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Important Metrics Startups Should Keep Track Of

Posted by Kanika Sinha

February 12, 2017

For many business owners, just the word metrics has them filled with worry and stress.

In this article, we’re going to demystify the term and tell you what important metrics startups should keep track of.

Why look at metrics? Well, metrics measure performance, and your investors are going to want to know how you’re doing. You also use metrics to measure your startup’s behavior, activities and other important attributes.

You can then use these metrics to support your growth and justify your budget.

While many startups know how to create a product and take it to launch, many don’t know how to take their burgeoning business to the next level.

To do that, you have to have metrics and data to support your business and show you what you need to do to grow.

It takes discipline to make metrics a priority and even more diligence to collect and analyze the data.

To help you, here are the important metrics startups should keep track of.

Sales Revenue

Just knowing that you have money in the bank isn’t enough.

You must measure your sales – this is the income you receive when a customer buys your products or signs up for your services.

Then, you need to look at why your numbers are increasing or decreasing.

When measuring sales revenue, look at your pricing, the seasons and your marketing. Know the competitive arena and what might affect your sales.

This is one of the most important metrics to monitor as it will let you know if your startup will succeed or fail.

Revenue Run Rate

Next, you want to look at how your business is scaling. This helps you measure how your sales are developing over a specified period of time.

When it comes to hitting forecasts and picking up on patterns, your revenue run rate can help. You’ll be able to adjust pricing and marketing strategies by knowing your revenue run rate.

Your revenue run rate for one year is figured by multiplying last month’s numbers by twelve.

Customer Loyalty

An often overlooked metric for new business owners, customer loyalty is vital to your success. After all, it’s easier to keep a customer than it is to get a new one.

Your goal as a startup owner is to build customer loyalty so that they buy and buy again, eventually becoming brand ambassadors for your company and bringing in new business.

How do you measure customer loyalty? Consider these strategies:

  • Loyalty rewards program
  • Customer surveys
  • Feedback at the point of purchase
  • Analysis of customer purchase behavior

Know these metrics so you can build your retention rates.

Customer Acquisition Cost

When you know these metrics, you know how much it costs you to acquire a new customer. This includes all of your marketing as well.

You determine customer acquisition costs by dividing your total acquisition expenses by the total number of new customers over a specified period.

This cost helps you determine the value of your marketing strategies and whether or not they are too expensive or spot on.

You can expect your customer acquisition cost to go down as your business grows, and people start to recognize your brand.

Burn Rate

You want to know how much cash goes out your door every month. Salaries, overhead, marketing and other expenses make up your burn rate.

This metric is crucial to your success as running out of money is a top reason startups fail.

Your investors really want to know your burn rate. They want to know if and when you’ll start generating a profit.

Profit and Loss

When you calculate profit and loss, you want to include the fixed and variable costs of operation. Know what you spend and lose each month.

Know how much you are selling and how much is walking out the door for rent, utilities, insurance, taxes, marketing, benefits and salaries.

This metric helps you determine if you are charging the right amount for your products or services.

Labor Hours

How long does it take your employees to do their jobs?

You can bet that employee salaries are one of the most expensive parts of doing business, so you need to stay on top of it.

Use these metrics to fine tune your processes. Staying on top of labor costs is important to keep moving forward.

Final Thoughts

Now that you know some of the most important metrics startups should keep track of, it’s time to make a plan for acquiring and managing the data.

Knowing and analyzing your metrics will help you reach your goals and milestones along the way.

You want to be hyper-vigilant when it comes to these metrics so that your startup has the best chance at victory.

Are you a new startup ready to succeed? Are you looking to get your new business off the ground and watch it rise to success? We are here for you. We can help answer your questions and guide you through the process. Outsource your HR duties, finances, payroll and more to us. Contact Escalon today to get started.


Kanika Sinha
Kanika Sinha

Kanika is an enthusiastic content writer who craves to push the boundaries and explore uncharted territories. With her exceptional writing skills and in-depth knowledge of business-to-business dynamics, she creates compelling narratives that help businesses achieve tangible ROI. When not hunched over the keyboard, you can find her sweating it out in the gym, or indulging in a marathon of adorable movies with her young son.

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