KPI and Power BI as Tools Supporting Monitoring and Data Analysis in Startups

Defining the right KPIs, then monitoring and analyzing them, are crucial aspects for business owners who want to continuously verify the profitability of their company. This is especially important in growing startups – scaling a business requires constant financial oversight and making accurate business decisions. Today we want to introduce you to the topic of KPIs in startups and recommend Power BI as a tool to streamline reporting and detailed, multidimensional performance indicator analysis.

What Are KPI Indicators?

Before we present the most important KPIs for startups, let’s briefly explain what they are and why they matter. Key Performance Indicators are measurable and objective values aimed at assessing the effectiveness of your business and verifying whether your business goals are being achieved. Monitoring and analyzing the right KPIs will allow you to determine, among other things:

• the financial health of your startup,
• the effectiveness of your sales channels,
• the value of an individual customer to your company,
• your margin levels at different stages of delivering a solution to market,
• how and why customers are leaving your business.

The more precise this data is, the better control you’ll have over your company’s development.

Inaccurate data directly impacts financial performance in 88% of companies, with the average company losing 12% of its revenue because of it (Experian Data Quality)

Of course, the types of KPIs you should measure depend on your startup’s offering, business model, and market strategy. In this article, we focus mainly on metrics relevant to tech startups, including those offering SaaS (Software as a Service) solutions. Given the nature of such products and services, critical KPIs include conversion rate, gross profit margin, and burn rate (the speed at which the startup is spending invested capital). But these are far from the only important KPIs – below we present (in our opinion) the 8 most essential performance indicators.

List of the Most Important KPIs for Startups:

1. Customer Acquisition Cost (CAC)

We’ve also prepared a separate article on CAC, LTV, and the LTV/CAC ratio in the context of data-driven marketing – we encourage you to read it.
Customer Acquisition Cost (CAC) refers to how much it costs you to acquire a customer. It is calculated as follows:

CAC = KM + W + S + U + PK / Number of customers acquired during the period

Where:
KM – marketing costs for customer acquisition
W – salaries of sales and marketing teams
S – cost of sales support software
U – outsourcing costs
PK – other general sales and marketing costs
Calculating CAC alone is not enough to assess profitability. You also need to know Lifetime Value (LTV), i.e., the estimated total profit from a customer or contract.

2. Lifetime Value (LTV)

LTV is calculated using the formula:

LTV = IT * WT * MS * LO

Where:
IT – average number of transactions per period
WT – average transaction value per period
MS – average gross margin (as a %)
LO – number of periods in the customer lifecycle
Note that the methods for calculating LTV and CAC may vary depending on your startup’s business model.

3. LTV/CAC Ratio

To assess the profitability of your efforts, divide the LTV by CAC and compare the result to 1. Based on the outcome, you can determine if your startup is generating profit:

• LTV/CAC < 1 – your business is not profitable – you’re spending more to acquire a customer than they are worth.
• LTV/CAC ≈ 1 – revenue is roughly equal to acquisition cost – not ideal, as there’s little or nothing left to cover service delivery or operating costs.
• LTV/CAC > 1 – ideal situation – the customer generates more revenue than it cost to acquire them.

The optimal LTV:CAC ratio is often cited as 3:1, though this can vary by industry.

4. MRR (Monthly Recurring Revenue) and ARR (Annual Recurring Revenue)

MRR (Monthly Recurring Revenue) refers to your recurring monthly subscription revenue, typical for subscription-based business models. By multiplying it by 12, you get the annualized version: ARR (Annual Recurring Revenue).

MRR is also associated with related metrics such as:

• New MRR – revenue from new customers acquired during the month; reflects sales and marketing performance.
• Reactivation MRR – revenue from returning customers who had previously canceled.
• Upgrade MRR – additional recurring revenue from upselling or cross-selling to existing customers (also known as Expansion MRR).
• Downgrade MRR – lost revenue from existing customers who downgraded their subscriptions.
• Churn MRR – lost revenue due to subscription cancellations.
• Existing MRR – unchanged recurring revenue from customers who didn’t change their plan.
• Total MRR – the net monthly recurring revenue calculated by summing all MRR types.

Special attention should be paid to the Churn Rate. While often seen as a failure metric, it’s one of the most important and useful early warning signals. When analyzed alongside other metrics, churn can help identify necessary improvements such as UX optimization, feature enhancement, or pricing adjustments.

Churn can be monitored in two ways:

• Volume-based (Customer Churn Rate): number of customers lost ÷ number of customers at the start of the period.
• Value-based (MRR Churn Rate): net lost MRR ÷ total MRR at the beginning of the period.

5. Burn Rate (Monthly Burn)

Burn Rate measures negative cash flow – how quickly your startup is spending capital before becoming cash-flow positive. It’s especially relevant during the seed stage, where revenue is usually insufficient to cover expenses. It’s typically expressed per month.

6. Runway

Runway is directly tied to Burn Rate. It shows how long your startup can survive given current cash reserves and spending levels. It’s calculated by dividing current cash by the monthly Burn Rate.

1,500,000 PLN / 50,000 PLN = 30 months

Conclusion: if commercialization takes another two years, the current cash should keep your business afloat until then.

7. Margin

Margin can be calculated at many levels and should reflect your business model. For example, a cloud-based SaaS product might track margins such as:

• Direct margin – revenue minus the cost of running the app (servers, IT, salaries, licenses, etc.).
• Margin after sales and customer support costs – subtracting CAC and retention costs from direct margin.
• Operating margin (sales margin) – subtracting all indirect operating costs.
• EBITDA margin – including all income/operating costs, excluding depreciation.
• Net margin – includes all revenues and expenses, as per your P&L.

This is just an example – margin levels and calculations may vary depending on your startup’s complexity and stakeholder expectations.

8. Activation Rate

Activation Rate measures how many users complete a meaningful milestone in the onboarding process – a milestone that indicates they’re likely to become active, paying customers with low churn risk.
This milestone can vary by business type. A social network might track the first friend added, while a music app might measure how many users create a playlist.

To define this, find the event that strongly correlates with customer retention and long-term value.

Data Quality – The Foundation for Reliable KPI Tracking

For KPIs to deliver real business value, the underlying data must be high-quality and reliable. Read our article on data quality to learn more. In short, your data must be:

• reliable,
• consistent,
• up to date,
• accurate,
• complete,
• relevant.

If any of these criteria are unmet, your analysis might lead to poor decisions. In startups, bad decisions cost far more than professionalizing data processes. Errors, lack of experience, manual work, or not enough time to analyze – these all increase the risk of failure.

How Power BI Helps

To ensure data quality, process optimization, and a data-driven culture, startups should use BI tools such as Microsoft Power BI. At Enterium, we combine Power BI with business, financial, and technical expertise to deliver unique value to startups. We also fully take over data management – so startup founders don’t have to worry about integration, data cleanup, or dashboarding.
This is also a huge advantage when talking to investors – they expect hard numbers. Data-driven organizations receive higher valuations, which is crucial for startups relying on external funding. It’s an investment that pays off on many levels: operational, business, and ownership.

Contact us – we’ll help you choose the right KPIs, calculate them properly, and fully manage your business analytics and controlling!