Women in startups need to start breaking those barriers limiting them from growing. Society only sees women in one way, but now it’s time for women to enter the business. Startup Tandem is your next business partner. Their founder, Alejandra Santos, strives to help entrepreneurs, especially women, reach their financial goals. Join Elliot Begoun as he talks to Alejandra about Startup Tandem and what’s holding entrepreneurs back. Learn how to embrace fear and go out there into the business world. Discover what makes a good set of financials for your business. Start managing your balance sheet and forecasting your cash flow. Be a leader in your business today!

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Breaking Through The Barriers As A Woman In A Startup With Alejandra Santos

I’m glad to have everyone here excited for this conversation. We’re going to have a far-ranging conversation about finance, female entrepreneurship, the important role that women play, the need for more women leaders in this industry, etc., and all the other things that we’re talking about Jedi and more. Before I introduce our guest, a couple of things to call out, a couple of interesting points. For those who are reading this, I’m assuming this is coming out before the Hirshberg Entrepreneurship Institute.

If you have not yet purchased your tickets for that online event, please do so. I have been giving my time to Hirshberg Institute for numerous years. I do so because I feel like it’s one of the best ways to learn. It’s one of the best forums for sharing information, garnering new knowledge, but also to build new connections, and so forth. The first two days are case studies presented to panelists. One on marketing, one on finance, and one on eCom. The third day is an opportunity to pitch in front of an investor cohort in a different form. All of it is based on shared learnings and opportunities. Please participate. It’s only $50. It’s time well spent. In 2023, we’ll be back, hopefully, live. We do at least two Hirshbergs a year, one in Boulder, and one in Auckland, New Zealand. I’ll be excited to be present for both.

Let’s get this party started. I want to introduce Alejandra Santos. I got a chance to chat with her. Quite frankly, I was blown away by her business acumen, personal journey, and the role that she’s playing for lots of founders. I asked if she would find it in her schedule to join me and chat, and she graciously has. I’m thrilled to have you here and love for you to introduce yourself.

Thank you, Elliot. I am so grateful to be here. Thank you for the opportunity. My name is Alejandra Santos. I am the CEO and Founder of Startup Tandem. The role that I play in an entrepreneur’s life now is amazing. I get to be in contact with many businesses and entrepreneurs at a very early stage. The role of Startup Tandem is to help these businesses build their business and finance infrastructure from a very early stage all the way until they’re done with me.

First of all, tell folks a little bit more about Startup Tandem and the role that it plays and when it makes sense to engage, and the scope of service. I want to dig in soon after that into the roles that you’ve played and the experiences that you’ve had but plug the business a little bit here.

Startup Tandem was created to fill the gap in the consulting industry, which is providing those valuable services or what is perceived as a valuable service to entrepreneurs and startups at a very budget-friendly price. Startup Tandem was created to operate as a fractional CFO and accounting service. It has expanded all the way to HR, business development, and business coaching.

In all honesty, this is for anyone. I go to Farmer’s Market and see an entrepreneur doing a very innovative product. I say, “Why are you selling it? What side are you on pop-up stores?” If I liked the product, I give them my business card and say, “Reach out to me. I want to coach and help you scale your business.” It’s for anyone that has the pattern and a great idea. They can come to me for business coaching. I have people who don’t have a business structure yet, but they come to me to ask for advice.

What is my business structure? What should I be doing? How can I form it? What is my business model? All the way to businesses with $1 million in revenue or $13 million in gross revenue. There are a lot of other big ones, but it doesn’t matter where you are in your journey. Startup Tandem was created to help you help create its goals and be that business partner. As a creative, you know that you don’t have the business mentality. You did not. You could be creative, passionate and innovative, but you do need a business partner. That’s what Startup Tandem does.

Why did you start this? What made you decide to build this business?

It’s very interesting, Elliot. I had this vision in 2017. I run many miles. I love running. I meditate when I run. It’s one of those things. I pictured this community of startups helping startups and entrepreneurs become successful. I come from a background where I didn’t have a support system. I basically did it all on my own. It was very hard. I’ve been on my own since I was sixteen and doing all steps forward alone, which feels like a long journey.

It has gotten here because I’m very passionate about giving the support that I didn’t have to other people. I guess you could say that my past and struggles are the ones that gave me that vision of bringing a community of startups to interact with other startups like marketing agencies. A lot of other startups are doing great things in helping entrepreneurs. That vision in 2017, when I was running miles, I kept crying and said, “I want this business and help people be successful. How do I do this?

It was a matter of time before things went into place. When you think about something and put it out there, the universe unfolds to you. It gives you the opportunities for you to see and have more clarity, and that’s what happened to me. I went into the startup industry. I worked for different startups and in the consulting industry as well. That’s when it came real to me. I see the problems that are right now in the industry. This is my skillset and this is how I can provide value.

I do some of my best thinking during the first half of my run. The second half is all about not dying. You mentioned some of your struggles and lessons. Why don’t you share with those reading a bit about you and your background? It was super impressive in our conversation. I’d love for our founders to read to understand where you’re coming from and your journey thus far.

My life changed when I was sixteen years old and the death of my mother. I was in Honduras at that time. I decided to come to America at seventeen because, in all honesty, when that moment happened, my whole life was shuttered. It was my whole support system. I was born in America. I lived here with my parents back in Miami for a little bit, but we went back down the rest of it. Why not? I got on a plane. I lied to my dad at the time and said, “Dad, can you sign these papers? I’m going to go to America to go shopping.” I basically never came back and ran away from home.

I did that, though, because I felt that I needed a change, to grow, and be somewhere else. That’s how my journey started. I went to school in Florida. Since I did that, he didn’t support me on those decisions. My mom’s family also couldn’t support me in those decisions as well, but I did a whole by myself. I got a job at a restaurant and did a lot of waiting tables. I put myself through school. I cried a lot in financial aid. When I said, “Please help me, give me a grant.” I don’t know. I did it.

When I lived back, that was the biggest mountain I’ve ever climbed. For me, being able to come to a country, not know anybody, put myself through school, went from taking the bus to getting a car, to driving a car, which I didn’t even know how to do, and to be here is so rewarding. If I can do that, I have insight into other people that are building something, and I think I’m living my purpose. This is what Startup Tandem is all about, me giving you the support.

Let’s talk a little bit about the in-between between graduating college and starting Startup Tandem. What have you done career-wise?

I graduated back when the economy crashed. It was a great time. I did a financial analyst position, which didn’t last long because of that economic situation. I went into a CPA firm and did accounting for a few years. After that, I went into the startup industry. I worked for a few brands like tone it up. I went back to consulting for a startup as well, where I definitely got a lot of learning and great company. They’re still around. I got a lot of my teachings from them, but it was that moment.

When you’re consulting, you don’t sometimes understand exactly what’s happening inside a company because you’re so on the outside. When I went back inside other startups, I started to realize, “This is what they need. This is where the struggles are.” I went to a beauty company. They were part of a merger and minor acquisition, and I was part of that big venture. I’ve been all around the map when it comes to consulting nonprofits and restaurants but mainly startups.

Let’s shift gears. I wanted to give folks reading the background of you. I think that grit, determination, and the ability to persevere are all elements of the entrepreneurial journey. It’s sometimes hard for entrepreneurs when they’re working with folks who haven’t experienced that, reached down deep to figure things out or have that stark realization that they’re falling and having to figure out how to land safely. You obviously have lived that very intimately.

One of the things you mentioned in our conversation was your passion for seeing more women entrepreneurs and more women in startups. What do you want to share with those women who are reading about this journey and how they should be feeling supported, and where they can find that support?

I would say I don’t have fear. A lot of people don’t execute their dreams is because they have fear. It’s great to have fear. You should embrace it, but don’t live in it. Continue moving forward. It is the best antidote to fear execution. It’s going to be a hard journey. That doesn’t take it away from what it is, but it’s what makes it so special. You have the opportunity to create something. When you create your own business, you have the power to create a solution that could be a product or a service. You have the power to create an amazing culture within your company, the power to provide value to the people around you.

You have so much power. Women are strong leaders. We are strong leaders. We’re the ones that are giving birth. How much stronger can you be giving birth? That’s right. There is an amazing experience. If you can do that, you can do anything. Imagine that, like giving birth, business, you can do anything. You need to be around the right people. That is the one thing that you have to do. For anybody, male or female, a support system is very important.

Having somebody there, it could be one person or two people. To be quite honest, I have a good friend. He’s supporting me. Hearing about every move that I make, and that’s all I need. I don’t need to be proud, but if you do have a support system, leverage on them and ask questions. Nobody has the answers. I do research all the time. I don’t have all the answers. If I don’t have the answers, I’ll go and ask someone, and that doesn’t make me look weak. Own your confidence, fear, and struggles. Own it because that’s going to make you a very good businessperson.

Before we start getting into the mechanics of finance and for those creatives reading, their eyes roll back, and they start twitching because we’re talking numbers and spreadsheets. Waving on our team, he goes into a spreadsheet fog. Why, in your opinion, are we still in this day and age struggling to see in this CPG industry the number of women and minority founders? Why is it still dominated by white men?

A lot of it is the perception that we have that society has of us. We basically lived out of that perception, and it shouldn’t be like that. I feel like, “Yes, it’s true. There are more white men, but if you want to create something, go out there and do it. The perception that society has of us is that we’re not good leaders. We’re emotional. Leave that at the door and go out there and do something or create something. The more women become businesswomen and business leaders, and the more women will become. It’s a trickle effect. The more women business leaders create a unicorn and big startups.

Those women are going to provide for other women’s businesses. I go out there and become part of the 1% of the trend. You’re going to make another big influence. It’s a lot of pressure. What are people going to think about me? What are people going to say? I don’t have any money. I hear a lot of women tell me, “I don’t know where to get a loan,” or “If somebody’s going to approve me.” You’ll be surprised how many people are doing great things out there. You’ll be surprised if you go into what site and say, “Grants for women-led businesses.”

There are a lot of amazing organizations giving money to women-led businesses. There are a lot of women VCs out there having conversations, giving money to women’s own businesses. Whatever the mental struggle is, don’t live in that struggle. There is a solution for every problem. That’s what it is, Elliot. I think that women are nurtured into being behind the male figure. We have to break those barriers, and it’s more of a mental barrier than a physical barrier at this time.

It’s changing slowly. One of my real passions is I think that diversity, not diversity in gender or color or orientation, all of these matter, but diversity in thinking, trying to create people with different voices, different worldviews, different perceptions, or different paradigms. When people with different thinking, diversity of thought, and diversity of experiences come together to solve common problems, the degree to which those problems are solved and solved quickly increases dramatically.

I’m going to switch gears. We’ve talked about all of the big issues. Let’s get into the brass tacks of running a business and numbers and doing all of those kinds of things. You obviously peek under the hood of a lot of startups, especially those in the early days. What are some things that you could grab as an entrepreneur in the early moments and say, “Do these things now, and it’s going to save you so much pain later?”

I get a lot of entrepreneurs that, I’m very sad to say this, come to me with very messy financial. It happens. This is the problem in the industry. There are a lot of consulting agencies out there that are not doing their job correctly. I tell entrepreneurs that all the time. The first thing I told them is like, “Please, if you’re creating a business, make sure that you’re picking the right agency. It doesn’t have to be me. Just pick the right company that’s going to take care of your numbers.”

What happens is that when you go in for a funding round and have financials, they don’t even tell a story. Everything is in different places. Nothing has been reconciled. It’s the worst headache to clean. You’re over there spending tons of money on a new agency to make amends with whatever job they did from a previous agency. First of all, pick the right company that’s going to be your partner. It doesn’t have to be me. It has to be whoever you choose. Make sure it’s the right person, the right agency. How do you do that? There are a lot of ways how to do that. Ask them about their policies, their deliverables, and their processes.

You can ask about reviews as well. Word of mouth, ask about reviews, where they find your reviews, but main the main thing is what are the processes? How are they seeing compliance? That’s a big one. How are you delivering those? Put deadlines, like, “When is my date? Are you going to give me my financials when?” Keep them accountable? What happens is that if you don’t and are like over there, they’re handling it, and you’re not on top of your numbers is going to become a big headache later.

It sounds a bit ironic when you say anyone is doing your accounting and bookkeeping. You need to keep them accountable. It is true. One of the things that I see happen often is that entrepreneurs do hire someone to do that. They think that means, “Now I don’t have to worry about my numbers, or I don’t have to stay as close to my numbers. This person’s going to do that.” That’s wrong thinking. At worst, a good bookkeeper or accountant is a scorekeeper for you. At best, there is somebody who can help you ask the right questions about your numbers. At the end of the day, the person who needs to be most intimate, most knowledgeable, and most proficient in the numbers needs to be you as the entrepreneur.

There’s no getting around that. One of the other things that I will encourage those reading is that a lot of times, you’ll hire somebody to do this. They’ll put things in order, be gap compliant, do all those kinds of things, and give you a monthly financial. You look at it, and it’s great for you. You don’t stop and go back and say, “Walk me through this. Explain to me what everything means here, what it’s telling me, where every line is.”

The best part of having clean, good financials is that you have this incredible platform from which to make informed and better decisions. That’s all that means. Those sets of numbers become the fodder for great decision-making. If you don’t know how to extract those numbers and make decisions based on them, ask for help.

The other thing that I see and would like your feedback too is a lack of involvement or understanding truly of cashflow. We say all the time that I think entrepreneurs, in general, are an optimistic bunch. Gary Hertzberg always says, “Pathologically optimistic.” You always think it’s going to cost less and are going to get paid faster.

They run a cashflow report when they’re asked by somebody or the person doing their finance and run it once a month. I tried to promote, especially in the early days, doing a weekly projected cashflow followed by what you did. You can begin to learn and be more predictive. What hacks would you recommend for some folks early that they start doing and building in terms of discipline?

I live by the weekly cashflow model. I love it. I have it in my company. I do it for myself. You are so involved when you’re looking at a weekly cashflow model. It’s interesting other companies come to me and are doing the monthly cashflow. I said, “Let’s do a weekly and see exactly where are the pitfalls? What are the areas that need to be improved?” By having the big picture right there, you can see where the money’s going. Let’s negotiate better payment terms with some of the suppliers. Can we get a LOC somewhere in there to help you maybe extend 90 days on those payments? There are so many ways that this model can help the business survive.

I like to do case scenarios as well. I like to put a little bit of a case scenario in there as the tweaker to see if we get this much money coming in. This is what we’re going to be. I like the worst-case scenario. I’m very positive, but I’m also very negative when it comes to numbers. It’s my job to be conservative. That’s my job. I like to be very conservative, always put a worst-case scenario and see exactly where are we going to be thirteen weeks from now? In six months, I want to know where the business is going. That’s what the cashflow model tells you.

I’ll be putting one on my website. I want everybody to have access to it. We’re creating a weekly cashflow model that everybody can download and use it. It’s a very simple version. It does revenue expenses the major categories, but I think it’s so important for entrepreneurs to have a piece of that. I am putting it for free on my website. That’s how important it is.

We have a template that we encourage folks to use. It’s not reviewing. I think there’s a huge benefit and call bullshit on this if you want to. I think there’s a huge benefit in forecasting what you believe the cashflow to be by each of those buckets out for thirteen weeks, week by week by week, and each week putting the actual numbers in. You learn so much about your business, but you also learn so much about yourself.

You learn where maybe you’re overly optimistic and conservative or not paying enough attention. One of the things in entrepreneurship is nobody can. I don’t care what advisor, consultant, board member, investor, an employee you hire. Nobody is going to be able to eliminate the obstacles, the cliffs, the walls, all the shit that litters the way, and nobody can.

The difference between entrepreneurs who persevere and fail are the ones that are using things like cashflow projections to be looking far enough downfield, so they can see when those cliffs, obstacles, holes, minefields, trapdoors, and things are coming. They can plan for that. They can make informed decisions ahead of time. Those that don’t wind up with their toes dangling over the edge of the cliff. You don’t have a lot of good options there. You don’t have a lot of choices there.

To me, the single most important instrument to that, the single best way to do that, is to be incredibly intimate with your cashflow. I get it. I don’t know of anybody except for those who start businesses like yours, who wake up and go, “The real reason I’m doing this isn’t for world peace, to save or fix the climate. It’s because I want to do a cashflow every day. It’s what I want to do.”

I get it. It’s not what you signed up for, but trust me, if you do it, I have somebody on your team, not have your fractional person to do, but if you do it, sit once a week, whatever it is, if you need a drink to do it, have a drink, whatever you need. Sit down and do that every week. Within two 13-week cycles, two quarters, you will be a better entrepreneur, more predictive of your business, and feel more in control. It’s that simple?

I feel the forecast has been a great measure for disability. It tells you exactly, “Are you right on target?” I like being conservative, to be quite honest. I like to be negative Nancy when it comes to finances. That’s my role. You have to make those decisions according to these amazing cashflow. Not only that, but it also makes you look at the business through another lens. What are you trying to do? Are you trying to go with another co-packer? Are you trying to enter a new field? What decisions are you going to be making around after that file is made?

It’s not sexy and exciting, but I would encourage any of you to do it and to make a commitment to doing it. A question that came up is, when you’re sending information to potential investors, what do you feel are the most important elements of a good set of financials?

It’s a good representation of what’s happening in the company, making sure that everything is recorded accordingly. Everything is captured. Make sure that the forecasts and valuations are not over-exaggerated. Sometimes it’s used valuations. I say, “How did you get that number?” It’s very interesting to me because some people use industry averages. Some people say, “Everybody’s doing this.” People say, “This is how much it’s going to be in the next five years because I’m making $20 million next year. This year I’m making five. The next year I’m going to be making twenty. How are you going to get there? Let’s make sure we represent that accordingly to the financials. If you’re going to forecast $20 million, how are we getting there?

Are you doing marketing? Are you putting in a lot of effort? Are you building a new team? It’s making a sure representation. Accurate representation is very important. Completeness verification of the actual numbers is very important as well. A lot of investors are very sophisticated, but a lot of investors don’t do a lot of due diligence on their own. It’s not there. It’s not correct. If I had a startup in my portfolio and they’re doing fundraising rounds, my job is to make sure that these people get at least a good set of financials. That is my job. My job as well is to make sure the entrepreneur is projecting those financials in the future very accurately for information to the investor. I feel comfortable for them to have that set of finances.

I think it’s important that they’re clear and you can speak to them. You got to be able to talk to them. You’ve got to understand them to be able to answer, answer those questions. When you mentioned a little bit about valuation, and so forth, I have a great next question here. I want to talk about that for a second. What do you recommend as people think through how, especially in the relatively early days where they don’t have a straight way to do multiple on revenue or a multiple on EBITDA? What do you recommend as a thought process?

There are many ways. There are different mythologies to it. I honestly think, at an early age, the best way to be conservative with your valuation is because otherwise, you can hurt yourself. If your evaluation is too big and you don’t meet the standard later on in the next funding round or first funding round, you may have to downgrade your evaluation, and that’s going to be very hurtful. Be very conservative at the beginning, and after that, you can do a market-based valuation. You can do a discounted cashflow valuation. If you have everything already, more activity, or do an ROI or once you get to the level of an EBITDA.

I’ll add to that too and say, “First of all, valuation methodologies are different forms.” At the end of the day, it doesn’t matter. What ultimately matters is what the investor is willing to invest their money for and what you’re willing to give up for those dollars. It’s good to have a methodology because it makes you sound smart. It’s good to have a methodology, at least as a starting point, but at the end of the day, it’s going to be what the market bears and what happens. In the early days, everybody got to give a path for that investor to make money. You’re asking them to come on when the risk is perceived to be the highest, and they’re not going to see any liquidity of that money for the longest time.

If you don’t make that early investment compelling enough, even if they love you and love what they’re you love what you’re doing and believe in you, why would they not keep the money in the bank, modest to nothing in interest, but keep it there and come back in a year later after you’ve taken some of that risk off the table? You’ve got to think that way and be mindful of that. Here’s a great question that I’m glad somebody felt vulnerable enough to ask, but I’m sure they’re not the only one who wonders this. In every financial package I send out, we send out a balance sheet, but nobody’s ever told me what a balance sheet tells me. Do you want to take that one?

That’s a good one. The balance sheet is very important because that’s where all the skeletons go. That’s what I call it. There are a lot of things going on with the balance sheet. For example, you have $700,000 or something in inventory that will tell you, am I being poor with cash management? Am I putting too much money into inventory? If you go to cash, how much is my cash? Is my inventory moving fast enough? Is my inventory turnover good? What decisions are you making? That’s exactly what the balance is telling you. How is cash management? Is my cash balance $20,000?

I have tons of inventory sitting. That’s the big plaque. That right there is telling you, “This person is poor with cash.” Cash is king cash. Everybody needs cash. Those are the things that you have to watch for. Where is the money going? Where is the money coming from? Is there a lot of debt? Is the money coming from a lot of debt, or is the money coming because there are a lot of investors? Those are the things that you have to be watching forward, the money coming from, where’s the money going, is the money being preserved? That will tell you a lot about the management style of the founder.

Balance sheets can be confusing because they are balanced. You’re trying to figure out how does that work? How do assets and liabilities balance, and so forth? At the end of the day, what does it shows you where you have assets, and what liabilities are drawing from those assets are used or were used to support those assets? It could be anything from equity, owner equity to shareholder equity, debt, etc. This is one of those great questions. When you sit down with a balance sheet, you look at it and go, “I got a balance sheet. I feel like a grownup now. I’ve got a P&L statement of cash flows. I got a balance sheet. I’m a real business.

If you look at the balance sheet and go, “I have no fricking idea what this is telling me, whoever put that balance sheet together, sit down with them and ask them to tell you what they see in this. What is it telling them? You need a decoder ring. It’s in code. I remember when I went to graduate school a long time ago, and I’d been in the business world for a few years to cycle back to school to get my Master’s in Finance. I had gotten a Liberal Arts Degree. This was my first real heavy thing and defining it.

When we started looking into things like the balance sheet, I was so completely lost. I somewhat numbered phobic at the time anyways. Once I got the decoder ring, it was like, “I’m in the cool kids club now because I can read these things. I know what they’re telling me.” It’s like a doctor getting an x-ray. You get to see what’s going on inside and be able to make a much better diagnosis. It’s a powerful set of tools, these things. They’re not pieces of paper that you send in your data room or to investors or you have for taxes. They are the x-rays that show you what’s going on in the bones of your business. You don’t have to be a numbers nerd, but you know how to read your own x-rays.

Always ask for a backup. I always say people get the P&L out, and it’s great, but that’s why I say the balance is where the skeletons hide because you need to ask for the backup for those balance accounts. Are they reconciled? Is there support scheduled? A lot of people can put things in there to hide what’s going on in the company. Part of your due diligence as an investor, as the founder, is to make sure that you have proper information informed in the balance sheet and in the P&L.

I’ll ask your opinion on this as well to see if you disagree. If I were to rank them in terms of which things are most important to me, looking at a business, number one is cashflow. Number two is a balance sheet. Number three is P&L.

I agree.

We think of it the other way because we talk more about revenue and gross profit, which, don’t get me wrong, are hugely important. Scorekeeping, and they’re telling me more long-term, but knowing where the businesses are right now, I want to look at the last thirteen weeks of cashflow and the balance sheet. Using that filter, look at the P&L having the knowledge of what I’ve seen in the other two. If you’re an entrepreneur, that’s how most investors are going to look at it.

I think for those investors reading, shoot me emails if you disagree. I think that’s how most of them are going to look at it as well. If you, as an entrepreneur, spend more of your time on your P&L or, quite frankly, you look at revenue expenses and gross profit, and you don’t pay attention, and you don’t ask, whoever’s helping you with your books. Tell me what you see on the balance sheet. If you were an investor looking at this, what would be good? What would be bad? What do I need to know? What does this tell about my current situation? You’re putting yourself at a disadvantage.

I agree. For investors reading, please do your due diligence, look at the balance sheet, ask questions about what those numbers are, and make the right questions. It’s not about the P&L anymore. It’s about building the P&L. What are those numbers that are going to be blending into the P&L later?

The question here is coming back to common mistakes. What common mistakes are you seeing entrepreneurs make as it relates to all things finance?

What common mistakes do people make in all things finance? One is making the wrong choice of agency. When you are an entrepreneur, you build a business, especially businesses in CPG, especially in business. You’re thinking one day it’s going to go public, or you’re going to sell it, and you have to make sure that you’re looking at your financials in a certain way, not cash basis. You have to look at it on a cruel basis. You have to make sure that everything is a revenue-expense match, following up, and all of that. Ultimately that there’s a story behind it. Make sure that whatever the story of your business is, where are your big costs? What is above the line? What is below the line?

Those are very important. I see a lot of those mistakes happening. I made an educational course not too long ago. I give it for free to entrepreneurs, but it’s teaching people how to read financials. What does it mean? What is the story? My business is different than your business. We can be two CPG companies, but your story is going to be different than mine. Whatever your story basis is, make sure that it’s represented accurately with the accounts and how you’re also classifying expenses and revenue and how you’re recognizing AWS as a scripting model and makes sure that it’s represented correctly.

Subscription models are interesting, especially when it comes to evaluation. If you do not have that, there are many things, but make sure that your financials tell the story of your company. That’s another mistake that I see. Everything is very generic. They download a template from CBO, whatever that template is. It’s like, here it is. It’s my account. I’m like, “This does not tell me anything about your company.”

I think one of the things that start with is putting some good, serious thought into your GL structure. I know I’m like a total buzzkill, GL structure, General Ledger structure. This is basically the accounts in which you’re going to keep scoring, the buckets. It all rolls up from there. Makes sure the things that you want to measure, the things that you want to watch, you’re calling out for accounting for. That it makes sense, the things that are in marketing roll up into marketing. The things that are trade expense or contract revenue, and aren’t down below and expenses, that your gap compliant, but it starts with the construction. The scaffolding of accounting is your general ledger. I don’t mean to talk down to anyone, but I get it.

This isn’t what people signed up to do. If you’re wondering what I mean by general ledger, typically, when you run your P&L statements, for example, from QuickBooks or so forth, you’ll see a number next to the line item. That architecture of numbers is your GL codes. If you make sure that they flow correctly, you can roll things up into bigger buckets and take things down into smaller buckets that make sense. You can use that to be more informed about your business. I think starting right there to build and making sure that you’re having a conversation with whoever’s helping you on, let’s set this business up from day one, or if you’re starting to want to professionalize your accounting and so forth, let’s set this up the right way. Let’s talk about the GL architecture. Let’s get into it.

It starts from the beginning, and something so simple can cause so many problems in the end if you don’t get it back up from the beginning.

The real premise of this isn’t to build financials for investors. It’s built good financials to make better decisions as an entrepreneur. That’s what it’s all about. It’s to give you a good, informed position from which to make decisions. Trust me, better decisions, more informed decisions, that oftentimes the difference between why one founder or one brand succeeds and another doesn’t. It’s because you’re making better decisions.

Two things for me. One is I always like to make sure that this is super actionable. Sometimes the most actionable thing about it is that it’s better than melatonin. People use this to go to sleep when they’re not sleeping well. You’re welcome for that. Walking away from this episode, what are some of the things that you want to make sure entrepreneurs here? Secondly, if they want to learn more about you and Startup Tandem, how do they do it?

Everybody makes a business number one thing. You have the power to create an amazing culture in your company. Do that, hire great people, read them great, do that. It is amazing. People don’t understand this, but you see that great resignation. It costs more to replace someone than to retain them. Number one thing, when you’re creating a business, come with the idea that you’re a powerful human being already. You’re creating something amazing.

If you need a business coach, business expertise, financial coach, accounting coach, whatever it is that you may need, you can always reach out. I’m always available. You can text or call me. I’m a very approachable person. My team is always there to help. If you need to build a culture in your company as well, I do have an amazing teammate that helps me with that. We are all about collaboration with other brands. We’re all about collaborating inside of the teamwork. People are creating services. People are creating products. People are maintaining customers. People are the biggest asset in your company.

As an entrepreneur, know that you are going your biggest asset is not the product or the service that you’re creating. Kudos to you. Amazing service and the product you’re creating. Your biggest asset is your people. That will be my number one thing for everybody to please take away from this. The other thing is that you can contact me at any time because I am here. Startup Tandem was created to support entrepreneurs at all levels from the very beginning all the way to whenever they’re done with me. We’re here for you, HR, tax, finance, accounting, coaching, whatever you need. We’re here. We also have a lawyer on the team if you ever need advice.

How do you evaluate if cashflow is healthy? Is there a specific metric?

Look at your test runway. Is that for six months? You have a positive cashflow runway for six months. Let’s start there. What is your monthly cash burn? What is your net burn monthly? What is your gross burn monthly? Those are a few metrics that I like to look at. When I sit it out with lenders, they asked me what the cash burn is? That’s number one. What is the cash runway? They need to be funded at least for six months. That’s what they tell me. Those are the things that you have to look at but mainly is, make sure that you’re always capital positive. It’s hard to do, but if you’re not, that’s when you have to make a decision on bringing extra help, additional funds.

A couple of other things I would say, cashflow, especially in the CPG, is almost always the first few negative. You understand things below the cashflow as well, like your day sales outstanding. From the time you invoice to the time you’re paid, how long is that taking, and how long are you taking to pay your vendors so that you understand that relationship? Some other ratios and things along those lines, but watching it, the number one thing is to see if it’s improving and to see that there’s a correlation.

Make sure that as revenue grows, you’re improving your cashflow. If you see that, that’s a challenge. I say this often, “Growth is a voracious consumer of working capital.” You need more inventory. You’re holding more receivables, all of those things, so knowing that. We’re out of time. I can’t dig any deeper. Thanks so much for doing this. This was awesome. I appreciate it.

It’s so much fun. Thank you, everybody, for the questions.

Thanks, everyone, for reading. We’ll catch you next time.

Thank you, Elliot.

Important Links

• Startup Tandem

About Alejandra Santos

Alejandra Santos comes with 14 plus years of experience in accounting and finance consulting. She has experience with nonprofits, restaurants, real estate, wealth management, and startups. She landed in Miami from Honduras at the age of 17 with no support, money, or family. During her first few years in the US, she struggled to keep a roof over her head and food on her table, while at the same time pursuing an education.

Her drive and resilience kept her going forward, she knew in her core that she was destined to create amazing things. Because of education and job opportunities, she has lived in Orlando, DC, VA, and NYC. She graduated from high school at 16 to start her professional journey pursuing a degree in International Business, and Marketing at UNITEC in Honduras. In Orlando she obtained her Business Management degree from Valencia College, then moved to Washington DC where she obtained her B.S. in Finance from George Mason University and her Accounting degree from Northern Virginia College. In California she is currently working to obtain her Executive Master’s degree from Pepperdine University. Alejandra continues to enrich her education by attending educational seminars and obtaining certificate programs. She comes from an entrepreneur family, making her empathetic to the struggles and challenges entrepreneurship present.

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