Metrics or KPIs (Key Performance Indicators) are essential for driving and understanding growth of an early-stage startup. What isn’t measured can’t be improved, and startups that aren’t growing are not likely to survive.
We have written extensively about these topics before:
- Intro to Startup Metrics
- Funnels for Startups
- Whats is the Magic Moment for your Startup
- Your MVP is minimal, but is it viable?
Today’s post will focus on how to set up a simple, actionable dashboard for your pre-seed or seed-stage startup regardless of your vertical and customer type.
3 RULES FOR TRACKING KPIs
After working with hundreds of startups across many industries, we are advocating for a simple, minimalistic approach to metrics for an early-stage startup. We recommend using 3 simple rules:
Rule 1: Less is more. Regardless of your vertical and customers, pick one key metric— and no more than 5 supporting metrics—for your dashboard. Be reluctant to add more than necessary, and commit to driving up the top metric. The top metric should be tied to growth of revenue, or be a lever of how you will likely make money in the future.
Rule 2: Consistency. Track each metric regularly—weekly, monthly or quarterly, depending on what makes sense.
Rule 3: Focus on Growth. Measure new revenue, new customers, new visitors, etc, instead of totals (or vanity metrics). This way, you can really focus on your growth. Even when the progress will look minimal at times, you will be focused on acceleration.
For example, when your new revenue is a flat line every week, you are still growing linearly. When your new revenue is a straight line with a non-zero angle from bottom left to top right, you are growing exponentially.
Lastly, make sure you read this post about funnels. It will come in handy in many situations. For sales and conversion funnel specifically, you want to track the entire funnel on your dashboard, because a lot of what you will focus on will be optimizing it.
SAMPLE B2B DASHBOARD
Top Metric: New Revenue/MRR/ARR and New Customers per month/week/quarter. This is your bottom of the funnel.
- New Leads/Qualified Leads per month/week/quarter. This is the top of your funnel.
- Sales Funnel – the entire sales funnel with all stages of drop off should be tracked and optimized one stage at a time, starting from the bottom. This includes unqualified leads, qualified leads, demos, meetings, LOIs, commitments, etc., depending on your business.
- Revenue/Customer Churn per month/week/quarter.
SAMPLE D2C DASHBOARD
Top Metric: New Revenue/MRR/ARR and New Customers per month/week/quarter. This is the bottom of your funnel.
If you are not yet generating revenue, then:
New Engaged Customers per month/week/quarter ⇐ Engagement should be tied to an activity that will be monetized in the future.
- New Visitors per month/week/quarter. This is the top of your funnel
- Conversion Funnel – the entire conversion funnel with all stages of drop off should be tracked and optimized one stage at a time, starting from the bottom. This includes visitors, activation, engagement, all the way to magic moment.
- Revenue/Customer Churn per month/week/quarter
If you are not yet generating revenue, then:
Engaged Customers Churn per month/week/quarter.
SAMPLE MARKETPLACE DASHBOARD
Marketplaces are more complex in the sense that you are driving both supply and demand. It is typical to focus on one side at a time. For example, if supply is critical, you may want to initially focus on locking down enough of it, like Uber had to lock down drivers, and Airbnb had to have listings available.
Then you may need to focus on the other side: demand. This means that depending on the stage you are at—supply constrained or demand constrained—you may need to pay more attention to one vs. the other.
Here are the general things you want to track.
Top Metric: New GMV/Transactions per month/week/quarter. This is the bottom of your funnel.
- New Suppliers/Qualified Suppliers per month/week/quarter. This is the top of the funnel for Supply.
- Supply Funnel – the entire supply funnel with all stages of drop off should be tracked and optimized one stage at a time starting from the bottom.
- New Customers (Demand) per month/week/quarter. This is top of the funnel for Demand.
- Customer Funnel – the entire demand funnel with all stages of drop off should be tracked and optimized one stage at a time, starting from the bottom.
- Revenue/Supplier/Customer Churn per month/week/quarter
SAMPLE RUNWAY DASHBOARD
Regardless of the type of business you are running, you also need to keep track of your runway and burn. Here is a simple way to do it.
- Revenue ⇐ Actual cash you got this month
- Expenses ⇐ Cash you spent this month
- Burn ⇐ Revenue minus Expenses
- Cash in the bank
- Average burn last 3 months
- Runway in months
Don’t spend time on fancy tooling. Instead, setup a simple dashboard, focus on your funnel, start optimizing and start growing.
Once you have the Dashboard in place, it becomes a great tool for you as founder to drive your business forward and communicate with your team, as well as mentors and investors.
Engineer, Immigrant. Vegan. 3x Founder, Managing Partner @2048vc. Previously ran @techstars in NYC. I write #startuphacks: http://alexiskold.net .