Measuring Startup Success

There probably has been little time to slow down since you launched your startup. Every day, it’s go-go-go. But, it’s important to take time to track certain stats in addition to expenses and profit that reveal how your startup is truly performing.

“Employing several metrics — including net income, marginal revenue and gross profit — is important when measuring a startup’s success,” according to Investopedia writer Claire Boyte-White.

New customers

The success of your startup is dependent on your customers. Therefore, tracking how much money it takes to grow your customer base is important, according to Craig Bloem, founder and CEO of and writer. The customer acquisition cost is a simple calculation.

“The easiest way to calculate CAC is to pick a specific time period and then divide your cost of marketing and sales by the number of customers you gained,” he advises.

Current customers

Just as important as growing the number of customers you serve is the number of customers you keep. A loyal customer base will help your startup achieve continued success, and it’s a vital metric to watch. Whether you call it a retention rate or churn rate, knowing the percentage of customers you can count on will give you a clearer picture of your startup’s success.

To determine your retention rate, Bloem says to “subtract the number of new customers from your total customers at the end of a given period, then divide that number by the number of customers you started the period with.”

Repeat customers

If your startup is relatively new to the world, calculating the Customer Lifetime Revenue metric (the money generated by repeat customers) can be challenging. As time goes by, you’ll be able to assess the necessary data for this metric, according to Bloem. Not only is this metric helpful in terms of calculating expected business, it can also reveal the strengths and weaknesses of your customer service, he adds.

Marketing and advertising expenses

No business can thrive if no one knows about it, so you have to funnel funds into marketing and advertising campaigns. You’ll want to be cognizant of not only how much you spend on advertising but also how it pays off. According to Bloem, calculating the Return on Advertising Spending is simple math — take your sales and divide it by your advertising budget.

“So if you spent $15,000 on advertising that resulted in $30,000 in sales, your ROAS is $2. You generated $2 for every $1 you spent,” Bloem explains.

Your bottom line

Last, but certainly not least, is a metric that quickly determines if your business is succeeding — your bottom line. The stat, also known as the margin, means the money you bring in is more than the amount of money you’re spending to run your business.

“There are many ways to calculate margin, but generally speaking your revenue must exceed your cost of goods sold and your operating expenses (like rent, salaries, fixed costs, etc.),” according to Bloem.

These metrics will help you calculate the success of your startup. Track them diligently as your business continues to grow.

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