A business founder’s revenue projections can become a guiding light or hanging noose.
In planning for the funding of new companies, it’s all about revenues per employee.
The success of most early-stage companies is dependent on the accurate projection of cash flow, not the hoped for profits, which are merely investor-tempting cosmetics.
It is better for all, if the company becomes successful and executive compensation is primarily common equity, for which little other than effort is rewarded, rather than investor-paid wage and benefit packages.
Attorneys, and others who are trained to be precedent-biased in decision making, are better used as advisors and not as Board members.
It takes different skills to be entrepreneurially successful in creating and attracting investors to fund a company, than to manage it as a CEO. There are cases when the same individual can do both, but they are rare.
CEOs should be hired to analyze and evaluate the risks and rewards of opportunities, as well as to motivate and manage personnel. Vision and approval of capital changing actions should be approved by an owner-involved Board.
Investors are generally much better served by owning a new company’s percentage of revenues than of the company.
Arthur Lipper, Chairman arthurlipper@gmail.com
British Far East Holdings Ltd.