Important Metrics in a Startup's Financial Statements | Hacker News Reader

Important Metrics in a Startup's Financial Statements

ttunguz.github.io

45 pointsnanopisaroni10 comments

I found this article to be very educational on start-up fundamentals ; where can find a sample income statement spreadsheet which illustrates the concepts and formalae in this article ?

hey manishsharan, we have a collection of financial model templates within foundersuite.com. They are completely free to use / download.

when you login, go to Corporate Docs then click on the folder "Models". There's a SaaS model, an ad-revenue model, a subscription model and one or two others.

hope that helps, Nathan

Thanks for this Nathan, I hadn't heard of foundersuite.com before now - looks like a great resource.

I think the most important metric for a startup should be around whether customers are using a startup's product. For example, a company like DropBox will be most interested in a metric like TB stored with Dropbox across all customers. I believe as a startup this is the single most important metric that you should care about.

This is why I love software companies:

Revenue per employee. The beauty of software businesses is their leverage. Google's market cap is 40% larger than Walmart but it has only 2% the size of Walmart's employee count.

The true measure of a company is how much profit it produces. Why does revenue per employee matter?

It's a measure of efficiency. A company that takes 100 people to produce $100 of profit isn't as efficient as a company that produces $100 of profit with one person.

How this ratio changes over time is a measure of scalability. If a one person company goes from $100 profit to $200 profit after doubling the number of people, that's more scalable than a 100 person company going from $100 profit to $200 after doubling the number of people.

Great article, clear and to the point. Any suggested reading for one to dig further?

http://www.forentrepreneurs.com/saas-metrics-2/ is a good one for SaaS startups.

I'd be interesting in finding more about the source of the sales quota #s. And is that one time sales or lifetime revenue? (Since most new firms have a SAAS model now)

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