“Sometimes entrepreneurs think they can leave the finance and the numbers to the bookkeepers and the accountants,” Reichert said.
Kansas City, Mo. (PRWEB) October 29, 2014
Successfully running a new company requires more than a great idea and a business model. Founders need to understand the principles of finance to make good tactical and strategic decisions. Unfortunately, not all entrepreneurs have training or experience in finance. Bill Reichert, a venture capital expert who is featured in the latest Kauffman Founders School online education series being released starting today, shares a framework of financial tools and techniques that will help entrepreneurs manage and build their businesses.
Reichert founded several Silicon Valley-based software companies and now runs Garage Technology Ventures, a seed-stage and early-stage venture capital firm that has invested in more than 150 companies.
In "The Art of Startup Finance" series, Reichert recommends tools to enable entrepreneurs to get a clear picture of what is happening in their businesses, and to get an early warning of what’s on the horizon before it occurs. As a venture capitalist, Reichert also provides his perspective on the financial information and results that are most important to investors.
During the coming weeks, the nine modules that comprise the series will be released, one per week, including “Financial Processes: Cash Flow,” “Business Processes: Your Business Model Formula” and “Financial Budgeting: Your Long-Term Forecast.” Subscribe to the Kauffman Founders School newsletter or follow @KauffmanFS on Twitter to be notified as soon as they are released.
In these lessons, Reichert advises that entrepreneurs:
- Know how to incorporate elements of the business model, including spending on sales and marketing, and assumptions regarding pricing and revenues, into a business model formula. This formula enables entrepreneurs to translate their business models into financials.
- Create an operating budget that details the plan for spending money over the next year. The budget should be based on the key drivers of headcount, customer acquisition and revenues, and should be designed around key milestones the company has to hit.
- Develop a realistic long-range financial forecast that reflects where the team wants to take the company over the next five years, and how they expect to get there.
- Use monthly reports as learning opportunities to monitor what was expected to happen and what actually happened, and then to assess why there may have been a difference between the two.
- Identify a set of 12 to 15 key performance metrics for the company as a whole, in the form of a management dashboard that will be monitored regularly.
“Sometimes entrepreneurs think they can leave the finance and the numbers to the bookkeepers and the accountants,” Reichert said. “But entrepreneurs really need to understand the underlying financial flows of the business. That’s key to understanding how to manage your business.”
Teaching entrepreneurs best practices in areas not typically covered in other training programs, the Kauffman Founders School enables entrepreneurs to learn anywhere, anytime, and to immediately apply the lessons to their businesses.
The online education program is housed on the Kauffman Foundation’s Entrepreneurship.org web platform, which offers resources, educational information and tools for entrepreneurs. It can be accessed at http://www.KauffmanFoundersSchool.org or via http://www.Entrepreneurship.org.
About the Kauffman Foundation
The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that aims to foster economic independence by advancing educational achievement and entrepreneurial success. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo., and has approximately $2 billion in assets. For more information, visit http://www.kauffman.org, and follow the Foundation on http://www.twitter.com/kauffmanfdn and http://www.facebook.com/kauffmanfdn.