Not spending enough time gauging your business’s progress can be just as harmful as wasting your time with needless emails or Excel sheets. You may be so focused on getting your business to the next level, chasing funding and finding the right talent, that you are ignoring developing metrics to monitor your success.

But without strategic planning, you’re lost. And you can’t plan if you have no frame of reference for where you are.

I’ve found that these seven metrics (which roll up into three top-level categories: sales metrics, customer metrics and finance metrics) are good starting points.

Sales Metrics: Creating a Growth Engine

Revenue Run Rate. As you start to grow your business (develop a working product, gain customers and execute on your plan), you need to start measuring how your business is scaling. Your revenue run rate measures how sales are developing over time. It helps you see how likely you are to hit your forecasts, captures directional trends, picks up patterns (e.g. seasonality), and can tease out potential problems with your pricing strategy.

ARPU (Average Revenue Per User). Your ARPU is a measure of a customer’s average contribution to revenue. A rising level means you’re getting more sales from each customer and/or you have pricing power. Of course, that’s just a starting point. An average can’t tell you anything about the quality of your sales. We all know that some customers are more valuable than others! You need to get really granular and look at how sales break down by channel and customer type so you can tease out trends and devote resources to optimizing your customer mix and boosting your share of wallet.

Customer Metrics: Building Traction

CAC (Custom Acquisition Cost). Do you know how much it costs you to attract each customer? That’s what your CAC will show you. It’s a good way to monitor how efficient your sales process and sales team are. If the proportion of spend to impact is not improving over time, you need to make some changes.

Churn Rate. How sticky is your customer base? Your churn rate shows how well you hold onto customers. The absolute value is important, but again, so is the trend. It should descend over time. If it suddenly spikes or plateaus at a high level, you need to figure out why. The numbers will be your guide.

(There are a wealth of other customer metrics that feed into these high level ones: How long on average do your customers stick with you? How profitable are they? How do they vary by sales channel?)

Financial Management Metrics: Cash Flow

Burn Rate. Staying on top of your burn rate (how much cash goes out the door every month) is critical. In my experience, running out of cash is the number one reason startups fail. It’s also an important focus for investors. Knowing your rate is like looking down the track towards a finish line with the stopwatch running. You need to know how much time is left before you run out of money, how close you are to breaking even, and when you’ll start generating profits.

Operation Efficiency. How much operational efficiency does your startup have? In other words, are you getting a return on your spending or are you shortchanging your business by underinvesting in critical but low profile areas? The ratio of SGA (selling, general and administrative expenses) to sales will give you a picture. You’ll have discretion in areas like sales, marketing and payroll, but not for expenses like overhead and utilities.

Low margins could signal that your cost structure is out of whack, that you’re spending too much to get the business to scale, your pricing is too low, or a combination of some or all of the above. Outsourcing as much as you can is one way to get a handle on some of the biggest drivers. But when you’re just ramping up, you’ll need to spend more on sales and marketing to get traction. Spending in the right proportions will deliver the most bang for your buck. The results will eventually show up in your sales and cash figures.

Gross Margins. Your gross margins measure your operating profitability. Both the level and the trend are important. You should know what kind of gross margin is typical for your industry so you have a sense of where you stack up. Operating margins may not be meaningful yet (you might not be making any profits), but they’re a good goal. Gross margins will tell you how effective your management, sales and customer teams are at driving the business, what stage of the curve your business is in, what operating levers you can use to drive growth, and how close you are to inflection points.

These seven metrics are just a start. It makes sense to compare yourself to companies operating in the same industry and of similar size and stage of development, if you can get the data. But to really be valuable and help you achieve your milestones, you also need to come up with measures that are specific to your business.

“Ten years ago most people here did not know what this brown paste was,” says Anthony Brahimsha of the chickpea dip that is now nearly ubiquitous on menus in the U.S..

Born to Syrian parents, Brahimsha knew that hummus in the Middle East is much better than that found in American grocery stores. With the help of Mike McCloskey, owner of Select Milk Producers, the sixth largest dairy cooperative in the country, he developed a hummus called Prommus that is higher in protein –– three times that of other dips. It preserves the traditional flavor by using cold pressure, rather than heat, in the kitchen.

“What Halo Top is to ice cream and Chobani is to yogurt, we are to hummus,” Brahimsha says, by way of explaining that Prommus is also changing the industry.

The company name is a combination of the words “protein” and “hummus,” but is also a play on the word “promise.” With 1 percent of sales benefitting the World Food Program to fight global hunger, Brahimsha hopes that the product can have a significant effect on ending hunger and making nutritious foods available wherever they are needed.

Prommus cofounder Anthony Brahimsha, who has spent a lot of time on humanitarian missions, believes his hummus could help feed the world.

While the initial idea was born out of his humanitarian work in refugee camps along the Turkish/Syrian border, Brahimsha has even bigger dreams. The world needs to find more ways to make nutritious foods for people who are going hungry, and he thinks Prommus and its innovative production process are part of the solution. Two patents are currently pending.

The company’s four varieties (original, red pepper, olive, and avocado) are sold in the Midwest, primarily in Illinois and Michigan. These flavors were taste-tested by Brahimsha’s fellow members at Chicago’s WeWork River North, a community that he says has been invaluable to the startup.

“There are a lot of co-working spaces, but not everywhere is a community of social entrepreneurs who are rooting for their peers,” he says.

A winner in the business venture category at the Nashville Creator Awards, he says he’ll be able to start the next stage of expansion for his company, primarily by adding staff.

“As soon as you win this award, all the blood sweat and tears that you put into the company comes together,” he says. “Everything that you have been doing, the people that were with you along the way, finally, it feels like an affirmation that you were doing the right thing.”

 

Melanie Faye grew up in Nashville, but she doesn’t credit Music City with her success. She credits Guitar Hero. Yes, that Guitar Hero, the video game that allows players to mimic the sounds and moves of their favorite stars. For Faye, it was Michael Jackson.

“I don’t think growing up in Nashville introduced me to guitar players,” Faye says. “My parents were chemists. I was not able to go to bars and see local shows. Guitar Hero introduced me to all this music I was not exposed to. Guitar Hero looked really cool. It made me feel empowered.”

So, perhaps it shouldn’t be a surprise that Faye, now 20, has found fame via YouTube. After dropping out of college three semesters in to pursue her music career, Faye posted videos of herself sitting in her bedroom and playing covers of John Mayer and Mariah Carey.

“Guitar Hero introduced me to all this music I was not exposed to,” says Melanie Faye. “Guitar Hero looked really cool. It made me feel empowered.”

She also used the platform to debut some of her original work, which she describes as a mixture of R&B, hip hop, and pop. Her voice, serious guitar-playing chops, and friendly demeanor propelled those videos to more than 10 million views. She was so popular that the guitar company Fender tapped her to demo a new line of the instrument.

“I thought, ‘This is it! I’m viral. I made it!’ But it does not work that way,” she says. Faye makes ends meet by working at a local doughnut shop and teaches guitar. She also keeps working on her music the old-fashioned way, having been tapped to be the opening act for musicians like Noname and Mac Demarco. Her most recent gig was at the Nashville Creator Awards.

She is working on her first album, which she hopes will be out by the year’s end. A self-proclaimed perfectionist, Faye has been working on Homophone for years.

“If I had known it was going to take this long,” she says, “I wouldn’t have told people it was going to be out soon.”

Faye is also working to relieve the jitters that come with performing live, rather than in front of a camera. A recent show at the Hollywood Palladium was a game changer.

“I typically am really shy and inhibited on stage. But I felt so much support and positive energy, I just let loose,” she remembers. “I think to an extent you just have to have fake confidence at first. I walked up and had a confident demeanor and once I heard crowd cheering, then I was confident.”

“It happens overnight,” Maria Vertkin says. “An immigrant moves to the U.S. and goes from being a surgeon to washing toilets.”

College degrees and professional experience from their home country don’t always mean as much as they should when an immigrant starts a new life abroad, says Vertkin. She knows from experience: She spent her childhood in Russia and Israel before immigrating to the United States. But she realized that they have one thing that will always be of use to them: their language skills.

“It doesn’t make sense if you have something as valuable as a second language to not use it,” says Vertkin, who speaks English, Russian, Hebrew, Spanish, and Portuguese.

Vertkin, a Boston-based social worker, wanted to help train women to use their multilingual skills to their advantage. She saw a need that they could fill in the medical field. Hospitals in Massachusetts struggled to find interpreters for their patients who aren’t native English speakers. Without interpreters, expensive and even potentially fatal medical errors are possible.

A Found in Translation graduate shows off her diploma.

“The jobs are plentiful and the demographics are shifting,” says Vertkin. “Not only do they serve the local population, but medical tourists come from other countries and they need interpreters.”

The idea was a hit with the judges of WeWork’s Nashville Creator Awards. Found in Translation took home a $72,000 prize in the nonprofit category.

In 2011, Vertkin started Found in Translation to help homeless and low-income women achieve economic security by making their language skills an asset, rather than a liability. Within a few weeks of announcing the first class, she had 200 applications.

The nonprofit offers medical interpreter certificate training as well as other interpreter programs. And the training includes more than the core curriculum — childcare, transportation, job placement, and access to mentors for professional development are also part of the program.

The 186 graduates of Found in Translation classes between 2012 and 2017 earned approximately $1.86 million cumulatively more per year than they did before enrollment. That’s about $10,000 more per person annually. She says that if she wins in the nonprofit category at the Nashville Creator Awards, she can expand the program.

Classes currently take place in Boston, where Vertkin estimates they could easily double in size with the right funding. Every city in the U.S., she says, has the potential for success with Found in Translation.

“There is opportunity and need and we are connecting them,” Vertkin says. “The biggest risk is for employers not hiring multilingual employees.”

If Janett Liriano has her way, you won’t be using your FitBit much longer.

Liriano is CEO of Loomia, a New York-based firm at the intersection of tech and fashion. The company creates “intelligent drapeable circuits” that are soft enough to be embedded into textiles and can be safely washed and dried. Instead of wearing a step tracker on your wrist, it could be embedded into your running shoes.

That’s just the beginning of what these circuits can do. Those shoes might not just track your steps, but can also measure the pressure on your feet, giving you information on how you should adjust your gait. They might heat up and keep your feet warm in winter. And a light might keep you safer on a nighttime jog.

Loomia’s CEO Janett Liriano and founder Maddy Maxey

Liriano has two patents for her product and others in the pipeline for the smart fabric-enabling circuits. Her team is working with more than 80 brands on how they can integrate the smart technology into their designs. The current emphasis is on clothing, but the flexibility of the circuit opens the door to other products in the future.

“We are category agnostic,” Liriano says. “If you can make a washable circuit, you can put it on the floor. You can put it in wallpaper.”

Liriano, who took home third place in the business ventures category at the Nashville Creator Awards, sees potential in fields ranging from medicine to transportation.

Not only can Loomia transform the ways smart devices are used, it can also change what happens to all that data once it is collected. The company is looking at ways that consumers can sell their data to interested parties — or choose not to share it.

Liriano, a “born-and-bred New Yorker,” thinks the city is the right place for the firm. It’s one of the country’s great fashion hubs, but it also has a strong startup scene.

New Yorkers are inherently scrappy and resourceful,” she says. “For a business that is not super capitalized, that’s a good network. We are hard-core hustlers.”