How to Track Startup Metrics in Real-Time

Is your startup providing real-time visibility into its financial and operational metrics? If it’s not, you’re risking costly mistakes and missed opportunities, which could prevent your startup from growing and scaling.

Real-time visibility is crucial for high-growth startups because it enables faster, data-driven decisions, rather than relying on hunches. It can help boost operational efficiency and spot bottlenecks or inefficiencies, while also improving investor relations and stakeholder satisfaction through transparency. It can also help reduce costs through optimization and allow startup leadership to pivot quickly, while turning data into a competitive advantage to facilitate more sustained growth. Real-time monitoring can be especially beneficial for cash-strapped startups, allowing them to track their burn rate and cash runway, ensuring that any warnings aren’t missed and that fundraising periods can be planned accordingly. It’s also crucial for quickly pulling metrics to present in meetings with board members and stakeholders.

In fact, studies show startups that actively monitor their growth and health metrics grow up to 20 percent faster than those that only rely on periodic reviews.

Which Metrics Demand Real-Time Monitoring?

So what metrics should your startup be monitoring in real-time? It depends on the specific metric. Some should be tracked daily, while others are OK to view on a weekly or even a monthly basis.

Consider categorizing your key metrics into three distinct groups. Critical metrics, such as cash balance and daily revenue, should be tracked on a day-to-day basis, while metrics like burn rate and conversion rates are best tracked on a weekly basis. Other metrics, such as customer acquisition cost (CAC), customer lifetime value (LTV), and gross margin are best tracked on a monthly basis.

The metrics that you track and how frequently you track them may also be contingent on the market your startup is in. For example, SaaS, eComm and HealthTech startups have their own unique real-time metrics that founders often track based on their more specialized business models.

Cash Flow and Runway Indicators

Cash flow and cash runway are both essential to your startup’s survival and should be tracked on a daily basis. This is especially true for startups with less than a year of cash runway remaining, as a lack of real-time visibility can create an inherent risk to your startup’s ability to operate. Burn rate monitoring that automates runway calculations and adjusts based on spending platforms is another essential feature that supports disciplined cost management.

It’s suggested that all startups maintain a 13-week cash flow forecast to help gauge short-term financial visibility and allow for proactive management of liquidity weeks or even months before issues may occur. Incorporating collections forecasts from existing customers and expected receipts from paying customers can provide valuable insights.

Revenue and Growth Signals

Revenue metrics differ by business model and may not be consistent from startup to startup. For example, SaaS startups should track monthly recurring revenue (MRR) daily, especially during growth phases. SaaS startups should also more regularly check expansion and churn MRR.

Conversely, eComm and CPG startups need to place a daily emphasis on daily sales velocity, AOV and inventory turnover.

Tracking revenue in real-time is essential to a faster response to marketing campaigns or pricing changes and helps attribute sales and marketing efforts that truly drive revenue growth.

Building Your Real-Time Metrics Infrastructure

Building a real-time metrics structure within your financial dashboard begins with mapping out the places where your critical data lives. These tend to be places like your accounting software, payment processing platforms, marketing programs and your startup’s CRM. From there, start small and add 5-7 core key performance indicators (KPIs) to avoid data overload. Connect your live data sources using APIs or specialized tools.

How you organize your data is just as important as the key KPIs you track on your dashboards. It’s best practice to place the most important metrics at the top and categorize them accordingly from there. Select the appropriate visual tools to convey metrics and keep things simple, ensuring user-friendliness for both financial metrics and operational views.

Connecting Your Finance Stack

Integrating data from various systems and sources into a single platform can be challenging; however, it is crucial for building a robust financial dashboard that delivers value to your startup. Some common integration points include QuickBooks and Xero for accounting, Stipe and other payment processors for revenue and your CRM for customer data. Modern dashboard tools even offer seamless integrations that update automatically, making them easy to use and view.

Data accuracy is crucial with any dashboard. Automation can help. By setting up automated feeds from the various programs your dashboard can pull from, you’re reducing the time spent on manual entry and reducing the potential for human error, which leads to more valuable insights.

What Tools Enable Real-Time Startup Monitoring?

What tools are best suited for venture-backed startups to enable real-time monitoring of metrics?

It’s essential to understand the distinction between financial dashboards and operational dashboards. Financial dashboards are designed to track finances, while operational dashboards focus on action items and the steps required to accomplish tasks. Financial dashboard metrics assess your startup’s overall financial health and profitability, tracking the likes of revenue, expenses, profit margins, cash flow and more. Operational dashboards, conversely, focus on day-to-day processes and efficiencies, ensuring the smooth execution of tasks, and often include customer satisfaction and customer loyalty indicators. Many startups rely on both financial and operational dashboards for their decision-making.

Startups may also utilize multiple tools to track key metrics and measure progress. In fact, some create dashboards for internal use and separate ones that they show to investors and stakeholders, catering more to the specific information that these parties want to see, including average revenue, pipeline from marketing and sales efforts, and clear evidence of startup’s performance.

If real-time monitoring seems overwhelming to your startup, you might consider seeking professional assistance by working with a fractional CFO. These professionals work externally of your startup, but are often relied upon to implement and manage these systems as part of their duties with your organization. Another key benefit of working with a fractional CFO is that their services are scalable and flexible, ensuring they evolve in tandem with your startup and its changing needs.

Setting Up Alerts and Thresholds That Drive Action

Real-time data only leads to actionable insight if you know how to access it properly. On this note, it’s best practice to set up alerts on critical metrics and to trigger them when these thresholds are reached. Here’s a look at some considerations:

• Cash balance when cash runway hits 6 months or less.
• MRR drops that exceed 5% or a decline in monthly active users that signals churn risk.
• Unusual expense spikes

We also suggest arranging for reports to be automated on a weekly basis, keeping startup leaders and other key stakeholders informed and allowing for more timely adjustments to any identified issues. However, keep in mind that weekly reports may have a tendency to overwhelm leadership, making it essential to adjust reporting so that it focuses on the most important or relevant metrics at any given time.

Tailoring Dashboards for Different Stakeholders

Any data you present should be specifically tailored for its audience. For instance, the dashboards that members of your startup see aren’t likely to be the same ones that investors or key stakeholders see. Startup leaders should have dashboards arranged so that they’re seeing daily cash information and revenue, while board members, investors and other key stakeholders tend to want to see metrics that are more evident of growth and capital efficiency. Leaders track the sales team pipeline, the impact of marketing strategies, and conversion of new customers.

Targeted dashboards are also relevant to departmental leads within your startup. Consider setting up dashboards for different departments that cater specifically to their KPIs.

Investor-Ready Reporting from Real-Time Data

One of the best things about real-time dashboards is that they significantly simplify board meeting preparation and investor updates. Automated dashboards eliminate any sort of scramble before board meetings to compile metrics and can also help present trends, rather than just snapshots in time, to show month-over-month changes. These trends can also help your startup craft a narrative and tell a compelling story around its financials, which can be powerful in building trust with investors and other stakeholders.

Common Pitfalls in Real-Time Metrics Monitoring

As you set up your dashboards and select the metrics to track, it’s essential to avoid some common pitfalls that many startups encounter. These include:

• Tracking metrics that look good, but don’t really do anything to inform strategic decision-making.
• Over-engineering dashboards that obscure data and hamper user-friendliness.
• Poor or error-ridden data that makes real-time visibility useless.
• A failure to establish any type of regular cadence that empowers action from the data you’re tracking.

Transform Metrics Visibility Into Strategic Advantage

Are you ready to track real-time metrics and turn this visibility into a strategic advantage for your startup? Contact Graphite Financial today for more information and to schedule a consultation.

Real-time visibility encourages proactive decision-making, rather than reactive action, helping grow your startup and build investor trust in the process. Additionally, real-time tracking is no longer just a “nice to have,” many investors are expecting it. At Graphite, we’ll pair your startup with an experienced fractional CFO to integrate your data and create your dashboards. Contact us today to discover how we can help you improve your real-time visibility.

FAQs

How often should startup founders review real-time metrics dashboards?

While this frequency should be based more on the specific metrics, it’s best practice to check some as often as daily and others as often as weekly. Critical operational metrics, like cash flow, should be assessed on a daily basis, while other metrics like burn rate, CAC and LTV are best tracked on a weekly basis to examine trends and make more timely adjustments. Other key metrics, such as MRR and overall profitability, are also acceptable to review on a monthly basis. Think of it like this: You should strive to check the pulse of your startup daily, the health of it weekly and the long-term plan on a monthly basis.

What’s the difference between a financial dashboard and an operational dashboard?

Financial dashboards are designed to track finances, while operational dashboards focus on action items and the steps required to accomplish tasks. Financial dashboards show you data and numbers, while operational dashboards show the path on how you got to the data and numbers. Financial dashboard metrics assess your startup’s overall financial health and profitability, tracking the likes of revenue, expenses, profit margins, cash flow and more. Operational dashboards, conversely, focus on day-to-day processes and efficiencies, ensuring the smooth execution of tasks.

Which metrics matter most for pre-revenue startups to track in real time?

Pre-revenue startups are primarily concerned with demonstrating product-market fit and showcasing the potential of their operations to investors. Noting this, some of the most important metrics to track are the ones that show traction. These include the number of active users, activation rates and CAC, and others like burn rate and runway. Again, investors are looking at the potential of your startup in its early days and want to see evidence of scalability and sustainability.

How do I avoid dashboard overload when setting up metrics monitoring?

To overload your dashboard, start simply. Take a layered approach to your metrics monitoring, starting with high-level KPIs and then cascading down into the details. Start with metrics that answer specific questions and can drive decision-making, and go from there. When creating your dashboards, start with the essentials and add more only when a clear need arises.

Can real-time metrics tracking integrate with investor reporting requirements?

Yes, real-time metrics tracking can integrate with investor reporting requirements. When it does, it can offer your startup a significant advantage in transparency, efficiency and communication when working with investors. Integration is typically made possible via specialized software platforms that work to connect various data sources like ERP systems, CRM tools and accounting software. Benefits of such integration include improving trust and transparency with investors, facilitating faster decision-making, enhanced operational efficiency and more proactive communication between parties.

What’s the typical cost to implement real-time metrics monitoring for a startup?

The cost to implement real-time metrics monitoring can vary from nothing to thousands of dollars for managed services. Free or open-source programs may be ideal for your startup in its early days, when you’re only looking to track a limited number of key metrics. However, as your startup evolves, you may choose to transition to a managed cloud service or utilize specialized tools that leverage AI monitoring or more customized solutions to track metrics. These can cost hundreds to thousands of dollars per month to implement.