Tae Hea Nahm
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Tae Hea Nahm is co-founder and managing director of Storm Ventures and is the co-author of the “Survival to Thrival” book and podcast series. For more, visit Unlock, his online resource.

Finding go-to-market fit (GTM) is a pivotal moment for a startup. It means you’ve found a repeatable formula for finding and winning lead that can be written into a repeatable GTM playbook. But before you scale up your sales and marketing, you should check the metrics to make sure you’re ready.

So, how do you know when your startup is ready to scale? I’ll help you answer this using numbers you can calculate on a napkin.

You have to consider three metrics — gross churn rate, the magic number and gross margin. With these, you can measure the health and profitability of your business. By combining them into a simple equation, you can get your LTV:CAC ratio (long-term customer value to customer acquisition cost), which is a measure of your business’ long-term financial outlook. If the LTV:CAC is over 3, you’re ready to scale.

Whatever your particular business, it’s worth spending some time with these metrics to find realistic targets that will push LTV:CAC over 3. …read more

Source:: TechCrunch – Startups

      

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