The Key Metrics for Scaling a Business
Date: 27 October 2021
Author: Michael Boevink, Head of Sales, FINTECH Circle Scaleup Programme
As with everything else in business, scaling – and whether you are doing it successfully is measurable.
When companies engage with our 4S system, the first step they take is the so-called ‘image match’. It sounds weird, but we are in it for the long term, and we need to build up a mutual relationship, which goes beyond a business relationship. Working on a journey together with our clients is never a straight line and especially when things go wrong or critical feedback goes back and forward, we need to have a bond, so when the elastic is stretched it doesn’t break.
When the bond and the foundations are there, we have the metrics to drive the business!
Phase 1 is what we call the ‘Gorilla-Banana workshop’, setting the fundamentals of your company and making sure we target the ‘ideal client’ with the right message.
Acquiring a new customer costs five times more compared to retaining an existing customer, so it’s better to define the right client and avoid losing time and money unnecessarily.
As every scaleup wants more traction to get to their next level of growth for investment and target milestones, we can look at several elements to define the focus and evaluate and monitor key metrics.
Here are a few metrics you can look at and monitor while scaling:
- Free Cash flow is always a good metric to look at. You are growing so if you make one-off investments, the more free cash flow you have, the easier your life gets. Free cash flow (FCF) represents the money a company generates after accounting for cash outflows to support operations and maintain its capital assets.
- Customer Lifetime Value, or life-time value: a prognostication of the net profit contributed to the whole future relationship with a customer.
- Customer acquisition costs: the cost related to acquiring a new customer. In other words, CAC refers to the resources and costs incurred to acquire an additional customer.
- Growth rate: the amount in which the business increases Month on Month or Year on Year (MoM or YoY).
- Conversion rate: the number of conversions divided by the total number of visitors and client meetings.
These metrics are not there to make your life difficult; they provide an excellent reality check to see if you are on the right track and where you need to adapt and change your scaling strategy. That’s why in the marketing-sales process we often carry out test campaigns, interviews, and research. We do not have to get it all correct at once, but we do need to see continuous improvement to make sure you are scaling to the next level.
We hope this helps your scaling journey and feel free to reach out to us with any questions about being your partner to scale!
Michael Boevink is the Head of Sales of FINTECH Circle Scaleup Programme, helping fintech startups grow internationally. He’s also a fintech expert, consultant and the Co-Author of The PAYTECH Book, published by Wiley.