Steve Blank

SEPTEMBER 3, 2014

Speed keeps cash burn rate down while allowing you to converge on a repeatable and scalable business model. One interesting thing about the Lean Startup is that it teaches founders about Sales and Marketing (and a bit of finance) without making them get an MBA or a decade of sales experience.

Cofounder 336

Cofounder Founder Technical Cofounder Coder 336

Both Sides of the Table

SEPTEMBER 29, 2009

Three reasons: There is a relative valuation between the price a VC pays and their expectations of what it will exit for in an IPO or trade sale. Also, it’s harder to pay a $30 million pre-money value on an unproved company when you see public companies with $100 million in sales trading for less than $20 million.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Steve Blank

NOVEMBER 2, 2009

The key contributors to an out-of-control burn rate is 1) hiring a sales force too early, 2) turning on the demand creation activities too early, 3) developing something other than the minimum feature set for first customer ship. These are great, but they are not repeatable by a sales organization. Who influences a sale?

Lean 263

Lean Silicon Valley Startup RSS 263

Both Sides of the Table

NOVEMBER 3, 2009

Let’s start with how much value you think you’ll create for your customer if they use your product in terms of hours saved, costs avoided, extra sales, better conversion rates or whatever. Too aggressive about the rate of customer adoption? You might then slow down your burn rate or raise more money.

Business Plan 334

Business Plan AJAX Venture Capital Technical Review 334

Both Sides of the Table

APRIL 23, 2017

You have cash in the bank, a monthly burn rate and a “cash out” date that few in the company truly comprehend. Raising money is a sale and selling requires persistence and follow up. The best sales people never give up and they are politely persistent in finding new ways to get in front of target buyers. Be in Person.

Burn Rate 238

Burn Rate Term Sheet Fractional CTO CTO Hire 238

Steve Blank

FEBRUARY 26, 2013

90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening to me. Stage 2: Deny any of it was your fault. Stage 3: Get angry and blame everyone else.

Redemption 333

Redemption Cofounder Silicon Valley Burn Rate 333

Startup Professionals Musings

SEPTEMBER 14, 2016

Investors check your burn rate to assess your efficiency, and project your remaining runway before you run out of money and into a brick wall. It doesn’t take a financial genius to recognize that you need to keep your burn rate low. Cash flow out equates to burn rate, and the runway depends on your reserves.

Burn Rate 120

Burn Rate Hockey Stick Startup Salary 120

Startup Professionals Musings

JUNE 9, 2012

Otherwise, sales, marketing, and operational costs will kill you. Next comes sales volume by channel. Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup. That should be true even if your customer is really a distributor. This forecast is really their commitment.

Forecast 238

Forecast Burn Rate .Net Business Model 238

Startup Professionals Musings

JULY 15, 2013

Otherwise, sales, marketing, and operational costs will kill you. Next comes sales volume by channel. Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup. That should be true even if your customer is really a distributor. This forecast is really their commitment.

Forecast 238

Forecast Business Plan Burn Rate .Net 238

Startup Professionals Musings

MARCH 22, 2011

Otherwise, sales, marketing, and operational costs will kill you. Next comes sales volume by channel. Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup. That should be true even if your customer is really a distributor. This forecast is really their commitment.

Forecast 230

Forecast Burn Rate Startup .Net 230

Steve Blank

SEPTEMBER 7, 2009

This post describes how following the traditional product development can lead to a “startup death spiral.&# In the next posts that follow, I’ll describe how this model’s failures led to the Customer Development Model – offering a new way to approach startup sales and marketing activities. No one wants to sit next to the VP of Sales.

Customer Development 233

Customer Development Developer Customer Silicon Valley 233

Both Sides of the Table

DECEMBER 16, 2009

He asked each sales / biz dev person to call customers and tell them they had to change their contracts. I just knew that our sales sucked wind and we were burning through tons of cash. I advocated LOUDLY at the board that we needed to cut our burn rate. A new and experiened CEO was brought in and cleared house.

Entrepreneur 306

Entrepreneur Burn Rate Cofounder Sales 306

Both Sides of the Table

JUNE 19, 2017

One of the hardest decisions entrepreneurs make when they start a company and raise outside capital is figuring out what an acceptable “burn rate” is. That is, how much should your company be willing to lose in cash every month as you make investments in staff and equipment that funds technology, sales, marketing and management.

Burn Rate 212

Burn Rate Startup .Net Venture Capital 212

Both Sides of the Table

FEBRUARY 8, 2016

The startup industry may be “resetting,” which doesn’t mean a “crash” but rather just a resetting of valuations, timescales, winners/losers, capital sources and the relative emphasis of growth rates vs. burn rates. Optimize for a W more than % dilution in these circumstances.

Burn Rate 150

Burn Rate Cap Table Startup Dilution 150

Steve Blank

FEBRUARY 26, 2013

90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening to me. Stage 2: Deny any of it was your fault. Stage 3: Get angry and blame everyone else.

Redemption 225

Redemption Cofounder Silicon Valley Burn Rate 225

YoungUpstarts

MAY 19, 2016

Use burn rate as an example. If you don’t understand how much money your company is burning through each month, how can you expect to intelligently talk about your fiscal health? To become part of the surviving half, use these methods to ensure your startup’s structure stands strong. Read your books from cover to cover.

Technical Review 124

Technical Review Burn Rate IP Intellectual Property 124

Startup Professionals Musings

MARCH 25, 2010

Otherwise, sales, marketing, and operational costs will kill you. Next comes sales volume by channel. Your “burn rate” or net cash flow out is usually the single most important survival parameter to a startup. That should be true even if your customer is really a distributor. This forecast is really their commitment.

Forecast 151

Forecast Startup Burn Rate .Net 151

Feld Thoughts

NOVEMBER 18, 2013

The people on the sales side don’t feel they can charge for it yet because who’s going to take out their wallet for something that isn’t perfect. Company Hygiene Matters – One of the responsibility of a Board of Directors is to regularly discuss financials, burn rate, and cash management.

Burn Rate 153

Burn Rate Equity Software Review Early Stage 153

Steve Blank

MARCH 17, 2020

The questions every startup or small business CEO needs to ask now are: What’s my Burn Rate and Runway? Burn Rate and Runway. To answer the first question, take stock of your current gross burn rate i.e. how much cash are you spending each month. What does your new business model look like? How do you know?

Burn Rate 436

Burn Rate Startup Valuation Sales Cycle 436

VC Cafe

NOVEMBER 2, 2019

In SaaS the main benchmarks being measured are revenue growth, sales efficiency (unit economics), churn and burn rate. Rob Go: How Much Traction Do You Really Need to Raise a Seed or Series A Round? Software as a Service (Saas) benchmarks.

B2C 141

B2C Technical Review Startup Retention 141

Berkonomics

OCTOBER 5, 2023

Fixed overhead for salaries, rent, equipment leases and more make up the majority of the “burn rate” (monthly expenses) for most companies. Since this number is budgeted and pre-authorized, managers tend to focus upon other things such as sales, marketing and product development issues. The art of good management.

Silicon Valley 118

Silicon Valley Burn Rate Angel Investor Down Round 118

Up and Running

APRIL 22, 2020

Maintaining your business through the coronavirus crisis has likely led you to cut costs, revise your sales projections, and potentially seek out a loan to help you stay afloat. Thoroughly explain your situation and provide absolute proof that your business is struggling due to the virus.

SBA 139

SBA Forecast Software Review Business Plan 139

YoungUpstarts

AUGUST 19, 2016

Then come the marketing, sales, and accounting considerations. While you absolutely need to keep an eye on earnings and burn rate, human capital is ultimately the fuel that makes the machine run. Developing your product is just the beginning. Your employees, after all, become part of what you sell.

Startup 100

Startup Burn Rate Cofounder Salary 100

Berkonomics

AUGUST 10, 2017

Fixed overhead for salaries, rent, equipment leases and more make up the majority of the “burn rate” (monthly expenses) for most companies. Since this number is budgeted and pre-authorized, managers tend to focus upon other things such as sales, marketing and product development issues.

Silicon Valley 97

Silicon Valley Burn Rate Angel Investor Down Round 97

Up and Running

APRIL 30, 2020

.” It’s been a favorite management tool of mine since my time as VP for a market research firm, and it’s a method I used for decades growing a software company from zero to well over $10 million in annual sales. Impact on sales: If sales go down 30%? What is a scenario analysis? Will businesses open slowly?

Forecast 120

Forecast Balance Sheet Burn Rate Software Review 120

Both Sides of the Table

MAY 2, 2015

It freed up Ophir to grow out our sales organization, to work more closely with agencies, to innovate on product and to raise capital. They can show the projections on what this does to burn rate. At board meetings Ophir could focus on strategic questions because he knew that Phil could answer to every number in our board pack.

Operations 150

Operations Metrics Early Stage Non-Compete 150

crowdSPRING Blog

DECEMBER 12, 2014

Don’t Get Burned by Your Burn Rate – crowdspring.co/159KKrk. Online Sales for Girl Scout Cookies Are Approved – crowdspring.co/1pIc88R. When You Give Your Team a Goal, Make It a Range – crowdspring.co/1yINX9Z. 7 Simple Ways to Appreciate your Team (and Boost Performance) – crowdspring.co/1veUNVr. 1v6Fr0z.

Social Media 100

Social Media Small Business Design Media 100

Berkonomics

MARCH 30, 2010

Fixed overhead for salaries, rent, equipment leases and more make up the majority of the “burn rate” (monthly expenses) for most companies. Not long after, the company was sold in a “fire sale” amounting to slightly less than the debt on the books. All investors, including the VC firm, lost everything.

Silicon Valley 85

Silicon Valley Burn Rate Angel Investor Down Round 85

Mucker Lab

MAY 28, 2020

Before you indulge in marketing, sales and blinged-out offices, find product-market fit. Test your sales and marketing a few feet from the ground, first – not from an airplane. Why hire a sales team when you have nothing to sell yet? Test sales, marketing, and growth strategies on a limited budget. Hire the wrong people.

Startup 78

Startup Cofounder Burn Rate Technical Review 78

Up and Running

APRIL 6, 2020

This can be a daunting task, but the best place to start is understanding and calculating your cash burn rate and your cash runway. How do you calculate the burn rate? This total number is your Gross Burn Rate. Gross burn rate = (Total variable expenses + Total fixed expenses).

Burn Rate 100

Burn Rate Forecast SBA Cash Position 100

Up and Running

FEBRUARY 20, 2015

However, there are a number of metrics that every business owner should know, including cash flow, accounts payable, accounts receivable, direct costs, operating margin, net profit, and cash burn rate. What Is Cash Burn Rate? Cash burn rate is the rate at which a company uses up its cash reserves or cash balance.

Metrics 60

Metrics Burn Rate .Net Churn Rate 60

Both Sides of the Table

JULY 16, 2013

The company with no revenue and a $150k burn rate that raised $2.5 And if your ultimate strategy is a small sale of the business that recovers investment and puts some cash in your pocket – having more time to make this work makes a lot of sense. You’re out of money. So you take the offer you get. I see this weekly.

Burn Rate 412

Burn Rate Dilution Revenue Valuation 412

Transformify

AUGUST 27, 2017

Their investors may push them into that direction too, as the high burn rate is often seen as a prerequisite for high growth. You will have more time to focus on the strategy and sales while looking for the right project/ product manager, etc. The downside? Outsource the development of your MVP.

Hiring 64

Hiring Software Review Burn Rate Startup 64

Startup Professionals Musings

FEBRUARY 5, 2021

There is no black magic involved in predicting the future, if you use these four simple steps, with my basic rules of thumb to keep you on the right track: Determine your margin on sales. Forecast sales-volume expectations. Forecast sales-volume expectations. Per-unit cost less cost of goods sold is your gross profit or margin.

Forecast 369

Forecast Burn Rate Startup Widget 369

Startup Professionals Musings

FEBRUARY 17, 2021

These steps alone can reduce your monthly burn rate by at least $10K. Social media facilitates marketing and sales. You can now skip the mandatory office space rental, with secretary and bookkeeping staff, or outsourcing. Use the cloud and subscriptions for computing technology.

Cost 405

Cost Entrepreneur Burn Rate Social Media 405

Startup Professionals Musings

JUNE 27, 2022

You know you should have been tracking the burn rate, or inventory requirements, or late receivables, but have found yourself totally distracted by a flock of emergency daily issues. They let the burn rate go up too fast, and the business burns down before it really starts.

Burn Rate 329

Burn Rate Differentiation Salary Entrepreneur 329

Steve Blank

NOVEMBER 18, 2010

You can almost set your watch to six months or so after first customer ship, when Sales starts missing its “numbers,” the board gets concerned and Marketing tries to “make up a better story.” The web site and/or product presentation slides start changing and Marketing and Sales try different customers, different channels, new pricing, etc.

Burn Rate 252

Burn Rate Management Business Model Customer Development 252