Most Important Finance Skill for Founders

This weekend, I did an interview with Abhinav Sinha, host of the Funds & Founders podcast.

(Will share the episode when it's released!)

He asked a great question:

"What's the most important finance skill that founders need to learn?"

This was my answer:

You need to be able to see the through-line from the activities you do in your business, all the way to the bottom line.

All businesses work like this:

Their profit is equal to their revenues, minus their costs.

Profit = Revenue - Cost

But here's the thing:

It's not always obvious how those things relate to the stuff you ACTUALLY DO as a founder every day:

• What does your cost have to do with the number of customers you're reaching out to on LinkedIn?

• What determines whether this new benefits provider will save you money or cost you money?

• What's the relationship between your employees and your revenues?

• Are customer discovery calls a cost center or revenue generator?

• How will going out and pitching an investor impact any of this?

The through-line is often hard to find.

It all comes down to your business model.

The way that money gets made in your business.

From enticing buyers, to delivering what you do, to supporting your infrastructure, to generating returns, and everything in between.

Which is why, for so many founders,

You only start to see it

When you build a financial model

In Excel

Yourself.

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