Is your business a startup? Are you looking to open one in the future? Plenty of startups print out financial statements, glance them over, and assume everything’s fine. But the numbers that actually matter for a startup are different from those of an established company. Why? Startups are racing against time — you need to reach profitability or line up capital to offset launch costs before the runway ends. Knowing which numbers to focus on early makes that race a lot more winnable.
Here are the numbers startup businesses should be watching.
For a deeper look at startup funding, explore our guide to startup funding.
CAC (Customer Acquisition Cost)
CAC tells you how much you need to spend to acquire a customer. Tracking it lets you set a realistic marketing budget and predict revenue based on real numbers, and it helps you identify which channels are actually cost-effective for your business.
Calculating CAC is simple: tally your marketing and sales expenses for a given period, then divide by the number of new customers you acquired in that period. That’s your CAC.
Repeat Customers
Businesses survive on customer loyalty. Repeat customers are the lifeline of any company — keep existing customers happy and give them reasons to come back. Track how many of your customers qualify as lifetime-value customers; those are profits you can actually depend on. Growing repeat sales from existing customers is both a safety net and a cheaper way to grow than constantly chasing new customers.
Conversion Rate
How many times have you walked into a store and left without buying anything, or added something to an online cart and forgotten about it? That’s a lost conversion — and completed purchases are what keep a business alive. Understanding why people don’t convert, and what you can change about it, is worth real attention.
Calculating conversion rate is easy: divide completed sales by your total number of leads. Watching this number tells you where your business needs to improve and how many leads you actually need to hit profitability.
You may also find it helpful to read Startup Financing: Advantages and Funding Options for Your Company.
You may also find How Long Does SBA Loan Modification Take? helpful for your business.
REIL Advice
The numbers a startup needs to watch are genuinely different from those of an established business — the early stage is where you’re building the foundation. If you need funding advice, or your business has crossed the 6-month mark and you want to see what you qualify for, fill out REIL’s commitment-free application. We’re always happy to help.
Frequently Asked Questions
What numbers should a startup track that established businesses don’t worry about as much?
CAC (customer acquisition cost), repeat-customer/lifetime-value tracking, and conversion rate matter more intensely for startups because they’re still proving out whether the business model actually works before the runway ends.
How do I calculate my startup’s CAC?
Add up your marketing and sales expenses for a given period, then divide by the number of new customers acquired in that same period.
How do I calculate my conversion rate?
Divide your number of completed sales by your total number of leads for the same period.
