Flashcards on Back-of-the-Envelope Financial Planning for Startups
Back-of-the-Envelope Financial Planning for Startups
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Startup Financial Planning
22 cards
Card 1
Question: What is 'Revenue' in startup financial planning?
Answer: All the money you bring in from sales. (Example: 500 T-shirts × ₹600 = ₹3,00,000/month)
Card 2
Question: How do you calculate 'Profit' for a startup?
Answer: Profit = Revenue – Cost (where Cost includes fixed, variable, and any one-time setup costs)
Card 3
Question: What are 'Fixed Costs' and give examples.
Answer: Costs that stay the same every month regardless of units sold. Examples: rent, salaries, internet.
Card 4
Question: What are 'Variable Costs' and give examples.
Answer: Costs that change depending on how much you sell. Examples: raw material, printing cost, shipping, influencer ads.
Card 5
Question: What are 'Setup Costs' in the context of a startup?
Answer: One-time money spent before launch (entry fee). Examples: buying a laptop, building a website, getting licenses.
Card 6
Question: What does COGS (Cost of Goods Sold) represent?
Answer: The total cost to produce and deliver one unit of your product, including fabric, packaging, printing, delivery charges. (Example: 100 T-shirts at ₹25
Card 7
Question: How do you compute 'Total Cost' in startup financial planning?
Answer: Total Cost = Fixed Costs + Variable Costs (+ Setup, if one-time)
Card 8
Question: What is CAPEX (Capital Expenditure)?
Answer: Larger, one-time purchases that last a long time (long-lived assets).
Card 9
Question: What is the $10 million revenue test and why is it used?
Answer: A thinking tool to assess whether an idea could scale to ~$10 million annual revenue in 3–5 years; used as a marker of serious potential for investors
Card 10
Question: According to the provided content, what proportion of startups in India cross the $10 million revenue mark and what impact do they have?
Answer: Fewer than 5% of startups cross the $10 million mark, but those that do create over 80% of the total valuation in the ecosystem (India Venture Capital