Founders Forum: The Importance of Contribution Margin in a Downturn Economy

In this conversation, Abir from UpAccounting.com discuss the key financial metrics that e-commerce brands should focus on. He highlights the importance of contribution margin ( the money left over after deducting variable expenses from revenue) along with emphasizing the significance of operating cash flow as the ultimate measure of a business's financial health.

The conversation shift to the challenges of forecasting revenue for events like Black Friday and provides advice on managing cash flow and inventory during peak seasons. Abir also cautions against common financial pitfalls, such as over-investing in fixed expenses and not maintaining financial discipline during periods of success. Lastly, he highlights the significance of robust historical data and reliable revenue projections as a brand (or agency) prepare for an exit.

Key Takeaways:

•  The 4 key financial metrics for e-commerce brands
•  The importance of forecasting revenue for events like Black Friday
• How to avoid common financial pitfalls, such as over-investing in fixed expenses
• Why accurate historical data and strong retention numbers are crucial for businesses
• The importance of NOT relying solely on first-order profitability
• How different acquisition channels can impact customer retention
• Why you need to understand your numbers and build good relationships with banks
• What to consider with revolving lines of credit for scaling businesses

To learn more about Abir and the UpAccounting team head here: https://upcounting.com/

To learn more about the Foxwell Founders community or to join, head here: https://www.foxwelldigital.com/membership