You want to control the numbers and figures linked to your project but don’t know where to start? Here are
some good tips to start with.
If you don't know what you are testing, all the experiments in the world won't give you any answers! A start-up is in search of a solution to a problem that will allow it to deploy a profitable and growing business model. It's not a one-day job, or even a one-month job. And even once found, it may be appropriate to challenge this model, to make changes, to cut out some of its services or customers. To support these strategic decisions, beyond the expert opinion or just a feeling, when the time of decision taking comes, the numbers will allow you to see more clearly. You should start collecting this data as soon as possible. Even if they're not big numbers, even if it's a time-limited experiment, even if you change.
Imagine a car with no dashboard. We know how to drive it, but it's hard to know if we're going too fast or when we'll run out of gas, for example. And what if we have a GPS that gives us the exact position, but we don't know where we have to go? Being a pilot is driving AND controlling your itinerary. It's the same thing with a company. Many people run their business without having a clear view of whether they are going in the right direction, whether they are making progress, whether they have enough fuel left. Do not make that mistake, because at some point, especially when you go to a bank or an investor, your business will be a "black box" to them, and you will have to give them the data. They may be interested in what's going on inside, in principle, but what they're really interested in is what's upstream (money, resources, ...) and what's downstream (money, other resources, ...) In fact, your business will become a kind of formula,
Start by identifying economic and operational metrics. Economic metrics are the few things that measure activity in financial terms. What is your monthly turnover, what are your main costs? What is the monthly profit/loss? How much money do you have in the bank account? It represents an Excel sheet with ten rows and 12 columns (one per month). No more. Not too complicated, is it? Ideally, there are also 12 additional columns (one per month) that contain your budget (your projections) for each month. Operational metrics will represent specific elements of your business. They may be specific to your business, but no doubt there will be elements related to the acquisition cost of new customers, to what they buy from you, to the profit margin you make on what you sell to them, to the structure costs. But this can be related to the commitment on social networks, the number of flyers distributed, the number of offers sent, the number of products purchased at the same time by a customer…
Developments are more important than absolute values. In itself, a measure at a given moment is interesting. A customer acquisition cost of 150 euros is obviously higher than if it were 100 euros. But its evolution over time is more interesting, if not more important, than its value at that exact time. If it is 150 euros but decreases by 10% each month it is much more promising than if it is 100 euros and increases by 20 euros per month!Here is some advice: don’t let yourself drown in the data. Try not to have more than 10 key metrics! Otherwise, your dashboard may look like that of an Airbus A380. Eventually, when you find “your” positioning, you will likely adopt the “North Star Metric” approach, or how one unique measure of a key element will be used to align the whole company with what really matters.
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