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The business startup costs that are the least complicated for startups tend to be our "fixed costs" like office space, utility bills, or software expenses incurred. While these start-up costs grow with any new business, they don't scale the way our variable cost projections do when starting a business.

Fixed Costs vs. Variable Costs

The reason we separate our fixed costs versus our variable costs is that we want to isolate our startup cost categories to focus on what will truly drive our business plan. Things like scaling our advertising costs will have an exponential effect on our revenue, for example.

But our fixed costs don't have nearly this impact.

Our fixed expenses do "grow" over time, but not exponentially. Therefore we tend to separate...

Startups create financial projections in the form of a "Pro Forma Income Statement" — which simply means a financial forecast. Early-stage startups are still building their financial models with assumptions, forecasting everything from sales revenue to marketing costs to a basic cash flow projection.

We're going to explain exactly how to build financial projections for your startup even if you have no idea where to start!

Financial Projections are just Assumptions

Most businesses that have been around a while have historical financial statements that detail how operating expenses, direct costs, fixed costs, and their sales forecast have worked all along — startups have none of this.

Therefore instead of working from real-world data to build our...

Every kid should become a startup Founder, even if they never want to start a business.

Years ago, I started teaching entrepreneurship at my kid's Middle and High schools. What I thought might be an exercise in futility wound up being an incredibly eye-opening experience. As it turns out, kids are freakishly good at being Startup Founders!

When I was a kid, no one told me I could forge my own path. We sort of were handed a dozen careers, and you got to pick one. It was basically our guidance counselor telling us "Oh, you're good at math? You'll be an accountant." Never mind that we never really wanted to be accountants.

Kids Have Unlimited Curiosity

Instead of shoe-horning kids into some prescribed path, entrepreneurship leverages their gre...

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 ...

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 ...

Welcome to our four-part Splitting Equity Series. This is our Introductory piece and will continue to be split up into four phases:

Introduction - Early Startup Equity — Getting it Right ( ←YOU ARE HERE 😀)

• Phase One - Startup Equity - Avoiding Early Mistakes

• Phase Two - How Startup Equity Works

• Phase Three - How to Split Equity

• Phase Four - Equity Management

We are excited to guide you through your equity-splitting experience. Let's dive in!

We’re going to identify and isolate each of the key issues in splitting startup equity in a young company. Then one by one we will lay out which options are available, how most startups address this problem, and what key decisions the team will need to make to split the founder equity fairly and manage a plan...

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

• Part 2 - Recovering Startup Equity ( ←YOU ARE HERE 😀)

Let's do this!

When it comes to startup equity distribution, giving away a startup's equity is easy. How much equity do we get back? Well, that's a different story altogether!

An "equity clawback" is designed for early-stage startups to essentially reverse an equity grant based on a number of provisions...

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...

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 ( ←YOU ARE HERE 😀)

• Part 3 - Splitting Equity in the Future

• Part 4 - Calculating Startup Equity Splits + FAQ

Phase Four - Equity Management

Let's continue!

Startup founders have been trying to figure out a fair equity split for the founding team since the dawn of time. Sadly, dividing equity between each co-founder tends to be one of the biggest mistakes w...