top of page

Financial Risks: What Should First Time Founders Be Aware Of?

As a first time founder, there is immense pressure on you to build your firm and achieve financial stability. However, the journey of building is riddled with a variety of challenges and pitfalls, which if left unaddressed could result in failure to build and eventually cause the company to shut down. 


Most first time founders fail to recognize that building a scalable firm is not about having the perfect technological solution to a problem, or being on top of the trendiest business models. A scalable business model is built by optimizing organizational processes that result in repeatable financial performance. 


To build financially successful, scalable businesses, founders should-


  1. Understand the unit economics of your business: Understanding the unit economics of your product/service can do wonders for your business when it comes to scaling. The lower the unit economics, the easier it is to provide the good/service to the market. If unit economics are well understood, the processes involved in the production and sale of the product or service can be optimized- leading to improved scalability.

  2. Understanding the sources of cash flows: As a growing organization, it is imperative to manage your cash flows, as having excess negative cash flows can result in the organizations being unable to pay creditors, meet payroll obligations or invest in growth opportunities. By understanding the sources of cash flows, you can optimize cash inflow and outflow and focus on company growth. 

  3. Understanding the sources of operational risks: Some processes that your organization may employ are time sinks that result in you bleeding cash. These processes need to be optimized to ensure operational efficiency. 

  4. Understanding the compliance and regulatory requirements of your startups: As a first time founder, you may not be aware of all the compliance requirements that are required from your startup. Not meeting these requirements can result in fines, penalties and reputational damage.


We believe that getting a solid understanding of the above requirements will set a first time founder on the right track for a successful scaling journey. 


Comments


bottom of page