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10 Startup Metrics Every SaaS Founder Should Get In Touch With

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10 Startup Metrics Every SaaS Founder Should Get In Touch With

Being an entrepreneur is not an easy job. Mere getting an idea is not enough to establish a start-up. One should strive to create a sustainable business. For this, one must raise enough money, evaluate the market and think about growth and profitability apart from keeping your personal growth in mind.

Here, we help you with some startup metrics which will be useful to keep a keen eye on your business and tracking your journey as an entrepreneurship.

1) Gross Profit (GP)

Gross Profit is the difference between the total revenue and the costs of goods one sells. In simple words, gross profit is the profit which one company makes after deducting the costs related to the making as well as selling the product.

2) Customer Acquisition Cost

The growth of a startup mainly depends on the customer acquisition and obviously, there is a significant cost associated with it. If the CAC is not improving in due course of time, you need to make few gimmicks to decrease the cost and increase your customer numbers.

3) Lifetime Value (LV)

This is the total amount you expect from a single customer throughout the time they are associated with your business. For a successful business, one must ensure that their Customer Acquisition Cost (CAC) is always less than the LV. If in case CAC is more than LV, then it’s time to grow your capital amount for your business to run.

4) Billings

It is the sum of current quarter value and the sum of deferred revenue from the previous quarter.

5) Compounded Monthly Growth Rate (CMGR)

In simple terms, this is the return of the invested money over a certain period of time. Three measures are taken into account to calculate the CMGR. Investment’s beginning value, ending value and the time period. It can be calculated by the use of this simple formula.
CMGR = {(Ending Value/Beginning Value) x Number of Months} – 1

6) Gross Churn Rate

This measures the monthly recurring value that you lose in a month when your customers or subscribers discontinue your service in the middle of the time period.

7) Organic Traffic

This is the traffic that comes to your website as a result of unpaid search results. A better SEO increases the organic search of a website. As a founder, you should ensure your website has a better SEO by setting practical goals and sharp content strategy.

8) Sell Through Rate (STR)

Sell Through Rate is calculated with a simple formula.
STR = Number of units sold in a period/ Number of items at the beginning of the period.
The time period is usually taken as one month.

9) Gross Burn

This is a measure of all cash outlays and monthly expenses which a startup needed. If you are lacking sufficient capital to set a startup, this factor is what you should be concerned about.

10) Month-On-Month Growth

This is the measure of the monthly growth rate of your startup. However, investors will be interested to see your compounded month-on-month growth as it helps to track the periodic growth of your startup business.

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Startup Hacks

How Will Workplace Transparency Benefit Your Company?

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Transparency at the workplace refers to businesses where there is an openness between supervisors and employees. A transparent workplace can lead to happier employees and even increased production. Transparent companies create a feeling of being a part of something bigger where the executives are part of the greater team and not locked off in a room no one can access.

Transparency opens doors to good company communication and sets a tone for new joinees, thereby creating a flatter management structure. Some of the world’s best workplaces are defined by high levels of trust and camaraderie. Transparency also promotes trust at the leadership levels. During good times and bad times, a leader that communicates transparently will actually earn the trust of their employees enabling the organization to solve problems readily.

When a team works together in complete transparency, the results include faster problem solving, better teamwork, healthy working relationships, trust and ultimately, improved performance. Similarly, secrets and troubled relationships between team members and the leaders can hamper the performance levels of individuals and the entire team as a whole and leads to a high turnover rate. Open environments attract the best and brightest talent as they bring about an overall collaborative environment. Companies can move forward when the leaders challenge the employees empowering them with mission critical information, allowing them to flex their creative and problem solving muscles.

Greater transparency at a workplace opens up channels for better employee alignment. When the employees are able to take a look at the bigger picture for the company, they can begin to understand everyone’s role in it as well. Lack of transparency can lead to disgruntled workers who question the company’s actions effectively destroying trust in the workplace. Ultimately, promoting transparency is a continual practice which includes showing the employees that you value their input and trust them with both good and not so great news. Transparency also provides organizations the chance to utilize everyone’s ideas on how to move the business forward and build working relationships in the process.

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Startup Hacks

Choose The Best CEO For Your Company

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The Chief Executive Officer of any company is responsible for making sure the company is on track to reach its target and grow. The wrong CEO may be devastating and very public. If the board and the CEO don’t have a good rapport or are not on the same frequency can lead to potential catastrophe. The rough couple of months at Infosys, Apple when Steve Jobs was fired, HP without Meg Whitman are a few examples. Therefore it is really important for companies, startups in particular, to choose a CEO who fits the companies ideal, aims and ambitions perfectly.

Here are a few tips on how startups can hire a CEO who fits to a ‘t.’

Plan the criteria
Discuss, along with all the members of your board, what direction you want the company to take and what the new CEo will have to accomplish. If the board and the founders of the company themselves are confused, it becomes very difficult to find a level headed and experienced chief executive. Take into consideration the size of the company, if the potential candidates have worked with bigger companies or startups of the same size. Similarly, take the most important aspects of the company’s agenda into consideration to make the right choice.

Choose an insider
If possible, pick a CEO who has been with the company for a while. Multiple studies have shown that CEO chosen from inside the company have performed better than those chosen from outside the company. An insider tends to be more in tune with the workings of the company, already understands the route the company is taking and can work well with the employees.

Industry Experience
It’s not just enough to hand over the reigns of the company to an experienced executive. The chosen candidates also need to have the right kind of industry experience. One of the most important roles of a CEO is to own the vision of the company. If the candidate does not have a relative understanding of the industry, it will become difficult for them to understand the company’s vision and which can thereby delay or hamper any or all progress.

Conviction
While the previous points were about the characteristics to look at while looking for a CEO, this point speaks about the qualities a CEO should possess. Running a startup company is very hard work. If the executives don’t have the right conviction and courage, they will not be able to lead the company into the future. A CEO needs to have courage to take risks and the conviction to stick by these decisions during tough times.

History
Probably one of the most important aspects to keep in mind while hiring a CEO is their track record with other companies. Questions like what was that company’s turn over, how many products were launched successfully, where there any scandals during the tenure should have satisfactory answers to make a final decision.

Being the Chief Executive of a company is one of the hardest jobs in a company. So make sure that your next CEO meets all the prerequisites before hiring an executive.

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Startup Hacks

Things To Look Out For Before Working In A StartUp

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Working in a startup is exciting. There are new things to look forward to and new things to learn. Smaller businesses are more likely to cater to your needs rather than offer you a one size fits all option. That said, thorough research needs to be done before starting to work in a startup.

1. Company Stability 

Startups come and go like the tides. It takes a practiced eye and some good risk assessment skills to spot the ones which ones will stick around. Always check out the company stability before making the decision to join and check if the company is feasible, whether the management team is worth it and whether the company is going to be able to stick out for the long run or not.

2. Self Examination 

Self examination needs to be a big part of the decision. Why do you want to work for a startup? What are you getting out of it and what is your motivation for working in it? If these questions aren’t answered on time, then the whole purpose of joining a startup seems pretty pointless. So dig deep and search within yourself before you take the career changing plunge.

3. Who Are The Company’s Investors? 

If a startup doesn’t have enough funds, then how is it expected to survive the long haul? Your first question should be to find out where the company gets its funding from. Once you figure that out and you are convinced that the startup has enough resources to run for a long time, then you can take the decision to join.

4. Get Ready For The Unexpected 

As each startup is different, there are different processes involved. Expect the unexpected from the very word go. Longer working hours, more time involved in the creative process and unexpected interviews. This is all part and parcel of a startup and work gets all the more interesting if you’re ready for the challenges.

5. The Final Choice 

Even with all these things considered, remember that any amount of due diligence on your part doesn’t guarantee a startup’s success. Startups can and will fail, but like any failure in life, there are lessons to be learned and people who will make the journey special. The final choice depends on how badly you want the job and that, is dependent solely on you!

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