👋🏾 Hi friends!

Hello again from cold but sunny Tuscany 😀 

As promised, this week’s Off Balance is going to be a little (ok, a lot) shorter than normal as I unwind and reflect on the last year as well as plan for the year ahead.

Not that it hasn’t been a pretty busy December all in all, but sometimes you just need to stop being ‘productive’ and start getting strategic in your thinking.

So as you get the turkey in the oven and take that extra glug of wine to deal with your in-laws / sibling / cranky uncle, take a step back and give yourself a pat on the back for everything you’ve managed to get done this year which – at least in startup land – has been a pretty crazy one all in all.

Now let’s get down to business…

In this weeks Off Balance, I’ll be chatting about:

❓️ Planning a strategy as a first time solopreneur
❌ 10 things CFOs see founders doing that they REALLY shouldn’t be

Also, in this week’s Nothing Ventured, I spoke to Matthew Stafford, Co-Founder of 9Others, an offline social club hosting small, intimate dinners where entrepreneurs can – over a good meal and no doubt a bit of liquid courage – ask each other the answers to the questions that have been keeping them up at night.

Matthew also invests in early stage businesses and has a golden rule not to invest if it’s the first time he’s meeting the founder who is pitching.

As always, our Primer episode gives you a bit of background on how he got to where he is today – pheasant beating and all 🦃 

Also, if you have any feedback, or if there’s something you’re desperate to see me include, just reply to this mail or ping me online – I’m very open to conversations.

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Now let’s get into it.

How can did I add value?

This week I decided to try and add some value to someone who’s business has been transformational in my life.

Me.

Yes, I decided to sit myself down and give myself a bit of purposeful direction 😂 

There is an old saying, “physician, heal thyself” that comes from the Bible (Luke 4:23) and is one of those sayings that rings very true to me.

I spend a lot of time helping others out with their businesses or giving advice on their personal situations, but rarely take the time to do the same for myself.

It’s also true that it’s much easier to give advice than to take it, and even easier to second guess one’s own advice.

That’s why having mentors and coaches in your life can be a game changer.

Whilst I have lots of people whose wisdom I am able to draw upon, I’ve always defaulted to reading as a way to ingest the learnings of others – after all, we stand on the shoulders of giants.

At the moment, I am reading The Go To Market Handbook for B2B SaaS Leaders written by Richard Blundell, Paul Watson and Chris Tottman. I have known Chris, founding partner of Notion Capital, for a while, but had my first conversation with Richard only recently with a view to getting the three of them on the pod.

They’ve scaled and exited, failed and restarted multiple times and have really learned what works in the world of B2B SaaS – even if the term didn’t exist when they were doing it.

Now, my business isn’t actually a SaaS business, it’s a services business and as a result, I’ve always found it difficult to really hone in on our value proposition.

After all, the sort of things CFOs do is many and varied (just read all the posts I’ve written on them!)

But whilst I was reading the book, I had a bit of a mini-epiphany…

What if I flipped my thinking.

What if I thought of the business as a software business and our CFOs as a product solving a pain point for our customers.

You may ask why that’s necessary, after all, I could probably come up with a value proposition without going through a contorted thought process. But as I mentioned, service led businesses often get into all sorts of projects, but software solutions (at least the really great software solutions) tend to solve one problem (initially at any rate) incredibly well.

So I started thinking about all the issues that our customers face and what it is that we do to solve them.

That’s everything from managing cash flow and burn, to dealing with investors and financiers, navigating the board, setting up KPIs and metrics, regular reporting, dealing with EMI schemes, R&D claims and a plethora of other things.

And I tried to narrow those down into the essence of what it is that we are solving.

Then I tried to think about our customers – founders – and what intrinsic pain they face that we are there to solve for.

Now let’s face it. Founders face multiple pain points on multiple fronts, but ultimately the one that keeps them up at night (at least in the earlier stages of their business) is whether they can keep the lights on. Do they have enough fuel to keep the furnace burning and, more prosaically, are they going to make payroll this month.

The pain that they have is, simply put, will they have enough cash tomorrow to keep the business running.

So I went through a couple of iterations and then (because I’m that sort of a guy) plonked it on LinkedIn to try and get some feedback.

And here’s what I ended up with after to’ing and fro’ing with helpful folk online as well as my own team:

I’d love to get your thoughts on whether this makes sense, if it speaks to you about something you’ve been or are going through and can relate to viscerally?

I’m going to keep on working on it and narrowing it down further until I have the gotten to the pure essence of what it is we do – watch this space!

As always, my office hours are open, if you’d like to chat about this or anything else, just grab some time 😊.

Off Balance

As we had into the uncharted territory of 2024, I thought it might be worth taking a look at a few of the things that startups really need to be focussed on over the coming twelve months to give them the best chance of success.

So here are my top five issues startups are going to have to deal with in 2024.

5 Things Startups Need to Think About in the New Year

Economic Uncertainty and Market Volatility
As the global economy continues to see volatility, bouncing around like a kid on a trampoline, startups have to prepare themselves for some pretty unpredictable market conditions.

Not least the end of the zero interest rate period and an expectation that high(er) interest rates are here to stay.

This means they are going to need to ensure they really nail their financial planning and forecast as well as possible so that they will be able to navigate this shifting landscape and changing economic scenarios.

They will need to ensure they reserve sufficient capital to make sure they can weather downturns and keep an eye out on how inflation and interest rates might impact their own businesses internally as well as their customer base externally.

Cash Flow Management
It goes without saying, therefore, that tight control over cash flow remains a critical challenge for all startups. They are going to need to ensure they optimise their burn rates such that they are able to grow efficiently and without wasting capital.

This means planning to make sure that spending is focussed on delivery of their strategic goals and milestones whilst maintaining enough reserves to see them through the longer fundraising cycles we’ve been seeing for more than a year now.

In turn, it means they are going to need to pay more attention to their finance operations, ensuring that they manage working capital tightly controlling both their receivables as well as payables to avoid unexpected cash shortfalls in the event that targets aren’t met.

Regulatory Compliance and Tax Changes
It’s dry, I know, but as we’ve just seen with the aborted Adobe/Figma acquisition, regulators (especially here in Europe) are keen to put their stamp on how tech progresses.

Further regulation on AI is another key area where governments will be sure to be looking and startups in this space need to be conscious of what these changes might mean for their services.

As startups scale, they’ll also need to be conscious of shifting tax requirements. We’ve seen some of those issues arise as a result of Brexit in the UK, but as well as this, I would not be surprised if we see further tightening of tax rules in general – again, the changes to the R&D Credit scheme in the UK are a good example of this – many startups found themselves short of cash at a critical point in their cash cycle having planned for receipt of these credits only to have had them challenged by HMRC (or denied altogether). I’ve taken to advising the startups we work with to remove them from their projections altogether and to treat them as a bonus if they are ultimately paid out.

Fundraising and Capital Structure 
The VC and general investment landscape is continuing to evolve. As I flagged in last week’s Lowdown, there is currently $4 trillion of dry powder waiting to be deployed, but this does not mean it’s going to necessarily find its way down into the majority of startups.

VCs whom I talk to on a weekly basis are all becoming massively more selective around the sorts of businesses they’ll back and even starting to bet on businesses they think will be able to survive and thrive without the need for multiple financings throughout their life cycle.

The changing environment also means that founders and CFOs alike are starting to look at their capital stack differently, taking on debt in some instances where it’s appropriate and reducing dilution where possible.

Term sheets are also becoming more protective to investors with liquidation preferences and enhanced control provisions (I recently had one seed stage founder tell me an investor was asking for quarterly audited numbers – I am hoping they had misunderstood but in this market? Who knows!).

Technology Integration in Finance
It goes without saying that startups will need to start thinking about how to leverage more software tools into their finance stack. These tools will have a number of roles to play.

Firstly improving efficiency and reducing costs from the need for manual intervention through automation and more connected process flows.

Secondly ensuring better real time data analysis and reporting so that the business can course correct as data dictates rather than waiting until the monthly numbers are other before making a decision.

All in all, it’s a brave new world out there for startups and I’m excited for the sort of innovation we’re likely to see as well as the path that founders and startups will take in this changed funding landscape sat amidst broader changes in the ecosystem and global markets.

Whatever else it’s going to be, 2024 is going to be an interesting year in the venture ecosystem and I can’t wait to see what it brings.

I hope you found Off Balance #24 useful. As always, I’d love to get your feedback and understand the sort of topics you would love to hear about.

Just hit reply to this mail or drop me a line at [email protected] and let me know 😊

🚀And that’s a wrap for this edition of Off Balance – I’d appreciate your feedback so just reply to this email if you’ve got something you’d like to say.

📨 And if you think someone else might love this, please forward it on to them,

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That’s it from me so until next time…

Stay liquid 🙂

Aarish