Looking at key performance indicators (KPIs) ensures you know your strengths and weaknesses so you can address them before they become detrimental to business growth. In the early days, some KPIs matter more than others.

1. Customer Acquisition Costs (CACs)

The money it takes to acquire a new customer is the first thing you must consider, but it’s only part of the equation. While knowing your CAC gives you some insight into how effective your marketing efforts are and adjustments you may need to make, it is the first figure in a longer equation that looks at how much each customer spends and if you can retain them long-term.

2. Cash Flow

Many young ventures struggle with cash flow, citing it as a reason for failure in some instances. In a whitepaper by the Bipartisan Policy Centre on small business access to capital, researchers state 77% of small businesses worry about accessing capital when they need it.

Another 70% of owners said they have under four months of operating cash available. To keep your startup successful, you must plan for the unexpected and know where you’ll find the funds for rapid growth or potential catastrophe.

3. Lifetime Value (LTV)

To understand the effectiveness of your CAC, you also need to know the amount a customer is likely to spend during the years of doing business with you. Calculating lifetime value as a key metric is tricky in the beginning because you have no way of knowing if a new client will stay with you or bounce away after their first purchase.

You can study the performance of your competitors as a possible indicator, but some of the math will be guesswork. Over time, you’ll work to improve retention statistics and have a better idea of LTV.

4. Employee Performance

A small startup can be made by its employees but broken if they perform poorly. Training starts from day one and should be a regular part of development and company culture. There are several ways to measure performance – for example, nearly 70% of employers use job skill testing, while other businesses use measures such as peer feedback. Make sure you measure the things that will bring long-term success.

Measure both hard and soft skills. For example, if you hire salespeople, a hard skill would be understanding the customer relationship management software you use. A soft skill might be time management and if they listen well to shopper needs. For excellent performance, workers need a range of skills and training to improve weaknesses.

5. Monthly Recurring Revenue (MMR)

Startups often bootstrap their new ventures, coming up with the necessary funding as they go. One KPI that can help you plan for fixed and unexpected expenses is MMR. How much money can you count on every month from current buyers or investors?

When you know the amount coming in, you can see if you have the funds to hire a new person or expand to other product lines. You’ll have a better handle on how much to put toward marketing and whether your ad budget is too high or low.

6. Churn Rate

Your first year should measure how many customers you lose after the initial trial period. Which steps are effective in getting them to stay or come back?

Think about brands such as HelloFresh – it offers a deep discount to attract new customers. Some cancel after the trial period when the costs go up. HelloFresh has this built into its model and will immediately send out another discount offer to try to get the person to keep making deliveries.

McKinsey reports you have a 20% to 30% higher chance of retaining satisfied customers. Pay attention to exit interviews stating why someone is unhappy so you can fix any problem areas and keep clients happy.

Track Data Carefully

Statistics will change during your first year in business. Tracking KPIs such as churn rate, LTV, CAC, MMR, cash flow and employee performance will help get you past the initial hurdles of startup growth. Once you build a successful enterprise, the KPIs you measure will change to match your current goals and address any weaknesses needing improvement. Paying attention to the right metrics gives you the insight to build a thriving brand.