When starting your business, there are various metrics you need to consider in order to track and measure your progress. Here are the basic metrics you need to flourish in your business:
1. Customer growth – The most important metric is your customer growth. Without this, all other metrics are invalid. How do you start? Get the first customer of your prototype or of your idea. And get them to pay for it. A customer is someone who pays you money to use your product. Once you get your first customer, get the second one. Then get the third one. A good rule of thumb is to increase your customer base by 10% per week. Or you can make up your own percentage. Do this for a long time like 12 or 18 months and if you have a business.
2. Price – Finding the correct price for your product is one of the hardest aspects to nail down in your start-up. Is your price too high? Too low? Do you offer packages? Any discounts? The best way to address this is to test your pricing, and track feedback from your customers. We will use a subscription model for our example. First, cluster your customers in groups of 5 or 10. Second, charge them different rates. Group 1 – Ksh 1000 per month; group 2 – Ksh 2000 per month; Group 3 – Ksh 3000 per quarter; Group 4 – Ksh 12000 per year… and so on. After, interview them about their experience with paying for the product and the pricing model. The findings will guide you to find the best price.
3. Sales – You’re paying customers will give your business sales. How much are you making per day, per week, per month, per quarter, per year? It is always better if it is more than the previous day, week, month, quarter or year. Measuring your sales will tell you how your business is doing. It will guide your decision making in the short and/or long term of your business life.
4. Expenses – Key rule in business is to keep your sales high and costs low. When starting your business always get discounts, barter for work, or get it done for free. Minimize your costs and you’ll have more money to grow your business.
5. Churn – Churn is the number of customers that stop using your product. You need to know why customers do not want to use your product anymore and why they are moving to your competition. Conducting surveys and interviews, and getting feedback is crucial to understanding your customer psyche on how they value your product, what is working and what isn’t. Keeping paying customers is key once your business is running. No customers = no business.
Kiragu Gichuri is co-founder and Business Development lead at Ekobiashara.
