If you own your business, do you consider yourself to be a successful entrepreneur? How do you measure this success? Promotional Consultant Today shares these key metrics for success as defined by members of the Young Entrepreneur Council (YEC).
- Cash on Hand. Cash is the life-blood of any startup, and you should always have a pulse on how much of it you have left and how long it’s going to last. It is incredibly easy to let this slip by the wayside. – James Simpson, GoldFire Studios
- Lifetime Customer Value. While everything having to do with your income and expenses is important for any entrepreneur to understand and monitor, the most important number to know by heart at any given time is your LTV: Lifetime Customer Value. How much do you earn per customer? Per lead? If you know that, you will know how much you can spend to find them. – Cody McKibben, Thrilling Heroics
- ROI Per Marketing Channel. It’s crucial to keep a handle on ROI per marketing channel in order to optimize marketing spending. It’s not enough to check this every quarter. You should check it monthly or weekly. – Josh Weiss, Bluegala
- Renewal Rates. If you’re selling anything, understanding renewal rates is absolutely critical. If, for some reason, you’re not getting repeat customers, that’s a major problem and you need to spend as much of your time on it as possible. – Mitch Gordon, Go Overseas
- Gross Margin. It is crucial for entrepreneurs to understand their costs of goods and services. Keeping track of gross margin assures you know the value of each additional sale. Keeping track of gross margin by product offering will help you determine what balance of products and services will be best for your business. – Doreen Bloch, Poshly, Inc.
- Profitability Date. Knowing when you expect to be profitable will influence every other business decision you make. You need to know when your company will start making money to know how to manage the money you have in the bank. This impacts every decision related to your business, from hiring more staff to expanding product offerings to investing in marketing. – Ben Rubenstein, Yodle
- Burn Rate. This is the rate at which a company uses up its capital to finance overhead before generating positive cash flow from operations. As a measurement of negative cash flow, the burn rate is what you need to compare all your forecasts to so you don’t run out of money prematurely, and by lowering operating costs appropriately. – Phil Chen, Systems Watch
- Income to Expenses Ratio. All other metrics eventually lead back to this one. Are you earning more than you spend? All other decisions hinge on whether or not you’re in the black or in the red. – Colin Wright, Asymmetrical Press
Source: Scott Gerber is the founder of the Young Entrepreneur Council (YEC), an invite-only organization comprised of the world's most promising young entrepreneurs.
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Compiled by Cassandra Johnson