ES-IV: Managing Finances of a Startup
Profit & Loss and Balance Sheet While cash-flow management is a priority for startups and mature companies, an important question one needs to ask is how much money a company will generate from each unit of product or service that it sells (or plans to sell) . A good understanding of this will help the entrepreneur arrive at the number of products / service offerings to be sold, for the company to break-even and become profitable. We will start this blog by understanding Product / Service Margin . This will play an important role when we take up Profit and Loss (P&L) computation later. Though a startup may have some distance to go before actually selling products/services, these estimates should be computed even during the product development stage. Let us term this Product margin estimation . When the product/service is being sold, this straightaway gets plugged into the P&L. The margins multiplied by the number of units sold and delivered will