# The golden rule of startup metrics: KYN (know your numbers) Jeff Erickson February 24, 2024 Startup metrics should be every founder's true north. We call it KYN (know your numbers). Some founders do it, and some don't. As we've seen time and time again here at Forecastr - the founder who knows their numbers is the founder who succeeds. KYN isn't just about crunching numbers and plugging them into a forgotten spreadsheet once a month. It's a way of life for some founders. You can see it for yourself on Shark Tank anytime. One founder comes across as competent, confident, and capable. They face challenging questions with ease, and back up every claim with data. The next founder has a great idea and no idea how to make it happen. The difference between these two founders is KYN. If you fall into the second group, this post is for you. We're about to take a deep dive into the reasons why your metrics are your best friend. We'll show you why they matter and how you can master them to [attract great investors](/content/blog/raise-capital-startup/index.html) and make sharp, informed decisions that steer your startup toward success. From financial health to customer retention, and everything in between—this post provides clear definitions and practical advice so you can stand in front of any investor with confidence and poise because you know your numbers like the back of your hand. ## Table Of contents: - [What it means to know your numbers](/content/blog/startup-metrics-kyn-know-your-numbers#know-your-numbers/index.html) - [Financial health indicators every founder must track](/content/blog/startup-metrics-kyn-know-your-numbers#financial-health-indicators/index.html) - [Customer-centric metrics for growth and retention](/content/blog/startup-metrics-kyn-know-your-numbers#customer-metrics-growth-retention/index.html) - [Revenue metrics for startups](/content/blog/startup-metrics-kyn-know-your-numbers#revenue-metrics-startups/index.html) - [The role of engagement and marketing metrics](/content/blog/startup-metrics-kyn-know-your-numbers#engagement-marketing-metrics/index.html) - [Utilizing metrics for strategic decision-making](/content/blog/startup-metrics-kyn-know-your-numbers#metrics-strategic-decision-making/index.html) - [Monitoring startup metrics over time](/content/blog/startup-metrics-kyn-know-your-numbers#monitoring-startup-metrics-over-time/index.html) - [Conclusion](/content/blog/startup-metrics-kyn-know-your-numbers#conclusion/index.html) ## What it means to know your numbers Imagine being the captain of a massive ship. You're standing in the control room, and a storm is brewing on the horizon. Everyone in the room is looking at you, waiting for your orders. Without the appropriate tools and resources, your best option is to shout, "Steer us away from the storm!" You have no idea what lies ahead, which direction the storm is heading, or how long it will last. You're just doing your best with what's available. Everyone looks at you as if to say, "You sure about that?" If you're a startup founder, you can probably identify with this feeling. Now imagine the same scenario but with access to a compass, an interactive map with GPS, and the charted routes of every other ship in the area. Now we can make informed decisions. In the vast ocean of the startup ecosystem, the sea floor is littered with startups that sank because they lost sight of crucial metrics like customer acquisition cost or recurring revenue. In a word, they did not KYN. When an investor [listens to your pitch](/content/blog/financial-model-pitch-deck/index.html), this is what they're looking for. Your task is to make it abundantly clear that you are captain #2. ## Financial health indicators every founder must track ### Understanding burn rate and cash runway Burn rate and cash runway are two metrics every founder should be intimately familiar with. Startups fail for many reasons, but the number one reason startups fail is because they run out of money unexpectedly. Your burn rate is how fast your company is going through its cash reserves. Your cash runway is how much time you have, at your current burn rate, before you run out of cash. A good way to understand these metrics is to think about the fuel gauges on your car's dashboard. Your burn rate is like a Miles-per-Gallon reading, and your runway is the fuel level. You need to monitor these constantly. To calculate your monthly burn rate, subtract this month's total cash balance from last month's. To [find your cash runway](https://calculators.forecastr.co/startup-runway-calculato), divide your total cash balance by your average monthly burn rate. That’s how long you have to hit profitability or secure funding from another source. ### Gross profit vs net profit Gross profit shows what's left after subtracting direct costs, revealing your efficiency at managing core expenses. Net profit considers all operational costs, providing a broader view of financial health. Both metrics are essential. ## Customer-centric metrics for growth and retention ### Calculating customer acquisition cost (CAC) Calculating CAC involves adding up all costs spent on acquiring more customers during a period and dividing that by the number of customers acquired in that same period. This metric allows you to identify the most cost-effective channels. ### Figuring out your customer lifetime value (CLV) Understanding CLV helps break down which segments of your customer base are most valuable over the long haul. Multiply your average purchase value by the purchase frequency rate and by your average customer lifespan to get CLV. Together with CAC, they unlock essential metrics for unit economics. ## Revenue metrics for startups Understanding revenue metrics is vital for thriving startups. Monthly recurring revenue (MRR) is essential as it gives you a clear reading of predictable income. You should know where your revenue stands today, where it’s going, and how it impacts your future strategies. ## The role of engagement and marketing metrics Engagement metrics are crucial as they reveal how deeply your audience connects with your products. Tracking these metrics can inform product development and marketing strategies, aiding in understanding your customer. ## Utilizing metrics for strategic decision-making In an early-stage venture, knowing your startup metrics gives you a strategic advantage. It’s important to monitor not just individual data points but how they relate to your overall strategy and trajectory. ## Monitoring startup metrics over time The true value of metrics lies in measuring consistently and monitoring growth over time. Consistency is key. Measuring fluctuations and trends will provide insights into your startup’s health and trajectory. ## Conclusion Gathering metrics provides a snapshot of your startup’s performance. Diving deep into metrics to adapt strategies is how you set yourself apart. Knowledge of your metrics is how you attract and impress investors and ensure continuous improvement.