Surprise! Your Startup Owes $45,000

Oh and it's due in 3 days

Hey y’all — I got some bad news this month.

I had a new accountant take over my tax prep this year and he told me a mistake last year meant I owed $45,000 in taxes… and it was due in 3 days.

I thought “no way, this has to be a mistake” (with a few other choice words in there too).

But unfortunately he was correct.

Between Megaphone, the newsletter, the membership, and some limited advising the business is currently bringing in around $90,000/mo before expenses.

So an unexpected $45K bill is a bit hit.

A year ago when revenue less than half of what it is now this might’ve sunk us.

But I spent the last few months prepping for something like this.

Ironically our sponsor this week automates bookkeeping and tax prep — I probably should’ve used them sooner :)

Surprise! Your Startup Owes $45,000 In 3 Days

“Everybody has a plan until they get punched in the face.”

That’s a quote from the philosopher Mike Tyson.

It also pretty accurately describes how it feels to be told your bootstrapped company unexpectedly owes $45,000 in 3 days.

I’ve historically run my companies at pretty tight net margins, regardless of the gross.

This is risky because it makes it harder to keep steady with unexpected expenses or, worse, business-model-killing changes that are out of your control. Hampton’s co-founder, Joe Speiser, says he once lost $100 million due to a change like this — they happen.

When you work on high-growth opportunities though, keeping net margins low leaves you with more working capital to invest in growth and product improvements.

It’s a tradeoff.

Last summer I even said on a podcast I did that I hoped to keep my margins as close to 0% for as long as possible.

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