How do you measure and improve your revenue, profitability, and cash flow?

Revenue depends on 2 factors, P x Q, where P is the average revenue of a transaction and Q is the volume of transactions. By improving P and/or Q you can increase your revenues. What are the drivers that can lead to an improvement for P and Q? For example, you can increase P by increasing prices and/or increasing the average number of products/services purchased (bundles, upselling, cross-selling for example). And you can increase Q by increasing the number of new customers (adding new geographies, new channels, new uses of the product, and also lowering prices depending on the demand elasticity), but also it is very important to retain existing customers (eg becoming their favorite options for recurring purchases, adding subscriptions)

In my experience, it was less about fancy KPIs but about understanding exactly how my customers were using our product/ service. This work will help you really align your Product Market Fit while uncovering key attribute that will help you retain and grow your clients. It's also important to remember that finding new customers is hard and costly... spend your time growing existing customers to have the easiest path for success.

We did a 180° on our on-demand 360 Software as a Service (SaaS) business three years ago. We had hundreds of $33-dollar per month subscription customers. Our costs to support the individual REALTOR or small business photographer with those small subscription plans cost us 3 X more than we earned. We changed our business model and focused on mid-market and enterprise customers that wanted 360 on-demand tools with a managed service level and white-label options. The result was a 5-fold increase in MRRs and ARRs. It took two years to implement, but it was the best profit-boosting decision we could have ever made.

You only have two levers to work with... increase your prices or decrease your cost. Most startups, until they achieve Product Market Fit, are unwilling (or unable) to increase their prices. This is mostly due to competition (stealing from an incumbent by undercutting on price) or lack of confidence (it's tough to justify without real logos or case studies as "proof"). Therefor, you should look at every dollar being spent. Are you paying for licenses that you don't need, maybe a subscription that can be cancelled, or office space given up... there are lots of ways to reduce overall costs. The best way to systematically review this is to create a large excel document of all reoccurring expenses listed in descending order and start cutting.

Start by having your clients pay via ACH or credit card so the fund are processed immediately. Change the terms from 30 or 60-day down to on receipt. Another good tactic to motivate your clients to pay on time is to add a interest for any late payments. As for your payables, batch and pay all contractors/ vendors/ etc at certain times of the month (Bill.com is a great resource for this). And when all else fails, hold your personal paycheck to make sure your team gets paid!

Years ago, as far back as 1978, I began my journey into the financial advising world. Naturally, when newly started, I looked to open an account as often as possible. What I did not realize until further along was that the "master" level advisors in the private offices always seemed to open large accounts, especially those that were similar to the accounts they already had. I realized that all "master" advisors had a more substantial cost to attain the clients they perceived were worth the investment. Their investment was to target the market with the most characteristics of the potential clients they were seeking. The upfront expense was substantial. However, the conversion rate was as well.