5 Key Performance Metrics Every Founder Must Track

Numbers don’t lie, but they can definitely mislead you.

You check your dashboard—everything looks amazing. Website traffic? Booming. Social media engagement? All time high. Revenue? Coming in.

But then, reality hits you in the face. Burn rate is climbing. Customers are churning. Cash reserves are going down. What went wrong?

Here’s the truth: You were tracking the wrong numbers!

Most founders fall into this trap. They chase useless metrics—numbers that look impressive but don’t actually affect the business growth much. By the time they realize it, it’s too late.

But you? You won’t make that mistake. Because in this blog, we’re going to discuss the key performance metrics that actually matter and every founder MUST track!

1. Revenue Growth Rate

Are you actually growing?

Revenue is the backbone of any business. But just making money isn’t enough, you need to know how fast your revenue is growing.

A company with stagnant revenue, even if profitable today, is in danger. Growth is what attracts investors, boosts expansion, and secures your startup growth’s future.

Formula:

Revenue Growth Rate = [(Current Month Revenue – Previous Month Revenue) / Previous Month Revenue] × 100

Example:

• Last month’s revenue: ₹5,00,000
• This month’s revenue: ₹6,00,000

Revenue Growth Rate = [(6,00,000 – 5,00,000) / 5,00,000] × 100 = 20%

Why does this matter?

A steady increase in revenue means your business model is working, your marketing is effective, and customers see value in what you offer. If your growth is low, it might be time to reassess your pricing, market demand, or customer acquisition strategies.

If your startup growth rate is lower than industry standards, rethink your strategy. Run experiments with new pricing models, improve customer retention, and expand to new market segments. This is one of the startup success metric that you, as a founder, can absolutely not miss to track.

2. Customer Acquisition Cost (CAC)

Are you spending too much to get customers?

Getting customers is not free—you spend money on ads, marketing, sales teams, and more. The key question is: Is it worth it?

If you spend ₹2,000 to acquire a customer who only brings in ₹1,500 in revenue, your business is in trouble.

Formula:

Customer Acquisition Cost (CAC) = Total Marketing & Sales Spend / Number of New Customers Acquired

Example:

• Marketing spend: ₹50,000
• New customers acquired: 100

CAC = 50,000 / 100 = ₹500 per customer

Why does this matter?

A high CAC means you’re spending too much to attract customers. If your CAC is rising while your customer retention is low, you’re essentially throwing money down the drain.

Reduce CAC by improving website conversion rates, optimizing ad campaigns, using referrals, and re-targeting existing leads.

3. Customer Lifetime Value (LTV)

Are your customers worth It?

It’s not just about how much you spend to get a customer, it’s about how much they’ll pay you over time.

A healthy business ensures LTV is at least 3 times higher than CAC. If customers don’t stay long enough to cover acquisition costs, your startup growth will struggle.

Formula:

LTV = Average Purchase Value × Purchase Frequency × Customer Lifespan

Example:

• Customer spends ₹1,000 per order
• Orders 2 times a month
• Stays for 2 years

LTV = 1,000 × 2 × 24 = ₹48,000

Why does this matter?

If your LTV is low, it means customers aren’t loyal or aren’t spending enough. This can indicate a poor product experience, weak customer support, or aggressive competition.

Increase LTV by offering upsells, improving customer experience, building a community, and launching loyalty programs.

4. Burn Rate

How fast are you running out of money?

Your burn rate tells you how quickly your startup is spending money and how long you can survive before your cash runs out.

Many startups grow fast but ignore their burn rate, assuming revenue will eventually catch up. That’s a HUGE mistake because if you’re spending more than you’re making, you could run out of cash before reaching profitability.

How to calculate burn rate?

Burn rate simply means how much money your startup is spending per month to operate.

Formula:

Burn Rate = Total Cash Spent in a Period ÷ Number of Months

Since burn rate is usually calculated per month, if you spend ₹2,00,000 monthly, then:
Burn Rate = ₹2,00,000 per month

Example:

• Cash in Bank: ₹10,00,000
• Monthly Expenses: ₹2,00,000

To find out how many months your startup can survive, use this formula:

Months Left = Total Cash Available ÷ Burn Rate per Month

so,
Months Left = 10,00,000 ÷ 2,00,000 = 5 months

This means your startup has only 5 months before it runs out of money—unless you start generating more revenue or reduce expenses.

Why does this matter?

If your burn rate is too high, your startup won’t survive unless you raise more funding, cut unnecessary expenses, increase revenue ASAP.

Reduce burn rate by negotiating better deals, cutting non-essential costs, and focusing on high-impact revenue-generating activities.

5. Churn Rate

How many customers are you losing?

If your customers keep leaving, you won’t grow—no matter how many new ones you acquire.

A high churn rate means customers aren’t happy with your product or service.

Formula:

Churn Rate = (Customers Lost in a Period / Total Customers at the Start of the Period) × 100

Example:

• Start of the month: 500 customers
• Customers lost: 50

Churn Rate = (50 / 500) × 100 = 10%

Why does this matter?

Losing too many customers means your customer experience, pricing, or product quality isn’t up to the mark.

Reduce churn by improving onboarding, personalizing user experience, gathering feedback, and creating a strong customer support system.

Final Thoughts

Tracking the right key performance metrics ensures you stay on course and grow sustainably.

Don’t waste time on vanity metrics. Focus on numbers that matter, and you’ll build a business that lasts.

But tracking metrics is just one part of the equation. To truly scale, you need a solid digital presence, a high-performing website, and strategic tech solutions that fuel startup growth.

That’s where Raindrops Infotech comes in!

At Raindrops Infotech, we help startups and businesses build perfect websites, optimize performance, and implement data-driven digital strategies. Whether you need a conversion-focused website or a scalable web app, we’ve got you covered.

Ready to take your business to the next level?

Schedule a free consultation with us and let’s build something amazing together!

FAQs

1. What are the most important startup performance metrics?

The most critical metrics include Revenue Growth Rate, CAC, LTV, Burn Rate, and Churn Rate. These numbers tell you if your business is scaling sustainably.

2. Why is CAC vs. LTV important?

If your CAC (Customer Acquisition Cost) is higher than your LTV (Lifetime Value), you’re losing money on every customer. Your business should aim for an LTV-to-CAC ratio of at least 3:1.

3. What is a good revenue growth rate for startups?

For early-stage startups, a month-over-month growth of 15-30% is considered healthy. Established businesses should aim for at least 10% YoY (year-over-year) growth.

4. How can I lower my burn rate?

To lower burn rate, cut unnecessary expenses, automate tasks, focus on high-ROI activities, and negotiate better deals with vendors.

5. What is the churn rate, and how do I fix it?

Churn rate is the percentage of customers who stop using your product. Fix it by improving customer experience, offering loyalty programs, and personalizing interactions.