search

dwyl / home

🏡 👩‍💻 💡 home is where you can [learn to] build the future surrounded by like-minded creative, friendly and [intrinsically] motivated people focussed on health, fitness and making things people and the world need!
GNU General Public License v2.0
249 stars 5 forks source link

Burn Rate [Why We Need Revenue ASAP] 💸 🔥 #244

Open nelsonic opened 1 year ago

nelsonic commented 1 year ago

Successful companies/organisations cannot spend more money than they are making indefinitely. During the "seed" or "startup" phase cash is invested to build a idea/product/service as quickly as possible because getting to market swiftly - e.g. to secure a first-mover advantage - can be the difference between success and failure.

Metrics That Matter

[Smart] Companies/organisations often track many metrics so that they can analyse trends

There are 4 Metrics That MatterTM in a Startup

  1. Growth Rate - usually measured in the number of users people using a product/service.
  2. Burn Rate - the amount of cash being "burned" (spent) to build the product and acquire customers.
  3. Revenue - the money the people paying for the product/service are paying.
  4. Cash(flow) - How much Cash you still have in the bank and how much you are expecting to receive from operations.

All other metrics are "vanity metrics" - they are meaningless distractions that are not moving you toward your goal(s).

image

If you are not focussed on moving one (or more) of these metrics you are doing the wrong thing with your time. If you are wasting time "shopping around" to save a few bucks (€, £, $, ect.) on the price of some inconsequential thing like groceries, clothes or other "nice to have" things, you are working against the mission of the organisation.

1. Growth Rate?

Given that our growth rate is zero. We have no customers. This metric is easy. 0.

2. Burn Rate 🔥

These are our current monthly expenses - or at least the ones I have visibility of:

image

Yes, close to €10k/month ... 💸

@iteles if you want to add to these please do when you have a chance: docs.google.com/spreadsheets/d/1uq6Vkxf329byq

image

3. Revenue = 0

Revenue from operations is still zero. This is obviously not sustainable. We either need to focus all our efforts on revenue immediately OR adopt a rapid cost reduction to avoid going bankrupt.

4. Cash(flow)

At present we have enough cash remaining to continue for another few months. But if we aren't seeing any revenue from operations - that is our App or @home - then we need stop bleeding money. 🩸

"If you find yourself in a hole, stop digging."

nelsonic commented 1 year ago

Most of these numbers will seem familiar and even reasonable to many people. The childcare costs will seem "high" to some and within the right "ballpark" to anyone who has lived in a major city e.g. LDN/NYC, etc. They are high for PT especially 1:1 childcare ... We chose that as our preferred option in 2021 when I was working full-time.