Founders often ask me whether they should be asking for stock options in their own company. Some of them feel sheepish for asking. Some feel entitled. There’s no one right way to think about founder incentive compensation, but here’s how I have approached it over the years.
Venturebeat declared in an article yesterday that “The CFO is dead, long live the COO”. The premise of this piece, written by a CFO, was that today’s CFOs are intimately involved in growing their businesses. Rather, than just reporting on historical results, they are a key partner working across the company to promote better strategies and decisions, leveraging current, real time data, not just histocial financials.
All of this is true, but there is a big difference in my books between an actual COO and a CFO who happens to be adding value across the business. The COO is ACCOUNTABLE for those results. She will have P/L responsibility and will be managing a large team that is directly tasked with delivering those results.
We specialize in 3 sectors at SurePath: SaaS, E-Commerce and Marketplaces. The commonality across these segments is that they are all data-driven. Companies in these segments have lots of knobs and levers that they can twist and turn to optimize and grow.
In this post, I’d like to show you the first of three simple tests to ensure that your SaaS Pro Forma Model is solid. I’ll do the same thing for E-com and Marketplace businesses in future posts.
Test #1: Your Historical Funnel
It’s pretty easy to forecast expenses. The magic is forecasting revenue. If your SaaS business targets SMB, then you likely generate new revenue through a large marketing/ freemium funnel. If you run an enterprise SaaS business then you probably grow new revenue through an inside sales machine.Continue reading Is your Revenue Model accurate?
Founders and non financial people in general usually hate building financial forecasts. But, every startup needs one. You need one in order to raise capital. You need one every year thereafter to present to your board.
For me, financial models are very powerful. The numbers in them are rarely right. It’s not like you need to hit the revenue target that you set for 36 months out. But, the thinking into how your business works, how you grow users, revenue and staff is invaluable.