Startup Financials - Stay On Track With These KPIs
Have you started track your company performance with KPIs yet? KPIs is short for Key Performance Indicators. You may have heard that investors are often impressed when you know KPIs by heart. That is because investors believe the most successful founders are obsessed with their KPIs and have a laser focus on improving them. In this article, I will give you an introduction on KPIs and how you can utilize them to improve your startup’s performance.
KPIs - Track Company Performance
What is the definition of KPIs? KPIs are the data points that you collect to measure company’s performance. KPIs show the trend of the data and monitor the performance of your company by different categories such as revenue, expenses, growth, etc.
How Often Do You Produce KPIs
Most companies produce KPIs once a month. For companies that are more fast paced, they might even produce KPIs every other week. It really depends on how often you need to compare these results.
Use KPIs To Improve Performance and Keep Everyone On The Same Page
KPIs matter for your startup for two reasons:
improve the company's performance
keep all the employees on the same page
I would say that KIPs are the most subjective way to measure performance and communicate performance results to employees. KPIs show company performance in the format of numbers, they show you what has and has not worked. By using numbers to compare company performance, it is like comparing apples to apples, in a clear and direct way.
The real use of KPIs is to make better business decisions for your company. Learn what each KPI tell you about the company, and share the insights with employees. From there, spend some time to brainstorm with the team, and come up with strategies to better the company. That is where the true value of the KIPs from.
The Top KPIs to Keep You Stay On Track
Different industry tracks different sets of KPIs. However in general, here is a list of KPIs you should be tracking regardless of your industry:
Burn: how much your startup spends each month.
Runway: how many months your startup can last without additional funding.
Customer acquisition cost: how much you spend to acquire a new customer.
Conversion rate: indicates your company’s ability to convert non-paying customers to paying customers.
Customer retention rate: percentage of customers you keep from one month to the next month.
Churn rate: percentage of the customers you lose during a given period of time. Churn rate is the opposite of customer retention rate.
Lifetime value (LTV): the net value of an average customer over lifetime.
Monthly active users (MAU): the number of active users during a 30-day period. This indicator is used frequently for apps, online games, or social networking sites.
These KPIs exam your company’ spending, revenue, and growth. You can track performances with these KPIs every month to monitor the changes and adjust your strategies.
Takeaway:
KPIs help you track company performance and keep employees on the same page. Let’s get into the habit to be obsessed with KPIs and have a laser focus on improving them!
