Important Metrics in a Startup's Financial Statements(ttunguz.github.io)
ttunguz.github.io
Important Metrics in a Startup's Financial Statements
http://ttunguz.github.io/ten-financial-metrics
5 comments
I found this article to be very educational on start-up fundamentals ; where can find a sample income statement spreadsheet which illustrates the concepts and formalae in this article ?
hey manishsharan, we have a collection of financial model templates within foundersuite.com. They are completely free to use / download.
when you login, go to Corporate Docs then click on the folder "Models". There's a SaaS model, an ad-revenue model, a subscription model and one or two others.
hope that helps, Nathan
when you login, go to Corporate Docs then click on the folder "Models". There's a SaaS model, an ad-revenue model, a subscription model and one or two others.
hope that helps, Nathan
Thanks for this Nathan, I hadn't heard of foundersuite.com before now - looks like a great resource.
I think the most important metric for a startup should be around whether customers are using a startup's product. For example, a company like DropBox will be most interested in a metric like TB stored with Dropbox across all customers. I believe as a startup this is the single most important metric that you should care about.
This is why I love software companies:
Revenue per employee. The beauty of software businesses is their leverage. Google's market cap is 40% larger than Walmart but it has only 2% the size of Walmart's employee count.
Revenue per employee. The beauty of software businesses is their leverage. Google's market cap is 40% larger than Walmart but it has only 2% the size of Walmart's employee count.
The true measure of a company is how much profit it produces. Why does revenue per employee matter?
It's a measure of efficiency. A company that takes 100 people to produce $100 of profit isn't as efficient as a company that produces $100 of profit with one person.
How this ratio changes over time is a measure of scalability. If a one person company goes from $100 profit to $200 profit after doubling the number of people, that's more scalable than a 100 person company going from $100 profit to $200 after doubling the number of people.
How this ratio changes over time is a measure of scalability. If a one person company goes from $100 profit to $200 profit after doubling the number of people, that's more scalable than a 100 person company going from $100 profit to $200 after doubling the number of people.
Great article, clear and to the point. Any suggested reading for one to dig further?
http://www.forentrepreneurs.com/saas-metrics-2/ is a good one for SaaS startups.
I'd be interesting in finding more about the source of the sales quota #s. And is that one time sales or lifetime revenue? (Since most new firms have a SAAS model now)