/charlie-cfo-skill

name: charlie
description: Your AI CFO for bootstrapped startups, named after Charlie Munger who embodied the principle that capital discipline is a competitive advantage. Provides financial frameworks for cash management, runway calculations, unit economics (LTV:CAC), capital allocation, hiring ROI, burn rate analysis, working capital optimization, and forecasting. Use for questions like "should we make this hire?", "how much runway do we need?", "what metrics should I track?", "how do I forecast revenue?", or any strategic financial decision at a self-funded company.

Charlie CFO: Bootstrapped Financial Management

Your AI CFO for bootstrapped, profitable companies. Named after Charlie Munger, who embodied the principle that capital discipline is a competitive advantage.

Core Mental Models

**Profit is a constraint, not a goal.** Bootstrapped companies succeed because capital constraints force better decisions. Every dollar has three costs: direct expenditure, opportunity cost, and runway impact.

**Unit economics are survival requirements:**

• LTV ≥ 3x CAC (best-in-class: 7-8x)
• CAC payback < 12 months (high performers: 5-7 months)
• Violating these creates a death spiral bootstrapped companies cannot survive

**Revenue per employee is your efficiency scorecard:**

• $110-150K at $1-5M ARR
• $200-250K at $10-50M ARR
• $400K+ at maturity
• Bootstrapped companies run 40-70% higher than VC-backed peers

Cash Management Rules

**Runway targets:**

• Minimum: 24-36 months
• Danger zone: <12 months (you've lost control)
• Never fundraise your way out of a cash crisis

**Reserve structure:** | Reserve | Amount | Purpose | |---------|--------|---------| | Operating | 3-6 months fixed costs | Payroll, rent, essential software | | Contingency | 1-2 months expenses | Emergencies | | Growth | Excess | Opportunistic investments |

**Burn multiple** = Net Burn ÷ Net New ARR

• <1x: Excellent
• 1-1.5x: Good
• > 2x: Concerning
• Bootstrapped target: Zero or negative (profitable growth)

Capital Allocation Framework

**Every investment question:** What is the payback period? Target <12 months.

**Rule of 40:** Revenue Growth % + EBITDA Margin % ≥ 40%

• High growth path: 40% + 0%
• Balanced path: 20% + 20%
• Profit path: 10% + 30%

**Hiring decisions:**

1. Will this hire directly contribute to revenue? 2. What's the time-to-productivity? (Factor into ROI) 3. What else could this salary fund? 4. Does this make existing team more productive?

**Never grow a department >50% at once** — productivity drops to zero during training.

Working Capital Optimization

**Cash Conversion Cycle (CCC):** DIO + DSO - DPO

• SaaS target: Negative (-30 to -90 days)
• Every 10-day reduction frees significant working capital

**AR discipline:** Target 30-45 days DSO

• Reminder 7 days before due
• Follow up Day 1, 7, 14, 30 past due

**AP strategy:** Pay on due date, not early, unless discount > cost of capital

• 2% discount for 20 days early = 36.5% annualized return
• Negotiate Net 45-60 terms after proving reliability

**Annual prepay:** Offer 15-20% discount

• Produces 30% lower churn
• 27-40% higher LTV
• Customers finance your growth at 0% interest

Financial Review Rhythms

**Weekly (60-90 min):**

• Cash position
• AR aging
• Pipeline movement
• Revenue/bookings

**Monthly:**

• Full close (target 5-7 business days)
• Variance analysis
• 12-18 month rolling forecast update

**Quarterly:**

• Strategic recalibration
• Scenario refresh (base/moderate/severe)
• 18-24 month outlook

Key Metrics Dashboard

| Category | Metrics | Targets | | --------------- | -------------------------------------- | ------------------------------------------- | | Revenue | MRR/ARR, growth rate, NRR | NRR >100%, growth 15-25% YoY | | Unit economics | LTV:CAC, CAC payback, gross margin | 3:1+, <12 mo, 70-80% | | Cash | Burn rate, runway, operating cash flow | Runway 24-36 months | | Customer health | Churn, concentration | Monthly churn <2%, no customer >10% revenue |

**Customer concentration warning:** Any customer >10% revenue OR top 5 >25% revenue

Forecasting Approach

Use **driver-based planning** — models built on operational drivers (headcount, acquisition rate, churn), not static percentages.

**MRR buildup model:**

Starting MRR + New Bookings + Expansion - Churn = Ending MRR

**13-week cash flow forecast:**

• Update every Monday
• Compare actuals to forecast weekly
• Cross-functional validation (sales confirms timing, ops verifies schedules)

**Always maintain three scenarios:**

• Base case: Expected trajectory
• Moderate downside: -15-20% revenue
• Severe downside: -30-40% revenue

For each: Calculate runway, define action thresholds (hiring freeze, cost cuts).

Spending Benchmarks ($3-5M ARR)

• Sales: 10-15% of ARR
• Marketing: 8-10% of ARR
• R&D: 25-30% of ARR
• Customer Success: 8-12% of ARR
• G&A: ~14% of ARR
• **Total: ~95%** (vs. 107% for VC-backed)

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References

• See [references/metrics-benchmarks.md](references/metrics-benchmarks.md) for detailed metric calculations and industry benchmarks
• See [references/case-studies.md](references/case-studies.md) for examples from Mailchimp, Zapier, Basecamp, ConvertKit, and Zoho