In this age of information overload, it’s easy to get carried away with all the data your business intelligence software is capturing. It’s so easy, that a lot of founders focus on the wrong KPIs for so long, not realising they are running in the wrong track. By the time they realise, they’ve spent money
In this age of information overload, it’s easy to get carried away with all the data your business intelligence software is capturing. It’s so easy, that a lot of founders focus on the wrong KPIs for so long, not realising they are running in the wrong track. By the time they realise, they’ve spent money executing projects that have no impact on the business.
As a startup, your number one goal is to grow. Nothing should overshadow growth. Everything you do should be in service to growth.
Which is why you’ll hear founders say things like, hire the right team, hire a good accountant. The reason is, when you’re in the thick of it, you don’t want to be worrying if anyone in your team will drop the ball. You want to be able to focus on the most important thing – growing your business. And that is something that requires all your focus.
But what does growth mean? First let’s see what growth is not.
Growth is not raising funds
When starting out, the first thing you need is not necessarily money. Money facilitates growth but doesn’t equal growth. You can raise millions of dollars but if you aren’t growing, it’s a matter of time before the business doors will close.
Growth is also not making profit
A lot of unicorns are yet to become profitable. That’s the world we live in now. Twitter, Amazon and Reddit are yet to make profit nevertheless they are valued at billions of dollars. These services grow everyday, spreading into more territories and acquiring more users.
So what is growth? Well, it depends on what stage you are in your business.
In accelerators, one of the major lessons they teach you is how to focus on the one key indicator of growth. If you’re pre-revenue, it’s usually getting users to sign up i.e. growing your user base. It’s not strange to have Monday morning meetings where the accelerator heads ask your team, “how much did you grow last week?”
After meeting your target number of signups, your definition of growth may change into increasing user engagement (via moving them down the conversion funnel). And the cycle continues.
This minimalist way of evaluating your startup is really helpful because it does something at a glance – it informs you if you’re growing or not. And knowing, as they say, is half the battle.
For example, let’s say you are just starting out, and you hear “android apps are all the rage these days. you should release an app”. Now the idea’s stuck in your head to hire an app developer to create an app for your business. Yet, going through your KPIs reveals that new user acquisition/signup is down by 5% from last week. Well, you have your answer right there. That app can wait, for now. You’ll want to get your user acquisition figures up and set systems in place to maintain your momentum.
Determining your key indicators of growth help simplify the decision making process. And the simpler it is, the faster you can execute.