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While we may not know all there is to know about our business yet, there’s still going to be some good old-fashioned accounting to do. So let’s break out those green visors and add machines — it’s time to learn WTF accounting is!

At its core, in order to be an accountant we need to be able to collect all the sources of income and expenses and translate those into a spreadsheet. When the numbers are small, this is so easy to do we’ll wonder why people get paid to do it. When they get large, we’ll wonder why anyone is willing to do this for any amount of money ever!

Can any Founder do Accounting for Startups?

Yes! Because accounting for startups in the early days just isn't that complicated yet. Even if we've never seen any financial statements ...

All financial projections for startups are based on a handful of financial assumptions. The problem is we tend to make very bad assumptions!

There are no "genius MBAs" out there building financial projections in a business plan that magically come true because they took a class on it. Financial assumptions, particularly for startups, are about making and refining a million tiny guesses until our financial performance gets somewhere close to our financial projections.

Everyone Guesses... and We're Usually Wrong

Startup financial projections are built around making a series of educated guesses about how things might go. Public companies make sales projections, issue projected income statements, and create revenue forecasts all the time. The diff...

A Startup's financial health isn't just about updating financial statements and balance sheets — it's about understanding basic business financials, and guess what? It's not that hard. This primer is designed for Founders and operators who know little to nothing about startup financials.

Intro: The Basics of Startup Finance

The fundamentals of startup finance are this simple – we record every income item (our goods sold) on one side and then record every cost (operating expenses) on the other side of our financial statements. We subtract the income from the costs – and voila! – profit (or a loss... in the early days it’s usually a loss.)

There’s no special black magic to recording income and expenses.

We don't need Complex Accounting Software (...

No matter how much we stand to lose, there is always a way to recover.

At the time it sure doesn't feel that way. Nothing keeps us up at night more than playing out every possible scenario of catastrophic outcomes for our startup. We think about the cost of losing our startup, our team, our investor's trust, and ultimately, our personal well-being.

And yes, all of this is super terrifying. But here's the thing, Founders have an amazing ability to recover from catastrophic losses because, in the end, we never consider the fact that the one thing we can't lose is our own tenacity.

It's important to think beyond the "monster in the corner" and play out the entire scenario of what a big loss means, looking all the way past to the other side of ...

Becoming a startup CEO requires zero qualifications — that's because we're often not really CEOs (for those that don't already know, a CEO is the chief executive officer of a company).

Anyone who founds a company is by default the CEO. My 9-year-old daughter incorporated her pet-sitting business and is technically its CEO. But she doesn't walk around comparing herself to Jeff Bezos.

As Founder-CEOs, we need to have a very sober outlook on our new title and as such, so do all of the people around us. After all, a successful startup CEO is responsible for more than a "company builder" — they are expected to create the company culture, form the leadership team, and keep everyone in the org moving in the right direction. We basically need to take...

A capitalization table or "cap table" is a record of the equity ownership and actual ownership percentage of each member of the company. Private companies typically develop a cap table when they are first formed to capture the stock ownership of the co-founders and then later begin recording stock ownership of employees, advisors, and investors.

Why do Startups need Cap Tables?

The moment the number of shares in our startup expands to more than one owner, we typically create the company's cap table. This is just a ledger of where the company's ownership stands and can be captured in something as simple as a spreadsheet.

As our startup expands, cap table management becomes more complex, such as when we take on a funding round with a venture cap...

Welcome to Phase Four of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - How Startup Equity Works

Phase Three - How to Split Equity

Phase Four - Part 1 - Equity Management ( ←YOU ARE HERE 😀)

• Part 2 - Recovering Startup Equity

Let's continue!

Splitting startup equity is only half the challenge for early-stage startups — managing startup equity is a whole different issue! How much equity we split and the founders' ownership percentage is generally determined by what we expect each founder to contribute.

But the problem is once ...

Welcome to Phase Three of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - How Startup Equity Works

Phase Three - Part 1 - How to Split Equity

• Part 2 - Splitting Equity Today

• Part 3 - Splitting Equity in the Future ( ←YOU ARE HERE 😀)

• Part 4 - Calculating Startup Equity Splits + FAQ

Phase Four - Equity Management

Let's continue!

Founder equity splits rarely turn out to be what we hoped they would be after Year 1. The co-founders at startup companies start off with the best intentions, but as the business venture turns into lon...

Running a startup is a ton of work as a solo Founder, so much so that many Founders find themselves at a loss trying to get everything done. For those that are non-technical, this proves to be a challenge, as coding is essential in this day and age, so bringing on a technical co-founder is a must. This is also true for technical Founders missing the mark on the creative front, so it's no surprise that one of the most searched terms on the internet is "finding a cofounder."

It seems like it should be easy — find a co-founder (or more) that aligns with your startup idea, mission, and has the complementary skills to do all the things you don't know how to — but it's not that simple. Finding the right co-founder is a complex combination of effor...

Why does it Matter?

The financials slide in our pitch deck takes our own financial projections and consolidates them into our most key metrics that potential investors care about.

Most pitch deck financial projections wind up being incredibly hard for potential investors to understand, so we're going to provide you with a killer financial projections slide template that's easy to use and will impress investors.

Key Metrics Potential Investors Want

We always build our financial projections slides in our pitch deck backward from what questions investors have.

That way, the financials slide is only covering exactly what a potential investor wants to see — and no more!

"What are the pro forma financial projections?"

Our "pro formas" are really just a ...