Ryan Deiss grades ten business metrics for founders at $500K revenue. Focus on cash flow, gross margin, CAC, and conversion rate. Stop calculating LTV yet. Runway matters only if you've raised capital.
Metrics when you're at $500K. EBITDA. EBITDA is going to be a C. EBITDA matters but at $500K you probably don't have a lot of E. Churn. D. I'm not saying that churn doesn't matter but at $500K you just need to be doing a good job and let churn be what it is. Track it later. Cash flow. A. Cash flow and understanding that you're starting to generate some cash flow. If you're not profitable at $500K and you're not making that in early on, you're probably not going to be profitable. Later on, at least from a cash flow perspective. Revenue per employee. C, it matters, but it doesn't matter at this stage. Lifetime value. I'm gonna say F because you have no clue what it is. So stop trying to calculate LTV. You're more interested in what's the immediate customer value. Gross margin. I'm gonna say S at $500K. You need to start dialing in your unit economics at this point. Cost to acquire a customer. S. Those two numbers, by the way, what's the gross margin, what's the cost to acquire a customer, That's what's going to tell you how much you can afford to spend to get one of those customers. It's critical to understand at this stage of business. Runway. If you raised capital, then it's an A, and if you didn't, it's an F. Conversion rate. I'm gonna say A. Conversion rate matters, but you're mostly just trying to optimize for it, so we're gonna track it, but it sorta is what it is at this point. Average order value. S. An average order value is that other side of the equation. If you can increase your average order value, and if you know what it is, and you know what your gross margin is, if you know those numbers, then you've got the basic math that you need to scale beyond just the— your own efforts.
