/finances

name: finances
description: "Use this skill for the money math of a bootstrapped business: 'what's my quit number,' 'how many customers do I need,' 'how long is my runway,' 'should I raise money or bootstrap,' 'how much should I set aside for taxes,' 'do I need an accountant,' or 'are my numbers OK.' Works out the quit number, runway, and whether the business survives without outside money, sets up simple money habits, and says when the numbers mean stop. Not for setting a price (use pricing) or for forming a company (use legal)."
metadata:
  version: 1.0.0

Finances

For a bootstrapper, runway is the main limit. Know three numbers: how much the founder needs, how long the money lasts, and whether revenue passes costs before it runs out.

Step 1: The quit number

Monthly personal costs (rent, food, insurance, debt, other) + 20% buffer = monthly need
Revenue needed per month = monthly need ÷ 0.70     (covers tax, tools, and variance)
Customers needed         = revenue needed ÷ price
Timeline                 = customers needed ÷ realistic new customers per month

Show the timeline plainly. If the founder needs 500 customers at \$29, that is likely a journey of 18–36 months. **pricing** shows how a higher price shortens it.

Step 2: Runway

Savings set aside for this ÷ monthly costs while building = months of runway

Write down the date the money runs out, and the date the founder must decide (about 3 months before that).

Step 3: Will it survive without outside money?

At the current growth and costs, does monthly revenue pass monthly costs before the runway ends? If yes, the business is alive by default. Every decision can then be made calmly. If no, something must change: more customers, a higher price, lower costs, or more runway. Say which change matters most.

Step 4: Bootstrap or raise

Default to staying profitable. Profit means unlimited runway and full control.

Outside money can make sense when:

• a funded competitor would win the market by moving faster, or
• the product needs money that customers cannot fund first, or
• the founder has proof (paying customers, growth), so the terms are good.

Options, from most control to least: customer revenue → revenue-based financing → angel investors → funds that back profitable companies → venture capital. Venture capital expects a very large outcome, and it changes what "success" means. Before raising, talk to 2–3 founders who took that kind of money. Then use **focus** (Mode B) for the decision.

Step 5: Money habits from day one

• **A separate business bank account and card.** Never mix personal and business money.
• **Set aside 25–30% of profit for tax** in a separate account each month. In the US, pay estimated taxes quarterly. Elsewhere, check the local rules.
• **Bookkeeping:** categorize transactions weekly, in a spreadsheet or a simple tool. Counting money when it arrives (cash basis) is fine early on.
• **Hire an accountant** for year-end taxes once revenue is real. Hire a monthly bookkeeper only when the books take hours.
• **Spend in this order:** software first, then freelancers, then employees.

Step 6: Watch these numbers every month

| Number | Why | |---|---| | Paying customers (new, lost) | The first sign of fit or of trouble | | Monthly revenue | Progress toward the quit number | | Cash and runway | How long the founder can keep going | | Profit or loss | Whether the business survives alone |

Track the cost to acquire a customer and the lifetime value of a customer only once the founder spends money to acquire customers.

When the numbers say stop or change

• More than 10% of customers leave each month, with no clear fix.
• No new paying customers for 3 months, despite steady outreach.
• Less than 3 months of runway, with no path to profit.
• It costs more to acquire a customer than that customer pays over their lifetime, after 3 months of trying to fix it.

Hitting one of these means: change the customer, the offer, or the price, or stop. Say so plainly.

Output

Quit number:   <revenue needed per month>, <customers needed> at <price>, about <months>
Runway:        <months>, money runs out <date>, decide by <date>
Survives without outside money: <yes / no, and the one change that matters most>
This month:    <the numbers table>