Measurement of Health on Startup and Business.
With the aim of encouraging entrepreneurship, many initiatives are being taken up by government and various organizations. One such initiative was taken up by Lemon Ideas in the form of Webinar to promote the measurement of health of startup and business. Speaker of the Webinar was Mr. Chintan Bakshi , CEO of Startup Oasis. In the Webinar he emphasized that owner of the business must measure the it’s health regularly to make the business model of startup to be profitable and repeatable. He gave five metrics for the measurement of health of business. They include,
1] Customer Acquisition Metrics
2] Revenue Metrics
3] Unit Economics
4] Operating Break-Even
5] Funding Requirement
He further specified that all the five metrics are important and interdependent on each other. Customer Acquisition Metrics is the main driver of the sale, it states that customer base to which organization is catering must accept the product, organization must make sure that significant amount of their customer base is retained so that revenue per user is high. For startup if sales driver are perfect than revenue generated from them is high, which can be measured through revenue metrics. For the organization per unit sales are important, as they are the fundamental financial building blocks, organization spend considerable amount to gain customers for their products as well as to keep them loyal. These is measured through unit economics. When lifetime value from the customer exceeds their acquisition costs, organization attains breakeven point at which it operates on no profit, no loss basis. Up to this point organization depends on the investors funding. Funding from the investors depends on cash flow of the organization, Working capital which keeps track of organization’s liabilities as well as Valuation of the organization which defines the estimated value of organization. Finally Mr. Chintan Bakshi stated that for the organization to be profitable and to be able to sustain in market for long time, all the metrics of measurement should be positive.