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Founderfuel backoffice talk oct 4 2011
1. Startup
BackOffice
101
Mark MacLeod
@startupcfo
Real Ventures
ยฉ Mark MacLeod 2011
2. Agenda
What is โBack Officeโ? &
why does it matter?
Your Back Office Toolkit
Measuring Your Business
Hiring a CFO
What Investors Expect...
ยฉ Mark MacLeod 2011
12. Startup Accounting Tips...
Vendor Payments: 15th & end of month
Credit card for everything
Outsource & batch (no more than 2x/
month)
ยฉ Mark MacLeod 2011
13. Startup Legal / Governance Tips...
Scan & archive everything
NDA list
Use lawyer only for templates & key docs
Must: IP assignment, confidentiality,Work for
hire
ยฉ Mark MacLeod 2011
14. Measuring Your Business
The basic ๏ฌnancial reporting package
Balance Sheet: Assets, liabilities, equity
Operating Statement: Revenues,
expenses
Cash๏ฌow: Sources and uses of cash
Dashboard: Key ๏ฌnancial and non-
๏ฌnancial metrics
ยฉ Mark MacLeod 2011
15. Sample Financials...
ACME STARTUP
STATEMENT OF OPERATIONS
ACME STARTUP For the year ended Jan. 31, 2009
BALANCE SHEET (All amounts in 000s CAD$)
January 31, 2000
(All amounts in 000s CAD$)
REVENUES
COST OF DELIVERY
ASSETS Hosting
Customer Acquisition (partners)
Current
GROSS MARGIN
Cash & equivalents
Accounts receivable OPERATING EXPENSES
Other receivables
Sales & Marketing
Prepaid expenses Personnel
Customer Acquisition
Marketing programs
Travel & other
Long-Term
Capital assets, net
Research & Development + QA
Intellectual property Personnel
Equipment, Licensing & Other
TOTAL ASSETS Operations
Personnel
Equipment, Licensing & Other
LIABILITIES & DEFICIT
Current
Corporate
Accounts payable & accrued liabilities Personnel
Bank loan Recruiting
Facilities, Insurance & Office
Deferred revenue Travel & other
TOTAL LIABILITIES Communications & IT
Professional fees
SHAREHOLDERS' EQUITY
Total Expenses
Common Shares
Preferred 'A' Shares EBITDA
Preferred 'B' Shares
Amortization
Accumulated deficit SRED, Grants
Share issuance costs Foreign exchange
Financial
Contributed surplus
NET LOSS
ยฉ Mark MacLeod 2011
16. Startup Accounting Tips...
WATERFALL
Acquisition
ACME STARTUP
For every 100 visitors (not including usage)
STATEMENT OF CASHFLOW
For the year ended Jan. 31, 2009
Registration
(All amounts in $ 000s CAD)
Activation
CASHFLOWS FROM OPERATING ACTIVITIES
Retention
Income (Loss) for the period
USERS
Other non-cash items
New
Total
Change in non-cash operating working capital items
USAGE
Stat 1
CASHFLOWS FROM FINANCING ACTIVITIES
Stat 2
Issuance of Shares (net of issuance costs)
Stat 3
Loans
EMPLOYEES
CASHFLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment
Net change
Increase in intangible assets
S&M
R&D
Ops
DECREASE IN CASH AND EQUIVALENTS
G&A
CASH AND EQUIVALENTS - BEGINNING OF PERIOD
Budgeted hires
Actual hires
CASH AND EQUIVALENTS - END OF PERIOD
LIQUIDITY
Cash & Equivalents
Working Capital
Number of months' pure burn on hand
ยฉ Mark MacLeod 2011
17. Tips for Good Reporting
Summary format: Donโt send your whole GL
Round up: $000s of $
Narrative: Tell your stakeholders whatโs going on
Dashboard: Give people a quick pulse of your
Operating metrics
User and revenue trends
Hiring
Cash burn & runway
Donโt spend a lot of time on this early on
ยฉ Mark MacLeod 2011
18. Non-Financial Measurement..
All web businesses should be data-driven!
Know your
Waterfall & conversion rates โ visitors to register
to active to paid
Sources of best users
Usage patterns
Virality drivers
Customer acquisition cost by source
Churn
Advance screening for low usage users who may
churn and high usage folks who might pay
ยฉ Mark MacLeod 2011
19. Hiring a CFO
This... Not this...
ยฉ Mark MacLeod 2011
20. Role of the CFO
Financier: Keep the bank ๏ฌush
Technician: Controls, reporting
Closer: Help bring in the big deals
Operator: Process, metrics, discipline
Lawyer: Check everything with words & a
signature
Sys Admin: Systems, information, data dude
Cheapskate: Say โNOโ a lot
Consigliere: Any Godfather fans out there know
what Iโm talking aboutโฆ
ยฉ Mark MacLeod 2011
21. When you need one...
Advisor: From day 1 (opportunity assessment)
Part time: Early (help with 1st funding, etc.)
Full time: โBโ round
ยฉ Mark MacLeod 2011
22. Investor Expectations
Accurate, consistent & timely info
You understand key metrics
You know where $ are being spent
Package:
- Monthly ๏ฌnancials & dashboard
- Regular blurb from the CEO (incubator - weekly; seed -
bi-weekly; series A on - monthly)
- One on one call before board meetings or if you have
major issues
- Full transparency (good, bad, ugly...)
ยฉ Mark MacLeod 2011