When to start

tiny thoughts Apr 05, 2022

Every now and then, a founder assumes that because I do this finance thing, I must believe it’s the most important aspect of running a business, and one that requires their full attention fresh from the start.

That cannot be more wrong.

Finance usually only starts being a thing once you have initial clarity on two fronts: (1) what the problem is that you’re trying to solve (“problem” defined loosely in entrepreneur speak as anything from “I can’t get my laundry delivered at 2am in central London” to “every 40 seconds, someone in the US has a stroke”), and (2) what you’re selling and to whom to address it.

Of course, you may need some money while you’re figuring these things out, but that's mostly a matter of personal finance, and whether you can afford to not have income while you’re coming up with your answers, or whether you need to stay in a full-time job or freelance while you’re doing that. (Often a good idea even if you can afford to quit, because almost everyone I know completely underestimated how much time it will take to launch and as a result, nearly (or fully) ran out of cash in the “I-really-thought-I-would-have-launched-by-now” stage.)

There is little (=nothing) that finance can help with on these fronts. Instead of crunching theoretical numbers, follow a problem that you’re excited about and talk to the potential customers, ideally by putting a good-enough MVP in front of them and asking them to pay for it.

Once there is something that someone is willing to pay for, then it makes sense to start thinking about unit economics, what your P&L may look like, how to grow revenue, and the like. At that point, finance-y input can help. But not much sooner.

Love and cash flow,

Jana

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