Frequently Asked Questions
As an Advisor and actively engaging with the startup ecosystem, we are asked tones of questions. Many of these questions have recurring themes. Some of the questions that we are asked across the Startup ecosystem include:
When should I get a CFO?
This will be an imprecise response as there are many variables that drive the need for a CFO. Key factors include:
(1) funding raised,
(2) transaction volume,
(3) complexity of the business,
(4) country operations
(5) systems architecture
(6) rate of growth
(7) unit economics
Do NOT hold back on taking on a CFO because of your cash burn. A CFO can work with you on addressing that and a number of other matters.
What is the difference between Xero & MYOB?
The analysis should be done based on your business and not other's experiences. Sit down and define your key requirements and what you want from an accounting system. If unsure, reach out to an accountant who can work with you on your needs analysis. Once completed, look at the features and, finally, the costs prior to making your decision. In your decision making, remember that the longer you persevere with excel, the greater the likelihood of error.
What does positive unit economics mean?
Unit Economics refers to the financial assessment of an individual unit in the business.
What is the TAM and how do I calculate it?
TAM can mean either the Total Addressable Market or the Target Addressable Market. In other words, it is the size of the market in which you wish to play and can be measured by country or multiple countries. It can be measured a variety of ways but the best approach is to source reputable data sets from government or regulatory bodies to set a baseline number.
What should I include in a Financial Model?
Think of the financial model as a numerical representation of your business plans. It needs to reflect what you say you are going to do and presents it via a profit & loss, balance sheet and more importantly, a cash flow. It should provide insights and graphical representations of this plan
How much is my company worth?
The value of your company is highly dependant on a number of factors. Some of the key factors in the determination of this value includes:
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What someone is willing to pay for it.
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The size of the problem that you are seeking to address, also known as the size of the market
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Your product's unique characteristics
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The maturity and potential of your product
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The unit economic results
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Ability to scale
Other Questions
Some of the other questions that we are asked over and over include:
Should I take in the investment as Debt or Equity?
What does due diligence require?
When will I need an audit?
How much capital do I need?
How do I incentivise my employees
How much do I share with a potential investor?
What I do when I have external investors
What is an ERP System?