#Startups: #CashFlow, #Revenue - in that order

Well, there are midlife Entrepreneurs. . Currently we are working together to build what we believe has strong uniqueness. Well, let me keep the 'what we do' apart. At your mid-life, the adventurism is gone, as life overalls mellows you with its experience, and Mr. Surprise is not a welcome visitor. Now, we want many safety nets to become an entrepreneur.

The fundamentals of business remain the same. The most important aspect comes to survival - or the oxygen mask, so to say. This is in the form of cash flow. Cash in is always equal to or greater than cash out. Now the source of cash in could be sales revenue, capital investments or loans. When sales revenue is the only source for cash inflow, ideally then the organization is said to be 'funding itself' or running on 'revenue accruals'.

Cash flow is more important than sales revenue, as sales revenue is, as mentioned only one of the source cash inflow. As an entrepreneur it is important to put a chronological approach to cash flow so that you know exactly how the entire month pans out.

Cashflow, Revenue: In that order. 

Month? Most of us look at bills, salaries to employees etc., which is on a monthly basis. If our expenses are monthly, it is only natural for us to measure our income monthly. Even entrepreneurs' expenses are monthly. So what we are essentially looking at is - monthly sources of income. Hence cash flow supersedes any other form of measurement metric, because this is a survival metric.

This is not to discount the importance of sales revenue. Right from the minimum viable product ( MVP) to successive versions, there is only one version - monetize, monetize and monetize. This is a proven successful model for managing investors, and also attracting higher valuation.

So, the priorities are cash flow, followed by Revenue. Everything else, including Brand, and valuation follows later. However, there are exceptions. We will deal with them in a subsequent blog.

- Ashok Subramanian

(C) Cherunathury Tech Ventures 2014