VA Partners has been in business for just over 5 years and almost since day 1 we have been a member of Communitech. It is located in the Kitchener-Waterloo region and serves as a hub for the tech community there. There are many great things about Communitech, but one of the most valuable are the Peer2Peer group sessions. I belong to the Business Development & Senior Sales group and in February the meeting was on Financial Statement review for Sales People by Don McKinnon, KPMG.
There is lots of great information in financial statements that can help a startup with its sales strategy for that account. Some of the highlights from Don included:
Health of a business: The balance sheet an income statement can tell a great deal about the financial strength of an organization. What does there debt to cash ratio and are they continuously making or losing money. If the company is very tight with cash and is losing money they may not have the funds to spend on your solution. Even worse they could become a risk for your business if you start to do business with them.
Internal rate of Return: This is the internal rate that many businesses will have to determine if they should decide on a new project. While it is not possible to get the exact number, you can look at the details on their debt and the interest they are paying. If there top interest rate is 15% you can assume that their internal rate of return is likely higher than that. If your solution has a Return on Investment that is higher it may be a good fit.
Look into the notes: There can be nuggets on information in the notes. This can relate to more detail on purchases, legal actions, and other information that does not make it into annual reports or onto a company’s website.
Financial information on Private companies is hard to find: Private companies are not required to report and so the information is often estimated. You may be able to find Revenue and employee numbers on Hoovers, Jigsaw, or on their Linkedin company profile.
The session with Don was interesting and helped the group make sense of Financial Statements. For more information about Venture Accelerator Partners, please visit our website and contact a member of our team for answers to your sales, marketing and social media questions.
