Your startup survives on very precarious ground. The
resources it needs to survive and grow are in much shorter supply than
your ambitions.
And if you’re a visionary entrepreneur, there’s a real danger that
your passion for turning that vision into a reality may cloud your
vision.
How can you get the necessary information to decide how best
to spend those scarce resources or devote more of your time to
attracting more of them?
The answer is to build a startup dashboard that tracks metrics that
flash green, orange or red to inform you about the current and projected
state of your startup’s progress on cash flow, investment prospecting, hiring, customer acquisition and product development.
Here are five key metrics for your startup dashboard:
1. Cash-burn rate light. The cash-burn rate tells
you how long before your startup will run out of cash. It details how
much cash you have available, the biggest bills you must pay and when
the payments are due.
If you have more than a year's worth of cash in the till, you are in
good shape. If you have between 11 months and three months before you
run out, you should be getting nervous.
And if there's less three months, you have a cash crisis that will
require a big financial infusion, a huge layoff or an orderly shutdown.
2. Capital-raising barometer. The capital-raising barometer
maps out how well you’re doing in obtaining funding for your startup.
It measures your goals and the cash received from sources including
customers (the investment or quick-payment terms), suppliers (the
investment or slow-payment terms), founders, friends and family, angel
investors and venture capitalists.
If you ae talking with all these stakeholders about investing and
have collected plenty of cash from them already, you are in good shape.
You should start to worry if you are talking to all these groups but
have received no interest from anyone in writing a check. And you should
devote much more time to building relationships with these stakeholders
if you are not already doing so.
3. Hiring-activity meter. Your hiring-activity meter
lets you know whether you are building what investors would consider an
A team. By job area (such as engineering, sales or manufacturing), it
details the number of industry superstars you’ve already hired, the
number to whom you have made offers and the number that you’re
interviewing.
If you do not a large number of A players hired or in the recruiting
pipeline, there’s a danger that your competitors do. Of course, you
can’t expect to be hiring this talent unless you have a compelling
mission and enough customer traction to attract it.
But if your hiring activity meter is not flashing a green light, you
must take action to bring more A players into your recruiting pipeline.
4. Customer-growth monitor. The customer-growth
monitor tracks the growth rate in number of customers and revenue. It
details the number of users of your product and how frequently they use
it, how many of them are recommending your product to people in their
network, how many of them are paying for it and how much they shell out.
Your customer-growth monitor is flashing a green light if more people
are using your product frequently, if many of them are recommending it
to their network and if an increasing proportion is paying a higher
price for it.
If you are achieving rapid growth but customers are not recommending
the product and very few are willing to pay for it, find out why and
change your product. And if you’re not getting more customers or they’re
not paying for your product, then you need to take more radical
measures.
5. Product-development tracker. The
product-development tracker lets you know whether you are on schedule
for building the right products. It details the timeline for your
products, whether your team is meeting its milestones -- and if not,
what’s holding things up and the feedback you’re getting from customers
about the prototypes you're releasing to them.
Your product-development tracker will flash green if you are ahead of
schedule and customers are giving useful feedback on the prototype. If
you are falling behind on the schedule and not getting customer feedback
on the prototype, you're in trouble -- and should investigate why and
make changes.
It’s vital for your startup’s survival to build and use this startup dashboard. Start today!
Credit to
Peter S. Cohan .
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