Hello, and welcome to this new blog!
Salient Point helps young companies make sense of the complex world around them. This can include customers, markets, suppliers, competitors, business models and investors. This blog is intended to share thoughts from my colleagues and I that might be of interest to our customers, and to others involved in technology startup businesses in Scotland and elsewhere.
I’ve had a few interesting conversations recently about the difference between the numbers that are useful in managing businesses, and the numbers that are usually used by accountants. I am very familiar with this from working in a larger consultancy earlier in my career, where none of the key numbers (forward load, utilisation and average fee rate) would ever appear in any formal financial statement.
These days I do most of my work with startups, which are often funded by investors and don’t have any sales to speak of. Until startups companies generate significant sales, the numbers I always want to see to manage the business are burn rate, runway and “drop dead” date. Since these don’t have formal definitions in conventional accounting, I thought I’d post the definitions I use! If you are using different numbers for the same purpose, perhaps you could post a comment and share your version with us!
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