Running out of cash denigrates the very value of a business, reducing greatly any bargaining power with suppliers or acquirers. A company that otherwise might be valued at twice book value, 1x revenues, or 10 times earnings will be valued at a lower amount by potential acquirers knowing that the company shareholders are in a tough position and management hungry for leverage and a little more sleep at night. Money in the bank is like oil in the car. MORE

Worse yet, the IRS would then consider the accrued amount to be taxable income upon which no tax was paid, since the accrued labor as an investment has value that was not accounted for from previously taxed earnings. MORE

For example when you say sales do you mean booking or revenue? If bookings are the total contract value of everything you sold in a period, how do you normalize for different contract lengths? Are renewals counted in bookings or broken out separately? New MRR – Also a bookings number but this normalizes for the monthly/annual/2 year booking but simply taking the one month value of all the customers sold in the period we’re talking about. MORE

For example when you say sales do you mean booking or revenue? If bookings are the total contract value of everything you sold in a period, how do you normalize for different contract lengths? Are renewals counted in bookings or broken out separately? New MRR – Also a bookings number but this normalizes for the monthly/annual/2 year booking but simply taking the one month value of all the customers sold in the period we’re talking about. MORE

Putting that point aside, for a moment, what is absent is a quoted liquid market in their equity and debt securities, which means that the determination of the book value of those private companies is necessarily subjective. MORE

Cash and the value of your business. Running out of cash denigrates the very value of a business, reducing greatly any bargaining power with suppliers or acquirers. A fast-growing but undercapitalized company is not highly valued in an acquisition. MORE

Product/Market fit now has its own book. This week the author of the business model canvas, my friend Alexander Osterwalder, launched his new book Value Proposition Design , the sequel to his million copy best seller, Business Model Generation. His new book does three things: 1. MORE

Let’s take a book, your book. Your book is the value you bring to the marketplace. The cover of your book is your personal brand. In other words, your cover is the assessment that the marketplace makes about the value you bring too the marketplace. MORE

Every S-1 contains the same language in Risk Factors that reads, essentially, “If you buy shares in our IPO, you will experience substantial and immediate dilution in the pro forma net tangible book value per share.” MORE