- Estimated duration: 3 hours
Modules
Module 6
Finance
In this module, you will learn the basics of finance for startups. You will be introduced to basic concepts of accounting and financial analyses.
While completing this module, think about the following questions:
- What are the different types of costs?
- What are the different types of financial statements and what are they each used for?
- What is a break even analysis?
- What is a cash flow analysis?
Section 1: Readings
Section 2: Videos
Section 3: Workshop
Supplementary Materials (Optional)
Section 1: Readings
Read the following materials to learn more about basic accounting for businesses and financial analyses.
‘How To Create a Startup Financial Statement’ (10 mins)
This article introduces the financial statement for startups by covering some of the most important financial documents (balance sheet, income statement, cash flow statement, and breakeven analysis). You will learn how to define and build each of these financial documents and analyze examples for each.
https://www.hubspot.com/startups/startup-financial-statement-template
‘How to Do a Cash Flow Analysis with Examples’ (10 mins)
When reading this article, you will learn how to create a cash flow analysis with a step by step guide on how to do so. You will also learn some tips on how to manage cashflows for your startup.
https://www.lendingtree.com/business/cash-flow-analysis/
‘What is Break-Even Analysis?’ (15 mins)
This article explains the break-even (BE) analysis. You will learn how to create the BE analysis (formulas and calculations), how to interpret it, and why it is important. You will also learn the benefits and limitations of the analysis.
https://biznessprofessionals.com/what-is-break-even-analysis/
Section 2: Videos
Watch the following videos to learn more about basic finance and accounting for startups.
‘Why Do We Need Accounting?’ (6:38)
This video explains the important role accounting has in running a business. You will learn the importance of accounting through an example story about a person who launches their own convenience store.
‘Accounting Basics Explained Through a Story’ (9:45)
This video helps you to understand the basics of accounting through telling a story of a person selling products to tourists.
Playlist: ‘The Art of Startup Finance’ (10 videos) (45 min total)
This playlist of 10 video explains many important concepts in finance, including financial statements, business model, budgets, forecasting, performance metrics, and more, to help you with managing your business.
‘Kirsty Nathoo – Managing Startup Finances’ (29:00)
This video shares the most common mistakes startups make with their finances and how to prevent them.
‘Startup Finance 101: Understanding the Basics on Your Way to Profitability | Startup Boston Week’ (53:35)
In this video discusses how finance can be a key factor towards success and profitability. You will learn about burn rate, scaling products, growth rate, profitability, and more.
Section 3: Workshop
Download the Excel file, Breakeven_Analysis, and follow the instructions on the “Information” sheet. You will create a breakeven analysis based on information about a simple word problem, and then discuss the results.
Feel free to play around with the numbers in the template to see how the BE point reacts to different values.
You may also keep this template to run a breakeven analysis for your own business as well.
Supplementary Materials (Optional)
These materials are not compulsory for the course. This is a library of additional resources for those who want to go beyond the course and learn more about topics related to this module.
Readings
‘Break Even Point: Formula, Definition, Analysis and Guide’: https://www.shopify.com/blog/break-even-analysis
‘Fixed Costs and Variable Costs’: https://corporatefinanceinstitute.com/resources/accounting/fixed-and-variable-costs/