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34 Startup Metrics for Tech Entrepreneurs

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34 Startup Metrics for Tech Entrepreneurs

Courtesy of: Funders and Founders

34 Startup Metrics That Tech Entrepreneurs Need to Know

Today’s infographic comes from Funders and Founders and information designer Anna Vital, and it lists the important metrics to gauge traction and success of new startups.

Several years ago, a key challenge with launching a new tech startup venture was that there weren’t many precedents to follow.

  • How do you scale a company?
  • How do you measure growth and costs in a more meaningful way?
  • Does the company have real traction?

Of course, there were knowledgeable people in the tech ecosystem that knew these things – for example, venture capitalists and ex-founders that had been successful with previous ventures – but they were tough to gain access to, and many of their theories and best practices weren’t yet widespread.

Fast forward to today, and the practices around new startups are much more established. While this can be a blessing and a curse to new founders, at least a more standardized set of metrics helps to give founders a sense of where their company stands.

Key Startup Metrics, According to VCs

The infographic from Funders and Founders lists 34 startup metrics for founders to know – but which one should be a focus for new ventures?

Here’s what three bigtime VCs have said about the startup metrics that they consider to be most important at early stages:

“Month-over-Month Organic Growth”

For most companies, MoM organic growth is a very useful metric and depending on the base, 20–50% MoM growth can be good. Retention, referral, and churn are all things we look at, too.

– Aileen Lee, Cowboy Ventures

According to Aileen Lee, who originally came up with the “unicorn” term, organic growth is a particularly useful metric.

On the other hand, Bill Gurley of Benchmark says that monitoring conversions is a comprehensive metric that is a good proxy for several key business areas.

“Conversion Rate”

No other metric so holistically captures as many critical aspects of a web site – user design, usability, performance, convenience, ad effectiveness, net promoter score, customer satisfaction – all in a single measurement.

– Bill Gurley, Benchmark

Paul Graham, of Y Combinator fame, says that the metric depends on the stage. If you have revenue, then revenue growth is the metric you want. If you’re not there yet, user growth is a good proxy.

“Revenue Growth or Active Users”

The best thing to measure the growth rate of is revenue. The next best, for startups that aren’t charging initially, is active users. That’s a reasonable proxy for revenue growth because whenever the startup does start trying to make money, their revenues will probably be a constant multiple of active users.

– Paul Graham, VC and co-founder of Y Combinator

It should also be noted that the most relevant metric to you depends on your business model. For example, MRR (Monthly recurring revenue) and churn rates would be particularly important to SaaS (Software-as-a-service) startups, while MAUs (Monthly active users) and organic traffic may be more important measurements for online media companies.

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Business

How to Take the First Steps in Scaling Your Business

What are the roadblocks to achieving scale? We look at these growing pains, as well as the steps needed to get past them in scaling your business.

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How to Take the First Steps in Scaling Your Business

Most entrepreneurs are hungry to bring their company to the next level.

Whether they operate a family-run business or a rapidly evolving tech startup, there is always another milestone in sight. Business owners want to their companies to make an impact with their customers and communities, and they want to keep honing their craft.

But with 27.9 million small businesses in the United States alone, there is no shortage of competition for the same pieces of the pie.

How can you take steps in scaling your business, and do what your competitors are not willing to do?

Roadblocks to Scale

Today’s infographic comes to us from Brunner Consulting, and it breaks down common roadblocks to scaling as well as potential solutions to the problem of decision fatigue.

To begin, we’ll look at a poll of U.S. small business owners, which gives perspective on the challenges most often faced by companies with fewer than 10 employees:

  • Profitability (50%)
  • Hiring new employees (48%)
  • Growing revenue (41%)
  • Cash flow (38%)

Unless a business has deep pocketbooks or is venture-backed, there are several obstacles here that may prevent companies from scaling successfully.

A lack of profitability is an obvious limitation, but it’s also clear that revenue growth, cash flow, and adding new employees can be growing pains that may derail any long-term plans.

Decision Fatigue

Why is scaling your business so challenging?

It’s because most types of businesses are not really scalable to begin with. The only sustainable way to scale for most companies is to grow revenue while decreasing operating costs, and for many traditional small businesses (i.e. bakeries, restaurants, hardware stores, consulting, etc.) this can be incredibly difficult.

Even if you come up with a scalable business model, there is yet another obstacle that can prevent your from growing the right way: decision fatigue.

In a growing and evolving company, entrepreneurs can’t do everything – and when they try to make every big and small decision, it affects the quality of those decisions. It can lead to being unnecessarily risk averse, maintaining the status quo, or even avoiding decisions altogether.

Scaling Your Business: First Steps

For a business to grow, there has to be more than one decision-maker.

There are two main routes to this:

1. Delegate Responsibility
In a typical small business, employees find and diagnose problems, while owners focus on solving them. However, by delegating these day-to-day decisions to employees, it frees up owners to work on the big picture items that can fuel growth.

2. Play to Your Strengths
Entrepreneurs can’t do it all, so it’s best to play to your strengths. To do this, outsource business departments that are outside of your wheelhouse. Often those may include things like bookkeeping, marketing, customer service, or website design.

Decentralizing decision-making is one of the first steps in scaling your business – and no matter how you do this, it frees you to focus on the big problems.

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The World’s Best and Worst Places for Ease of Doing Business

In some countries, launching a business is easy. In others? It’s a hassle that is littered with bureaucracy, corruption, and a lack of basic services.

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The Best and Worst Places for Ease of Doing Business

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

When it comes to supporting new businesses, not all jurisdictions are created equal.

Whether it’s the basics, like hooking up electricity and registering the business, or more complex regulatory hurdles, your location can impact the success of your venture in a big way. What makes a country business-friendly, and where are the most hassle-free places to open up shop?

The Ease of Doing Business ranking, by World Bank, breaks countries’ complex regulatory ecosystems down into quantifiable components. The resulting index and ranking system is a global look at who’s making it easy to do business, and which countries are struggling.

A Global View of Doing Business

The visualization below looks at the score (0-100) of 190 economies around the world, as well as a spread between high and low scoring factors in the subindices. While two countries may have the same score, one might have a much wider “spread” which points to outlaying successes or serious challenges in their regulatory framework.

Luxembourg, for example, ranked number one in the Trading Across Borders factor, but 173rd in Getting Credit.

Note: click the graphic below of the full list to expand to a higher resolution.

ease of doing business chart data viz
View a high resolution version of this graphic.

Of the 190 economies covered in the report, New Zealand comes out on top for the third year in a row. Singapore and Denmark round out the top three.

The United States, whose ranking has been slipping in recent years, came in at 8th spot.

This ranking offers up some surprises, such as Macedonia and Georgia, which are both in the top 10. Georgia makes it easy to start a new business, and has the lowest number of procedures to get the process going.

Afghanistan had the biggest year-over-year score increase after making big strides in enhancing the legal framework for businesses.

Rwanda is ranked at a very respectable 29th place – the only low-income economy to crack the top 50.

Building the Index

The data for the ranking is compiled from over 12,500 expert contributors in 190 countries who deal with business regulations on a daily basis. The final score is based on the average of 11 factors:

  • Starting a business – Procedures, time, cost, and minimum capital to open a new business
  • Dealing with construction permits – Procedures, time, and cost to build a warehouse
  • Access to electricity – Procedures, time, and cost required to obtain an electricity connection for a new warehouse
  • Registering property – Procedures, time, and cost to register commercial real estate
  • Procuring credit – Strength of legal rights index, depth of credit information index
  • Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
  • Paying taxes – Number of taxes paid, total tax payable as share of gross profit, and hours per year spent preparing tax returns
  • Trading across borders – Number of documents, cost, and time necessary to import and export
  • Enforcing contracts – Procedures, time, and cost to enforce a debt contract
  • Resolving insolvency – The time, cost, and recovery rate (%) under bankruptcy proceeding
  • Labor market regulation – Flexibility in employment regulation and aspects of job quality

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