You must know these 10 CRITICAL startup “survival” numbers:
- Monthly revenues: Total cash coming in from customers.
- Month-to-month sales growth: This may be obvious, but it’s an important indicator of improvement.
- Gross profit: Total revenues minus the cost of goods sold. You must make sure you‘re making money on EVERY transaction!
- Gross margins of each product or service: Should you substitute or stop selling a product? This is critical to know!
- Customer acquisition costs: Continuously measure the effectiveness of your marketing efforts.
- Monthly fixed expenses: Can you afford that fancy office? You’ll NEVER regret having lower expenses!
- Monthly cash burn rate: Cash is the oxygen of your business. Be conservative!
- Inventory turnover: If cash is ‘oxygen,’ then this KPI will motivate you to be efficient handling your inventory.
- Debt: I hate debt. Keep this number at zero. It’s easy to fall in the trap of using debt to solve your immediate troubles. Debt can easily become an unstoppable cash flow problem.
- Break-even point: This should be your startup’s FIRST goal. Know the number. Draw it. Share it with everyone. Update it monthly!
When your startup breaks even for the first time, it’s time to celebrate!