Entrepreneur Tip #803: Know Your Numbers
It's good to know your numbers. This is because, when you want to raise, say, a few million bucks, the people who are giving you that money want to feel like you know what you're going to do with the money.
The truth is you may not know exactly how you're going to spend all that money. That's fine. Par for the course. Totally expected.
What does not instill confidence, however, is when an entrepreneur puts up a slide with a bunch of numbers on it and is asked, "so... about how long do you think that lasts you?" To which the response is:
Silence. Glazed eyes. We'll get back to you.
If you're going to put the numbers on the slide, it's smart to be able to justify the numbers. Well... we think it costs about this much per person, and we think it takes us this long to build the thing, and we've accounted for a little bit of slip time, and then we need to market it... and so that amount of money gets us about this many months down the path.
There. You've thought about what you're going to do with the money, you can clearly communicate who you need to hire and how fast, and you have an idea of what you want to build and how long it might take.
All that is subject to change of course, and the mark of a good entrepreneur is someone who is flexible and adapts quickly to change. But it's good to show that you you have a plan that you've thought about, you demonstrate you have though through hiring and product and go to market, and you can articulate what you want to do. That goes a long way.
You want to have a convincing message around why what you're doing with the money makes sense. That is, what proof-point are you going to get to that means you'll be able to get to the next round of money (or to break-even)? From the perspective of the investor, you need to be doing something that takes risk out of the deal with that money. Otherwise, your investor might be better off waiting until later on to put money into your company.
When things are going really well during a pitch, the last thing you want to do is stumble on your numbers. "We have this really complex model that details everything out to the last dollar" isn't going to help your case. What will help you is being able to articulate, clearly, what you're going to do with the money, who and what you spend it on, and where it's going to get you that gets both you and your potential investors excited.
Your other option, of course, is to say, listen, this idea is so totally ground-breaking and game-changing that we have no idea how much it's going to cost us to build it. We need some dollars to get started and we're going to hire the best team on earth to build it. That won't fly with everyone, but it is a viable thing to say. In fact, it's better than putting out a bunch of numbers that you can't justify.
Entrepreneur Tip #803: Know Your Numbers.
The truth is you may not know exactly how you're going to spend all that money. That's fine. Par for the course. Totally expected.
What does not instill confidence, however, is when an entrepreneur puts up a slide with a bunch of numbers on it and is asked, "so... about how long do you think that lasts you?" To which the response is:
Silence. Glazed eyes. We'll get back to you.
If you're going to put the numbers on the slide, it's smart to be able to justify the numbers. Well... we think it costs about this much per person, and we think it takes us this long to build the thing, and we've accounted for a little bit of slip time, and then we need to market it... and so that amount of money gets us about this many months down the path.
There. You've thought about what you're going to do with the money, you can clearly communicate who you need to hire and how fast, and you have an idea of what you want to build and how long it might take.
All that is subject to change of course, and the mark of a good entrepreneur is someone who is flexible and adapts quickly to change. But it's good to show that you you have a plan that you've thought about, you demonstrate you have though through hiring and product and go to market, and you can articulate what you want to do. That goes a long way.
You want to have a convincing message around why what you're doing with the money makes sense. That is, what proof-point are you going to get to that means you'll be able to get to the next round of money (or to break-even)? From the perspective of the investor, you need to be doing something that takes risk out of the deal with that money. Otherwise, your investor might be better off waiting until later on to put money into your company.
When things are going really well during a pitch, the last thing you want to do is stumble on your numbers. "We have this really complex model that details everything out to the last dollar" isn't going to help your case. What will help you is being able to articulate, clearly, what you're going to do with the money, who and what you spend it on, and where it's going to get you that gets both you and your potential investors excited.
Your other option, of course, is to say, listen, this idea is so totally ground-breaking and game-changing that we have no idea how much it's going to cost us to build it. We need some dollars to get started and we're going to hire the best team on earth to build it. That won't fly with everyone, but it is a viable thing to say. In fact, it's better than putting out a bunch of numbers that you can't justify.
Entrepreneur Tip #803: Know Your Numbers.
1 Comments:
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