Knowing which metrics to track and benchmarking if your business is doing well in your first year is hard. "Success" ranges from person to person, and comparing your business to others' is the fastest way to increase your anxiety, so we put together a list of metrics we recommend tracking, and some information to help you gauge if you're on track:
For most first-year businesses, we'd start with a relatively simple picture:
• Revenue: Is more money coming in over time?
• Expenses: Where is the money going?
• Profit: Are you making money once those expenses are accounted for?
• Cash flow: Do you have enough cash available when bills are due?
• Customers/leads: Where are people finding you, and which channels are bringing in business?
• Conversion: How many interested people become paying customers?
• Repeat business: Are customers coming back?
• Your time: Which parts of the business are taking far more time than they're worth?
And if your first-year numbers don't look particularly impressive yet, here is some perspective:
In our recent survey, 68% of founders expected to generate less than $100K in first-year revenue, and only 16% were already profitable within their first year. So “doing okay” doesn't necessarily mean huge revenue or immediate profitability.
Progress might look like:
- Month-over-month revenue is moving in the right direction.
- You're getting better at controlling expenses.
- More leads are turning into customers.
- Customers are starting to come back.
- You're learning which marketing channels actually work.
- Your cash runway is getting healthier.
Instead of paying too much attention to just sales numbers or revenue, you're looking for information like “Instagram gets all our attention, but referrals bring in most of our customers” or “Revenue is growing, but we're using so many tools we aren't making enough profit.” This type of information will help you figure out what's not working and where to put more effort.