Every company I’m involved in keeps track of numbers. Daily numbers, weekly numbers, monthly numbers. Ultimately, all the numbers translate into three financial statements – the P&L, Balance Sheet, and Cash Flow Statement. While these numbers are sacrosanct in the accounting and finance professions, they are lagging indicators for most startup companies. Important, but they tell the story of the past, not what is going on right now.
I’ve formed a view that every young company should be obsessed about three magic numbers. Not two, not five, but three. Before I explain what those numbers are, I need to tell a story of how I got to this point.
My brain works better with numbers than graphs, so over the years I’ve conditioned most people I work with to send me numbers on a regular basis. Words are good also, but I love numbers. Early in the life of the company I request numbers daily. Some of this is for me; most of it is to try to help the entrepreneurs build some muscles around understanding the data and how to use it.
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