TOPIC 3: FINANCIALS AND KEY METRICS
- Always provide a quick run-through of your financials in the beginning of the meeting.
- For early-stage companies, burn-rate is key. Tell your board exactly how much cash you burned last month and on average over the past three months.
- At every board meeting, report on how many months of runway you have left in the following two scenarios:
- Assuming no revenue in the company and maintaining your current operating expense. (Note: If you have some guaranteed, recurring revenue, include that, but not any growth.) If there are imminent hires or expenses that you know you must make, include them here.
- A conservative plan of potential revenue growth (i.e., achievable rather than aspirational), offset by any growth in hiring/other costs that are projected in your current plan.
- For financials, report actuals versus plan. Reporting actuals in a vacuum isn’t much help to your board. Of course, seed-stage plans are frequently missed by a mile, even by great companies, as the forecasting process at this stage is extremely difficult and largely based on guesswork. But you should still have a reference point. And if a few months into a year you realize everything has changed, rework your forecast. What’s important is making sure you have clear goals that you’re working toward, and that your team and your board very clearly understand.
- While detailed financial projections may seem unimportant at this stage, providing this overview will ensure that your board is fully aware of when you might need to start fundraising again, and it can help them advise you accordingly. Don’t let your cash-out date sneak up on you!
- When speaking about financials, you should also review the key operating metrics that you are actively tracking.
- What are the metrics that you and your management team focus on together?
- What are they key predictive metrics that help create visibility into the health of the business one or two quarters ahead?
- What are the metrics you track to monitor the underlying unit economics of your business? These might include cost of sales, customer LTV, gross margin, support and customer success expenses, and others.
TOPIC 4: FUNCTIONAL UPDATES
- This is the section that varies most from company to company. It’s where you’ll dissect what’s been happening at the company since the last board meeting.
- Individual functions will vary by company. Very early-stage companies may only have two areas of focus – product and sales, for instance – but as a company grows and gains customers, its functional areas will also grow to include things like customer success, marketing, and business development.
- For each function at your company, think about what went well and what did not go well.
- It’s important to celebrate wins and achievements with your board, but it’s also crucial to be transparent and not cover up any underlying issues.
- A key part of a functional update is comparing what you did versus your “Focus Areas” provided at the last board meeting (see Topic 5).
- Lay out your goals for each function (or OKRs, if applicable), and color code each of those with a traffic light system: green for performing, yellow for making progress but with certain issues, red for making little or negative progress.
- Your board will likely spend time discussing the areas where progress is slow, and help you to identify strategies to rectify that.
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