Understanding key financial metrics is vital for managing a business and attracting investors:
Burn Rate: The rate at which a company uses up its cash reserves. A high burn rate can be risky without sufficient funding. Runway: The amount of time a business can operate before it runs out of cash, based on its burn rate. Gross Margin: The difference between revenue and cost of goods sold, expressed as a percentage of revenue. Customer Acquisition Cost (CAC): The cost of acquiring a new customer, including marketing and sales expenses. Lifetime Value (LTV): The total revenue expected from a customer over their entire relationship with the business.