Writing as part of our new contribution to The Entourage Blog, we look at what numbers do businesses need to show investors.
The first step any company should have is an understanding of what your product is and who the market is you are selling to. This is an absolute must before you even start chatting to anyone else. But when you start these conversations, what are some questions you will get asked by investors?
How do you acquire the customer and how much does it cost?
When acquiring a new customer, there are a range of costs that you have to think about. Google AdWords, Facebook advertising etc. How much are you spending on acquiring this customer?
What’s the lifetime value of a customer?
How much you make from a customer over their lifetime is critical to understanding what your future prospects will look like. The value of the data about your customers spending habits helps you and potential investors understand what your customer lifetime value.
What are your overheads?
That is, what are the costs that you have that aren’t directly related to a product sale. Staffing, rent, utility bills, IT costs, they all give a great understanding not only on what your cost levels are but how you run your business.
Why is it important for you to be able to answer these questions? It comes down to you owning the business numbers. And by doing so, you give potential investors confidence that you know what you’re talking about and know where your business is at.
You can read more about numbers for investors here.