Poor cash management is credited as one of the major reasons behind the failure of startups. One of the most successful elements of strategic cash management is to have a detailed annual budget/operating plan in place. It’s not enough to simply take the current burn rate and multiply it over time. Preparing detailed bottoms up plan requires thinking through all of the cost drivers which will increase expenditures in tandem with your revenue and growth drivers. A budget/operating plan communicates to board members and executives the financial demands of growth, allowing for informed decision making in the short and long term. 
 

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