When entrepreneurs start a business, it is common for them to get puzzled with all the ‘essential’ startup metrics. You might have had the experience of running a team, but it is not equivalent to running a business. Even with an experienced partner, you need to have some objective parameters for decision-making. The first few years are crucial for your business. Emma Brown suggests you start measuring business performance with five startup metrics in this article at Hackernoon.
Useful Startup Metrics
To choose the right startup metrics, you must analyze how those are different from the usual business metrics. Established organizations can weather financial downtime that startups cannot afford. So, a new business must have relevant data as early as possible to make faster decisions. On the other hand, you have plenty of room to play around in a new business. So, your metrics and KPIs should be more specific for smoother change management.
Steps to Choose Right
- Decide your overall vision and probable long-term business goals.
- Perform a SWOT analysis to discover how your new company is doing.
- Once done with the gap assessment, designate the improvement tasks to your team.
- Create metrics based on your vision and goals.
The Popular Ones
- Customer acquisition cost (CAC) reveals if you had a positive outcome from your sales and marketing investments. So, divide the cost of sales and marketing by the number of clients you have acquired.
- Once you have got the client portfolios, keep counting how many stayed back after the initial purchases. Startup metrics like retention rate conveys the results.
- Customer lifetime revenue needs sufficient data before you can calculate it. It says how much you have profited per customer relationship so far.
- Return on investment is an important metric for all organizations. For new businesses, the majority of the initial spending is on advertising. Keep a close watch on your ROI startup metrics to check unnecessary costs.
- Whether you are the CEO of a multi-national company or a struggling entrepreneur, your business needs profit. Measure it with gross profit by deducting all the expenses from the revenue you have earned.
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