Startups take energy, devotion, and consistency, right? And when you are putting all of that in your startup, you need to know if your efforts are paying off or not. You need to keep an eye on several aspects of your startup to measure its success.
Here are some quick and easy ways to measure your startup’s success to assess where you need to work harder:
- Understand the Stage of Your Startup
While it is good to look at the numbers to see how well your business is doing, you also have to look at other important metrics. The first thing you need to understand is where your startup is at.
Every startup has three stages – infancy, survival, and nominal. To measure its success, you have to check which stage your startup has acquired.
The ultimate success at the infancy stage is just to ‘stay alive.’ It literally means to stay motivated and develop a customer base. The focus here is to get new customers and make sure you deliver quality products or services on time.
In the survival stage, your success is determined by the income your startup is generating. If you start making some profit or reach a break-even point, you are successful.
Lastly, the nominal success stage is where your startup thrives. You might even need to outsource staff at this stage if you find it hard to deal with the boost in sales.
- Website Engagement
You have to look for your website’s engagement, particularly if your startup sells services. You can incorporate amazon keyword research dynamics while setting up your website to help better evaluate your website’s success.
Once you reach the survival or nominal success stage, you need to be more mindful of your revenues.
The primary goal of startups is to earn profits, so you have to look at the numbers. A simple way to check your revenue is to look at the invoice value or total sales in a particular duration. You can check your revenue monthly, half-yearly, or annually, depending on the nature of your startup.
A reliable way of checking your company’s revenue monthly is to assess your startup’s Average Revenue Per Unit (APRU). It allows you to see how important each customer is to you to work well with your customer base. To get this, you will have to divide your monthly revenue by the number of customers.
- Burn Rate
You also have to be aware of the cash flow to check how well your startup’s doing. Burn rate refers to the amount of cash that goes out of the door. Knowing the burn rate and comparing it with the money you earned helps measure your profits.
- Customer Retention Rate
Customer Retention Rate (CRR) is another great way of gauging your startup’s success. Retaining a customer and reselling your products cost less than attracting new customers since it cuts down advertising costs and other marketing tactics. Getting repeat customers indicates that people like your products, which is also an aspect of your startup’s success.
You can calculate Customer Retention Rate with this formula:
(CRR) = ((B-C)/A) x 100
Here, A is the number of customers at the start of the period, B is the number of customers at the end of the period, and C is the number of new customers you got during this period.
- Set a Baseline to Compare Your Measurements
To see how well your startup is doing, you must compare your current standing with the previous one. For this, you have to set a baseline to weigh your sales later on. Setting short-term realistic goals helps you match your growth with a baseline better.
- Know How to Interpret Data
Collecting data and calculating numbers will not help you if you do not interpret them. There may be some technical terms you are unfamiliar with, so you will have to educate yourself on them. You should also familiarize yourself with software that you might use to evaluate your data.
The Bottom Line
To sum up, you have to look at several dimensions of your startup to see how well it is doing. Sticking to only profits will not fully measure your startup’s success. So, make sure to check the aspects mentioned above to assess the success of your business.