As someone who is responsible for operation for a product startup.

It is essential that I know how my decisions impact profit. It is important

to convince external sources of capital that the business will be profitable
and, depending on the size of the investment, that the principles have a
prior track record of success.

The business plan needs to clearly outline costs and revenues in

a cash flow timeline that demonstrates to investors that they will see return
on their investment (ROI).

The funding sought needs to support product development, the

building of manufacturing and establish sales channels. Conversely you
want to limit the need for additional funding as to not dilute share value,
negatively impact initial investor’s shareholder equity and the “skin” in the
game for employees with shares and/or stock options.

In a startup cash is king. Operations consumes current assets and

generates sales revenue through manufacturing and shipping product
against customer orders. It needs to do this in a way that
maximizes gross marginthrough controlling its cost of goods sold (CoGS).

It also needs to control its portion of operating costs to favorably

impactearnings before interest, taxes, depreciation and amortization (EBITDA).

In what I do a business is built for the purpose of getting to a point

where its value reaches a superior ROI for its founders and investors and
it is sold off. For those who invest in the venture it is very important that
they weigh the ROI of this investment against the opportunity costs of
putting their money into some other venture. To them the time value of the
money they have today is how they weigh the success of the investment.

In conclusion, the course has emphasized to me that money is not

stagnant and its current value is not as important as its future value
(FV) when making an investment decision where the ROI spans a
considerable period of time.

It has helped me to better frame up costs and revenues to investors

that speaks to their specific concerns: are we on the trajectory of sales
and margins that will deliver ROI.