How do you know how your business is doing?

The equations below gives you three hypothetical maxes

  • 5 new customer per month / 10% churn
    • What is the maximum number of customers I can have? 50
    • This tells me at this rate 50 is the maximum number of customers I can get
    • I would need to increase the number of customer I get per month or decrease my churn to grow the business
    • If you have more customers than the theoretical max, you will be losing customers in the future
  • 1000 is the average revenue per client and 20% leave every month
    • This tells you how much each customer is worth? $5000
    • This helps you know how much to spend on marketing to get a customer
    • LTV = price*margin/churn
  • 10k of new business every month, losing 10% customers monthly
    • How much can I make per month? 100,000

For real estate:

  • How many leads did you get this month
    • How many leads signed a contract
  • How many deals can an agent handle at one time
  • Cac
    • How much do you spend on marketing every month
    • How many leads do you generate every month
    • How many leads complete the transaction within one year
    • Formula (leads/competed transactions) / monthly marketing costs
      • 10/2 * 200 = 1,000
  • Agent count
  • Under contract
  • Closed transactions
  • Average listing price, average buyer price
  • Average commission %