Over the year from my various interactions with founder teams, start-up CEO’s and Venture Capital investors, it becomes apparent that a large percentage of early-stage businesses enjoy similar characteristics. Founder teams are often a combination of complementary skill sets including a passionate and robust entrepreneur who understands the ins and outs of the product/service offering and a savvy engineering-minded / technical leader to oversee the product and tech development of the offering. More often than not missing from the core team is an experienced commercially adept financial member.
In my opinion and based on my experience, this often results in critical financial metrics being overlooked by these founder teams during the business foundation phase and subsequent roll-out. The most important of which is the bottom-up analysis and refinement of a robust, sustainable and cash generative revenue model.
For any management team understanding the critical drivers of how to monetise their product and service offering is key to ensuring the “best fit” revenue model to generate maximum profit which in turn supports sustainable growth. Founder management teams and early-stage entrepreneurs are often too vested in the functional and technical attributes of their product and go to market strategy, often at the expense of analysing and understanding the economics that drives the commercial business model and related pricing strategy.
Having a robust financial model based with measurable data points will not only provide a benchmark for business analysis and financial modelling but will also act as a blueprint for the customer acquisition and brand development teams respective planning, implementation and execution marketing strategies.
In my experience working alongside early-stage founder teams management must have a comprehensive grasp of the key financial drivers and commercial metrics of their operating business model to optimise product development strategy and to implement effective and measurable marketing strategies.