Understand Your Business Cold

March 18, 2015 10:01 AM

Understand Your Business Cold

With over 20 years of experience working with software companies, I have observed a common theme: successful entrepreneurs truly understand their business. This knowledge drives the business using a KPI dashboard. This tool is used by the management team daily and provides information for monthly Board reports.

I advise that early stage entrepreneurs learn these analytics and from day one incorporate them into their forecast model. A forecast model is simply a budget/plan to obtain the key milestones. Once funded, the entrepreneur will report their actual performance versus the forecasted plan (budget) monthly. Building the forecast off of the key industry metrics demonstrates to prospective investors that the founders are focused on and understand the business. Entrepreneurs should also compare their forecasts against industry benchmarks to insure that the goals are realistic and be prepared to discuss any significant differences with investors.

For SaaS startups, River Cities has recently published an updated benchmarking study here.

http://rccf.com/wp-content/uploads/2014/11/River-Cities-2014-SaaS-Benchmarking-Study1.pdf

Bessemer Venture Partners also publishes excellent data and analysis.

http://www.bvp.com/cloud

Good luck developing a dashboard that will help your company grow and get funded.

Brooks Malone, Partner

Technology Industry Team Leader

bmalone@hpg.com

+1.919.232.5905

www.hpg.com

@HPGcpas

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