Tuesday
Oct022007
Some Real Financial Numbers for Your Startup
Tuesday, October 2, 2007 at 3:44AM
If you are a startup you may find useful Guy Kawasaki's post Financial Models for Underachievers: Two Years of the Real Numbers of a Startup. Part of any business plan are the projected guestimates. They are guestimates because everyone keeps these numbers hidden like a Swiss bank account. But not Redfin. They've bravely shared their initial cost projections, their actual numbers from real life, and the lessons they've learned from the discrepancy between the two...
You can find their model estimates and actuals for Rent, Per Employee, Per Month (model: $250, actual: $336); Initial Per-Employee Equipment Cost; Monthly Benefits, Per-Employee; Annual Payroll Tax; Quarterly Bonus Payout, as a % of the Total Possible; Annual Payroll Increase for Existing Employees; All-Company Meeting Cost, Per-Meeting, Per-Employee; Annual Accounting Costs, and a few more.
There is also a great lessons section: Focus on headcount; Plan slow, run fast; Run top-down sanity-checks; Forget economies of scale; Admit that revenues are a mystery; Build from building blocks; Take out "hope"; Flag your assumptions; Hit $100 million in revenues within five years; Keep market-share under 20%.
I find $100 million in revenues a surprisingly high number. That's a lot of money. And the underestimate for meeting costs is pretty funny. It's always those damn meetings!
You can find their model estimates and actuals for Rent, Per Employee, Per Month (model: $250, actual: $336); Initial Per-Employee Equipment Cost; Monthly Benefits, Per-Employee; Annual Payroll Tax; Quarterly Bonus Payout, as a % of the Total Possible; Annual Payroll Increase for Existing Employees; All-Company Meeting Cost, Per-Meeting, Per-Employee; Annual Accounting Costs, and a few more.
There is also a great lessons section: Focus on headcount; Plan slow, run fast; Run top-down sanity-checks; Forget economies of scale; Admit that revenues are a mystery; Build from building blocks; Take out "hope"; Flag your assumptions; Hit $100 million in revenues within five years; Keep market-share under 20%.
I find $100 million in revenues a surprisingly high number. That's a lot of money. And the underestimate for meeting costs is pretty funny. It's always those damn meetings!
Reader Comments (4)
excellent (as usual)
Very good summary of the major points of startup financial. Planning is essential. The choices involved with development, architecture, layout, platform, provider and internal systems alone can cause serious issues.
More and more the unit of dev lifecycle and online marketing shake hands, as the SEO is now often responsible for integral assistance with planning of the taxonomy of the entity, which ultimately affects every part of development. Incorrect planning can triple development costs by going back and reimplementing errors.
From a marketing point of view and ROI, nothing is or can be written in stone, and forecasting revenues is like forecasting weather. The best way to startup is to tackle the uncertainties and the assumptions, and make sure you do not leave any stone unturned.
My Dad used to always says 'measure twice, cut once'. When you are running a large business, this isn't more true. You have to be quick to adapt, and quick to execute, but need to take time in the planning process to ensure that all of the elements are in place.
yeah, reall planning is not that easy and I completelly support the provrb quoted by memory foam... By the way to me this new website that you launched is a noble move. Not many people would contemplate starting a business, but here you are helping them. :)