V
Vivek Kumar
Author
June 22, 20249 min read
Business
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Financial literacy is essential for startup founders. At Softechinfra, we help founders understand these metrics to build sustainable businesses. Here's what you need to know to communicate with investors and track your health.
3:1
Healthy LTV:CAC
120%+
Strong NRR
18mo
Target Runway
70%+
SaaS Margin
Revenue Metrics
MRR & ARR
The foundation for SaaS businesses:
MRR = Sum of monthly subscription revenue
ARR = MRR × 12Track components:
- New MRR: From new customers
- Expansion MRR: Upgrades/add-ons
- Churned MRR: Lost revenue
- Net New MRR = New + Expansion - Churned
Unit Economics
CAC
Total S&M spend ÷ new customers acquired
LTV
ARPU × Gross Margin ÷ Monthly Churn
LTV:CAC
Target 3:1 to 5:1 for healthy economics
Payback
CAC ÷ (ARPU × Margin). Target <12mo
LTV:CAC Benchmarks
| Ratio | Assessment | Action |
|---|---|---|
| <1:1 | Losing money | Fix immediately |
| 1-3:1 | Needs improvement | Optimize acquisition |
| 3-5:1 | Healthy | Maintain or scale |
| >5:1 | Under-investing | Invest more in growth |
Retention Metrics
"Net Revenue Retention is the most important metric for SaaS. If NRR is >100%, you grow even without new customers. Above 120%? You've got a world-class business."
NRR = (Starting MRR + Expansion - Churned) / Starting MRR × 100Benchmarks:
- <100%: Shrinking without new sales
- 100-110%: Healthy
- >120%: Excellent
Efficiency Metrics
⚠️ Runway Alert: Start fundraising when you have 9-12 months of runway. Waiting until 6 months or less puts you in a weak negotiating position.
Burn Rate = Monthly cash consumption
Runway = Cash Balance / Monthly BurnTargets:
- Minimum: 12 months
- Comfortable: 18-24 months
- Fundraising trigger: 9-12 months
Monthly Dashboard Essentials
- MRR and month-over-month growth rate
- CAC and LTV:CAC by acquisition channel
- Gross margin and unit economics
- Burn rate and runway projection
- Net revenue retention (NRR)
- Cash position and forecast
For automation efficiency, see our Business Automation Guide.
Building a Startup?
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Discuss Your Startup →Learn more about startup strategy in our Startup Tech Stack Guide and explore our Radiant Finance case study.
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StartupsFinanceMetricsBusinessSaaS