Know Your Finances
The better you understand how much what you are doing costs and how much you can potentially make from your customers, the more likely people will want to invest in your business.Your Financial History & Future
Understand what a customer costs, your operating expenses, and potential revenue.
Create an Income Statement and Profit & Loss Chart. If you don’t have one yet, there is a starter template in the Finances folder. We cover this step by step in Module 2.
Record what you’ve raised so far. Know how much you need and what you plan to spend it on.
Startup Financial Metrics
Here are a few metrics to keep an eye on:
Average Revenue Per User (ARPU) — method for calculating the value of your users, or of groups of users in segments. Whereas LTV (lifetime value) measures the dollar amount a user brings in over their entire lifecycle, average revenue per user measures it over a set period of time.
Total Revenue Growth Rate — To calculate revenue growth as a percentage, subtract the previous period’s revenue from the current period’s revenue, and then divide that number by the previous period’s revenue. For example, if you earned $500K in revenue last year and $1 million this year, then your growth is 100 percent.
Customer Acquisition Cost (CAC) — the amount of money a business spends to get a customer to purchase its products or services. CAC is an important growth metric for businesses to determine customer profitability and sales efficiency.