Metrics & Finance Playbook

Core Rule

Know your numbers. Founders who don't know their burn rate lose their company by surprise.

The 6 Numbers Every Startup Must Know

1. MRR (Monthly Recurring Revenue)
2. Burn Rate (monthly cash out)
3. Runway (months of cash left)
4. CAC (Customer Acquisition Cost)
5. LTV (Lifetime Value)
6. Churn Rate

If you don't know all 6, stop and calculate them now. Use apps/runway-calculator.html and apps/unit-economics-calculator.html for interactive modeling.

Key Metric Formulas

Revenue

MRR = Sum of all monthly subscription revenue
ARR = MRR x 12
Net Revenue Retention (NRR) = (Starting MRR - Churn + Expansion) / Starting MRR
Gross Revenue Retention = (Starting MRR - Churn) / Starting MRR

Burn & Runway

Gross Burn = Total monthly expenses
Net Burn = Gross Burn - Revenue
Runway = Cash in bank / Net Burn
Months to break-even = Net Burn / Monthly revenue growth rate

Minimum safe runway: 12-18 months. Start fundraising when you have 9+ months remaining.

Customer Economics

CAC = Total Sales & Marketing Spend / New Customers Acquired
LTV = ARPU x Gross Margin % / Monthly Churn Rate
LTV:CAC Ratio = LTV / CAC (target: >3x)
CAC Payback = CAC / (ARPU x Gross Margin %)

Growth

MoM Growth = (This Month MRR - Last Month MRR) / Last Month MRR
Churn Rate = Customers Lost / Customers at Start of Period
Revenue Churn = MRR Lost / MRR at Start of Period

Efficiency

Burn Multiple = Net Burn / Net New ARR
  <1x = excellent | 1-1.5x = good | 1.5-2x = acceptable | >2x = inefficient

Magic Number = Net New ARR (quarter) / S&M Spend (prior quarter)
  >0.75 = efficient, invest more | 0.5-0.75 = OK | <0.5 = fix before scaling

Rule of 40 = ARR Growth Rate % + Profit Margin %
  >40% = healthy balance of growth and efficiency

SaaS Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
  >4 = very healthy growth | 2-4 = good | <2 = churn is eating your growth

Financial Model (Minimum Viable)

Build a 12-24 month model with these tabs:

TAB 1 — ASSUMPTIONS
  Starting MRR, growth rate, churn, deal size, headcount plan, cost drivers

TAB 2 — P&L (Monthly)
  Revenue | COGS | Gross Profit | Gross Margin %
  Payroll | Marketing | G&A | Total OpEx
  EBITDA | Net Income/(Loss)

TAB 3 — CASH FLOW
  Starting Cash | Revenue | Expenses | Net Burn | Ending Cash | Runway

TAB 4 — UNIT ECONOMICS
  CAC | LTV | LTV:CAC | Payback | Burn Multiple | NRR

TAB 5 — SCENARIOS
  Conservative | Base | Aggressive
  Key variable that changes in each scenario

Update monthly. Compare actuals vs projections. The gap between plan and reality IS the learning.

Model Red Flags Investors Spot

Pricing Scenarios

Before setting a price, model 3 scenarios:

Conservative: $X/mo, X customers -> $XK MRR
Base:         $Y/mo, Y customers -> $YK MRR
Aggressive:   $Z/mo, Z customers -> $ZK MRR

Price to the base. Manage toward aggressive. Plan cash around conservative.

OKRs (Objectives & Key Results)

Set quarterly. Max 3 OKRs. Max 3 KRs per OKR.

Objective: [Qualitative goal — ambitious but clear]
  KR1: [Measurable result with specific number and deadline]
  KR2: [Measurable result with specific number and deadline]
  KR3: [Measurable result with specific number and deadline]

Example by stage:

Stage 1:

Objective: Validate product-market fit
  KR1: 10 paying customers by end of Q2
  KR2: Monthly churn < 5%
  KR3: 3 unprompted referrals

Stage 2:

Objective: Build repeatable revenue engine
  KR1: $25K MRR by end of Q3
  KR2: CAC payback < 12 months
  KR3: Non-founder closes 5 deals

Stage 3:

Objective: Reach Series A readiness
  KR1: $100K MRR with 15%+ MoM growth
  KR2: NRR > 110%
  KR3: Burn multiple < 2x

Review OKR progress every Friday. Adjust KR targets if you learn they were wrong — but don't lower them just because they're hard.

Unit Economics Health Check

See also: traction-benchmarks.md for full stage-by-stage benchmark tables.

Investor-Ready Metrics Dashboard

Track and report these monthly:

[COMPANY] — [Month] Metrics

Revenue:
  MRR: $X (change% MoM)
  ARR: $X
  NRR: X%

Customers:
  Total: X (new: X, churned: X)
  Monthly churn: X%

Unit Economics:
  CAC: $X
  LTV: $X
  LTV:CAC: Xx
  Payback: X months

Cash:
  Balance: $X
  Net Burn: $X/mo
  Runway: X months

Efficiency:
  Burn Multiple: Xx
  Gross Margin: X%

Tools

> Disclaimer: This playbook provides educational frameworks for startup metrics and financial planning. These are general guidelines — your specific industry, business model, and stage may require different benchmarks. Consult a CPA or financial advisor for tax and accounting decisions. This is not financial advice.