The truth behind the spreadsheet: looking back at our first year and a half

Today I sat down to finish the Financial Projection section for our Data Room, ahead of our next plans. Going back over the numbers from HOPE CORP's early years, one word sums up how I felt: alarmed.

What the numbers say about the price of starting up

From the outside, people mostly see the polished present. But financial statements from the past do not soften anything.

I borrowed at interest and took out unsecured loans against several personal assets just to have capital to begin. For almost the entire first year and a half, cash flow went in only one direction: investing, and more investing. Gross profit was negative throughout. We worked as hard as we could and revenue still did not cover costs.

That is the plain truth. Starting a company has never been easy or rosy.

The founder's pay equation

Here is a comparison that is funny and also very real. Divide the total profit of those early years by the total hours worked, usually 14 to 16 hours a day with no weekends off, and the CEO's hourly return can be lower than that of a salaried employee.

Being the owner in the early stage is not about pointing fingers from a chair. It means doing everything, being the first to arrive and the last to leave, being the only person who cannot afford to fall ill, and sometimes being the last to get paid.

Surviving the critical stage, and the management lessons

Today HOPE CORP has come through the hardest period. The company is on a stable footing with positive cash flow, which is a solid base for the plans ahead.

Looking back, I am grateful for those heavy-loss days. They taught me things no school can:

• Learning by doing: from operations management to crisis handling.
• Learning to get back up: fall where you fall, rise where you fell, and grow through every number.

Advice from someone who has been there

However busy you are, build the habit of reviewing finances on a regular schedule. Do not wait until the water is at your feet. Reading financial reports weekly, monthly and quarterly is the only way to manage risk and to know whether your business is truly healthy.

In the early stage everything lands on your desk and it will feel overwhelming. That is necessary: you must understand where every dollar goes before you hand it to someone else. As the company grows you will have partners and a CFO to support you. Financial thinking, though, is something the person at the top must keep.

A journey of ten thousand miles begins with dry but weighty Excel sheets.