One of the mistakes a lot of CEOs make, is they assume that they’re going to have success on their revenue, and they build their cost structure in advance of that.”
In the first of a three-part series, entrepreneur and early stage investor Brad Feld discusses the importance of smart CEOs clearly understanding the financial dynamics of their business.
It’s not enough to know what your projected revenue and spending alone will be. As Feld reminds us, a strategic CEO needs to understand how spending should be adjusted if projected revenue isn’t met, because as most founders learn, first projected revenues are rarely realized.
“Being on budget is not the most important thing,” says Feld. For investors, it’s more important that they can see a CEO adjust to the realities of the revenue ramp and build spending accordingly, instead of trying to back pedal spending to make up for the actual revenue pace.