10 JEDISKOOL METRICS EVERY FOUNDER SHOULD TRACK.
Whether you’re bootstrapping, hiring, or fundraising, know these metrics. The more you’re clearly you can articulate metrics, the easier it is to grow your business, course correct and attract others to join you. I'll be adding others soon
1. RUNWAY = A startup’s runway (also called cash runway) is how many months your startup has before it runs out of cash. The longer your runway, the more time you have to build, make mistakes, course correct and grow your startup.
2. BURN RATE = a measurement of how much money you’re “burning,” or losing, each month - which tells you your negative cash flow. Burn rate is related to Runway. When bootstrapping, burn rate is a financial metric you can’t afford to ignore.
3. REVENUE = total amount of money your business makes from the products and services you sell. Many startups look at their overall revenue, but you’ll gain a lot more insight by breaking your revenue down by type (recurring vs. non-recurring) and source (products and plan levels).
4. MRR (monthly recurring revenue) = revenues that a business can generate every single month. For SaaS products (software as a service) or any type of subscription-based business, monthly recurring revenue (MRR) is a financial metric you must know like the back of your hand.
5. ARPA (average revenue per account) = avg revenue you make per paid account. For example, your monthly fee per account with 10 users could be$100/mo. And don't confuse ARPA with ARPU = average revenue per user. In this example, the ARPU is $100/10 users = $10.00.
6. MRR CHURN = monthly recurring revenue you lose from existing customers. MRR churn typically comes from 2 areas:
• Customers cancelling their account
• Customers downgrading their account
7. LTV (customer lifetime value) = average amount of revenue to expect to collect from a customer before they cancel or downgrade.
To optimize this metric, you need to:
• Increase amount of revenue customers spend with you
• Keep customers happy + paying for as long as possible
8. CAC (customer acquisition cost) = avg amount of $$$ spent to acquire 1 new customer. CAC can make or break a startup. Don’t assume that spending a little is best. It’s a balancing act. Spend too much and you’ll run out of $$$. Spend too little and you’re not maximizing revenues.
9. CAC PAYBACK = number of months it takes you to recoup your customer acquisition costs OR how many months it takes you to “break even”. The shorter your CAC payback period, the sooner you start making money from a newly acquired customer.
10. GROSS MARGIN = total revenue left after factoring in cost of goods sold (COGS). It’s easy to get fixated on revenue and ignore the money you spent to make it. Gross margin provides a more detailed and realistic picture of how much revenue you’re really generating.