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Category: Finance & Accounting

Price Your Product to Capture the Value You Create

May 14, 2014 by Shyam Jha

value based pricing

Are you leaving money on the table by pricing products based on costs? According to Wharton marketing professors Jagmohan Raju and John Zhang, most companies either price their products and services based on their costs, or their competitors. They fail to capture the value they create for their customers. When asked how they set their prices, many executives throw their hands up the air and say, we don’t set the prices, markets do. They are wrong. Markets don’t set prices; marketers do. In their book titled Smart Pricing, Raju and [Read More]

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Understanding Revenue Recognition for Software and Service Companies

July 18, 2013 by Shyam Jha

I was recently speaking to a software company CEO who was excited about having signed a big multi-year contract with a customer. He mentioned that this contract would significantly increase his sales during the current year. I asked him about the kind of payment agreement his customer had signed. “It’s a software-as-a-service (SaaS) model. The customer will pay monthly fees.” I told him that he would only be able to recognize the actual monthly payments made during the current fiscal year as revenue. He was surprised. “But we signed a [Read More]

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Recordkeeping for the Restless

December 21, 2012 by Akira Hirai

recordkeeping for startups is essential

Why keep business records? When you’re passionate about your company, keeping accurate business records can seem like a boring chore. It’s not the most glamorous or engaging task, and it requires patience and good organizational skills. But while dealing with paperwork can seem burdensome, a thorough and up-to-date record system can save you headaches and work down the road – and best of all, save you money at tax time. It can also help you improve your client relationships and accurately assess your company’s performance. In fact, maintaining immaculate business [Read More]

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Business Is So Good It’s Killing Me

October 25, 2012 by Jimmy Lewin

Cash Flow Management With Factoring

A call came into our office last week from a stressed out small business owner in Florida. He said that he needed a business plan right away that he could submit to a bank for a loan to fuel the growth of his commercial landscaping business. One of our consultants asked him to provide some details and this is what we learned: Business is great. He has about 80 commercial accounts, mostly multi-family and office properties. In most instances, his customers are property managers. New business opportunities seem to come [Read More]

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8 Reasons to Start Accepting Mobile Payments

August 22, 2012 by Akira Hirai

mobile payments

Mobile payment systems are sweeping the consumer landscape, offering speed and flexibility to both customer and retailer. Mobile payments include both systems that allow consumers to make payments with their smartphones, as well as systems that allow merchants to accept payments on their smartphones. Some systems even enable phone-to-phone payments. From movie tickets to meals, buyers are growing accustomed to making purchases with their smartphones. This means that while some small businesses have expressed misgivings about the security of mobile payments, those who don’t adapt to consumer expectations may soon [Read More]

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Why Startups Need Accountants

July 16, 2012 by Jimmy Lewin

Why startups need accountants

Last week we received an inquiry from a young woman in North Carolina. She told me that she and her husband wanted to start a commercial landscaping business. She said that neither of them had ever worked for themselves, and that they had no idea what to do. She wanted help in starting and running the business “from the ground up.” I told her that she was actually talking to the wrong guy. I explained that the “go-to” person to speak with about starting a business and running it in [Read More]

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Ten Common Financial Model SNAFUs

July 2, 2012 by Akira Hirai

Avoid these ten common financial errors

I plan to publish a series of posts on mistakes I frequently see in financial forecasts (or pro-formas, or financial projections, or whatever you want to call them). I’ve segregated the common mistakes into ten broad and sometimes overlapping categories. Today, I’ll describe these categories, and future posts will go deeper into each category, discussing ways to identify and correct typical errors within the category. Here are my ten categories of financial model errors: Big Picture & Scope Errors. Your model should be designed so that the level of detail [Read More]

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Advertising is Rarely a Viable Startup Business Model

May 3, 2012 by Akira Hirai

advertising is not a viable business model

First-time Internet entrepreneurs often have unrealistic expectations regarding advertising revenue in their financial projections. It’s not enough to say “hey, it worked for Facebook.” Not only was Facebook a rare exception; it remains to be seen whether or not they can monetize their user base at anywhere near the value implied by their valuation. Internet startups can expect to generate very little revenue during the first few years while it is still relatively unknown and user counts are still low. Until you get a million page-views a month, your revenue [Read More]

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Managing Your Startup’s Burn Rate

April 19, 2012 by Marty Zwilling

Managing Your Startup's Burn Rate

Cash is the fuel of every startup. Your burn rate is the rate at which that money is being spent, and allows an estimate of how long you can go before refueling (runway). That refueling is when you will need more investment, or when you will break even and begin that steep profitable growth curve. Investors also look at your burn rate to see how efficient and effective you are at running the business. It continually amazes me how two startups, seemingly comparable in stage and objective, can be so [Read More]

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All Startups Require Financial Forecasts

September 26, 2011 by Marty Zwilling

All Startups Require Financial Forecasts

Most entrepreneurs tend to avoid this area of the business, and as a result are badly surprised by cost realities, and investor expectations. They seem to think that financial projections are simply invented numbers for investors, and not useful. In reality, it’s like jumping in your car for a long hard drive with no destination in mind. Chances are, you won’t enjoy success from the trip. What is a business financial model, really? In most cases, it is merely a Microsoft Excel spread sheet loaded with your cost and revenue [Read More]

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