Business

Over the last three weeks I have visited the west coast twice and Toronto once to help clients work through funding rounds and strategic acquisitions.  I also visited with two angel investment groups which I work with.  The primary purpose of each trip was to help clients develop and realize their capital strategy for growth.  While most of these entrepreneur clients are in technology fields, others include a tax planning firm and a Bollywood project out of Toronto.

It does not matter what world your business is in, developing a solid capital strategy is essential to success.  Most companies are financed through personal earnings, angel investment, PE or VC investment, debt financing or grant funding.  Companies are then scaled on retained earnings or some additional outside investment.  Unfortunately, most entrepreneurs heading up earlier, high growth stage companies have not taken the time to develop their capital strategies.  This often results in inefficient and underfunded businesses with bad financial habits.

The three keys to a successful business model are:

1. A well developed market strategy;
2. The correct leadership team to carry out the market strategy; and
3. A capital strategy capable of funding the market strategy and team through growth. 

The key to developing a solid capital strategy is understanding your cash flow requirements and developing good projections.  The entrepreneur’s understanding of cash flow is paramount to the success of the company.  While employees care about salaries and managers care about margins, entrepreneurs care about cash flow.  The sooner the entrepreneur understands this the better.