Excellent work on cash flow forecasting! Now let's decode the three essential financial reports that every tech startup founder needs to understand.
Think of these reports as your startup's vital signs - they tell you exactly how healthy your company really is.
Engagement Message
Name one term you've seen on a financial report that left you scratching your head.
Meet the "Big Three" financial statements: Income Statement, Balance Sheet, and Cash Flow Statement. Each answers a different crucial question about your startup.
Together, they paint a complete picture of your financial health from three different angles.
Engagement Message
If you had to monitor just one of the 'Big Three' statements, which would you pick?
The Income Statement answers "Am I making money?" It shows your revenue minus expenses over a specific period, like a month or year.
Think of it like a report card for profitability - it tells you if your business model actually works.
Engagement Message
What's the difference between having users and being profitable?
Here's a simple SaaS app example: Monthly Recurring Revenue $10,000, Server costs $1,500, Development costs $3,000, User acquisition $4,000. Net Income = $1,500.
This $1,500 profit shows the business model is working, but we need the other statements to see the full picture.
Engagement Message
What expenses do you think this SaaS startup might be missing from this simple example?
The Balance Sheet answers "What do I own and what do I owe?" It's like a snapshot of your startup's financial position at one moment in time.
Assets (what you own) must always equal Liabilities (what you owe) plus Owner's Equity (what's truly yours).
Engagement Message
If your startup closed today, what would you actually own versus what you'd owe?
