12/13/25, 2:09 PM Session 9: Content | TekZone
Session 9: Content
Site: TekZone Academy Printed by: Mboh Pemamboh
Course: Business Innovation Training I Date: Saturday, 13 December 2025, 2:09 PM
Book: Session 9: Content
Description
Finance for Startups I
Table of contents
1. Session Objective
2. Introduction to Basic Finance
3. Definition of Key Terms
4. The Cost Structure
5. Practice Exercise I
6. Planned Budget
7. Practice Exercise II
8. Forecasting Cash Flow - The Direct Method
9. Practice Exercise III
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12/13/25, 2:09 PM Session 9: Content | TekZone
1. Session Objective
In this session, learners will dive into finance in relation to startups.
At the end of this session, you should be able to:
Explain basic terms related to finance.
Do a budget estimate for your business project.
Create a cash flow statement for your business project.
2. Introduction to Basic Finance
As a startup founder, you will handle the financial aspects of your business. Hence, you need to become familiar with some financial
terminologies such costs, cash flows, profit, revenue / sales, etc
Note:
The session on “Finance” relates to the blocks “Revenue” and “Costs” in your Lean Canvas or Business Model Canvas.
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12/13/25, 2:09 PM Session 9: Content | TekZone
3. Definition of Key Terms
Essential finance-related terms Startup founders should know:
1) Revenue (Sales):
The total money your business earns from selling products or services before any expenses are deducted.
For example, if you sell 100 products at $50 each, your revenue is $5,000.
2) Cost of Goods Sold (COGS):
The direct costs of producing the goods or services you sell. This includes materials, manufacturing, and direct labor.
For example, if each product costs $20 to make, for 100 products, COGS = $2,000.
3) Gross Profit:
This is revenue minus COGS. It shows how much money you make from sales before other expenses.
Formula: Gross Profit = Total Revenue − Total COGS
Revenue $5,000 - COGS $2,000 = Gross Profit $3,000.
4) Operating Expenses:
Costs required to run the business that are not directly tied to producing goods/services.
For example, rent, utilities, salaries, marketing.
5) Net Profit (or Loss):
The actual profit left after deducting all expenses, including operating expenses, taxes, and interest.
Formula: Net Profit = Gross Profit − Operating Expenses−Taxes / Interest
6) Cash Flow:
The movement of money in and out of your business. It’s crucial because even profitable businesses can fail if they run out of
cash.
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12/13/25, 2:09 PM Session 9: Content | TekZone
Cash flow in (Inflows): Money coming into your business, typically from sales of products or services, loans. other income
sources, etc.
Cash flow out (Outflows):
Money going out of your business, typically for operating expenses (salaries, rent, utilities), cost of materials, taxes, etc.
7) Break-Even Point:
The point where your total revenue equals total costs, meaning your startup is not making a loss but not yet a profit.
It helps you understand when your business will start being profitable.
8) Assets:
Everything your company owns that has value—cash, inventory, equipment, intellectual property.
9) Liabilities:
Debts or obligations your business owes—loans, unpaid bills, or taxes.
10) Equity:
The value of ownership in the company.
Formula: Equity = Assets − Liabilities
4. The Cost Structure
Costs:
These are the operational expenses you incur while bringing your product to market.
It’s important to focus on current costs first, rather than projecting too far into the future.
Example:
Business Idea: Drone-Based Precision Agriculture Services
A startup that provides drone services to farms for crop monitoring, pesticide/fertilizer spraying, and soil analysis. Using drones
and AI analytics helps farmers optimize yield, reduce chemical use, and lower operational costs.
Some early costs might include: drones and equipment, software and analytics, labour, marketing, maintenance
5. Practice Exercise I
Focusing on your improved business idea, reflect on all the costs you will incur to bring your
product to market.
6. Planned Budget
What is the required budget to launch your minimum viable product (MVP)?
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As a soon-to-be-founder, you need to estimate how much it’ll cost to start and run your business - that is your startup budget.
From the very beginning, you should estimate a budget for your project.
Consider how much it will take to run your MVP.
Remember, at the early stage, resources are limited, and you are not aiming to launch a perfect solution, but the MVP
The budget estimate (for example, a table) should be included in your pitch to investors or stakeholders.
When pitching for funds to launch your idea, your ‘clear ask’ should correspond to the amount outlined in your budget.
Example:
The table below shows the budget required to launch the MVP for the business idea: Drone-Based Precision Agriculture Services.
7. Practice Exercise II
Focusing on your business idea, create a budget estimate (in table format) to launch your
MVP and introduce it to the market.
8. Forecasting Cash Flow - The Direct Method
Remember:
Cash flow refers to the the movement of money in and out of your business.
Even before launching your business, your startup needs to forecast expected cash inflows and outflows.
The Cash Flow Statement:
A financial report that shows how cash comes into and goes out of a business during a specific period.
It can be useful for valuing a company and understanding its operations.
Forecasting cash flow helps a business owner understand the company’s future cash position and identify which areas of the
business will consume or generate the most funds. This allows them to plan ahead, finding ways to reduce expenses or
generate more cash.
Click the following link to learn how to create a basic cash flow statement: Sample Cash Flow Statement.
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Investors usually request cash flow statements for a period of 3–5 years.
Note:
A cash flow statement template is provided and can be downloaded for your own use.
9. Practice Exercise III
Focusing on your business idea, use the provided template to create a cash flow statement
for a three-year period for your business.
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