2021 brings important challenges for your company. Are you ready?
4 min read
The opinions of the employees of You are personal.
The end of an extremely complicated year is approaching for startups (and for everyone). There are important challenges for your company in 2021. While the global health situation is expected to improve significantly, the top priority will be to provide customers and prospects with the support they need. In this scenario, businesses will slowly recover even though there is no volume or cash flow to get closer to the pre-COVID-19 preview.
According to the Bank of Mexico, it has been estimated that the Mexican economy will close this year with a cumulative decline of -9% and that for the next year it is estimated to grow by 3.34% given an inflation rate of 3.60 % considered. In this scenario, you should be prepared more than ever and consider the following metrics to determine the health of your business and implement the best strategy for 2021 in this scenario:
Remember that Customer acquisition costsIf this is an essential investment in convincing a lead to become a customer, it is an essential financial indicator of your startup’s health. This measure speaks for the efficiency of your marketing efforts and is much more meaningful when combined with other metrics.
Customer retention rate. How many customers have you been able to retain this year? Getting a customer is very important, but it’s much more important to keep them, especially in these circumstances. It is the index that measures customer loyalty to your business over a period of time, and there are several methods that can be used to get this percentage.
Otherwise, has the pandemic made you lose customers? You need to factor in your churn rate, the rate of customers who are unsubscribing (either from a subscription list or from some other type of database).
Other relevant data that must be considered is the Lifetime valueThat means how much money each customer brings for the company from purchase to purchase stop. The ratio of CAC to LTV is an essential metric. It is an indicator of the sustainability of the company.
CAC recovery time. This KPI measures how long it takes for a customer to generate enough net income to cover the CAC. This payback period has a direct impact on cash flow.
General cost, or overhead, which measures a company’s fixed costs. It is a fact that you should always keep in mind. We can add the negative monthly cash flow to this. Understanding your income and expenses (fixed and variable) can help you calculate negative monthly cash flow.
Total budget; Total budget. This term is critical to a startup’s survival, with or without a pandemic, and is better known in the world of entrepreneurship as the runway. It measures the time that cash lasts, expressed in months. Especially consider this information if you are looking to raise capital. Don’t wait until the end when you run out of money. It’s best to be out of control for 12 months, and 18 months if possible.
Finally, look at the profit margin as this metric allows you to account for the profit margin ROI (return on investment) important to understand the scalability and sustainability of your company.
More indicators are needed to get a comprehensive analysis. We recommend that you accompany an expert and ensure the health of your company.