In our latest episode of Beer with the CFO, Consero’s Director of Marketing, Bridget Howard, had a quick chat with Tom Kieley, the CEO of SourceDay.
Tom is not a CFO, but we still wanted to talk to him to mix things up! Consero does, in fact, work with both CEOs and CFOs, as well as with private equity firms. We provide finance as a service for more than 250 clients in the US, most of whom are mid-market and high-growth companies.
We talked a lot about KPIs: which ones are important and which ones the private equity investors we work with want to see. We wanted to see the opinions other companies have, especially the ones who received significant investments already. Tom Kieley’s company is precisely one of those organizations. They received around $6.5 million in investments at the end of last year.
Before we see what Tom’s most important KPIs are, let’s discuss his company – SourceDay.
Tom Kieley is the CEO and Co-Founder of SourceDay – a company and software platform for manufacturers and distributors. The platform was founded to create a digital interface for manufacturers and the vast number of their suppliers.
The platform achieves several things:
- Makes automatic changes to delivery dates
- Makes automatic updates to pricing and quantities
- Replaces manual processes and automates the procurement process
SourceDay effectively manages to provide unique value to manufacturers and distributors as the software offers regional visibility, accountability, and collaboration for parts and materials they use in finished products.
As we already stated, they recently obtained $6.5 million in funding from investors, so we wanted to ask Tom about the KPIs SourceDay shares with those investors.
The top 3 KPIs investors want to see
Tom believes that there are three main KPIs every company similar to SourceDay needs to focus on with their investors. Naturally, these three KPIs are essential and often recurring for all subscription-based companies with annual recurring business.
The three KPIs are:
- Customer churn rate
The customer churn rate is the percentage of your customers who either don’t renew or cancel the subscription they have with you. It’s typically looked at in a 12-month rolling period.
If you have a subscription-based business like SourceDay, you must check this KPI and share it with your investors. Investors care about it as it can show them if your company is in trouble well before it's evident in the monthly revenue amounts.
- Annual recurring revenue
In Tom’s opinion, the annual recurring revenue is the most important metric of all. This subscription economy metric shows you and the investor the exact revenue from a subscription within a single year.
The investors will always want to know this specific KPI as it will show them the money you’re making from all of your subscriptions.
- Monthly burn
Just as much as most investors want to know your revenues, they also want to see the loses you're having. The monthly burn rate ensures you're not outpacing your budget and that you have enough money to maintain value in the business.
It's Tom's firm belief that these three KPIs are the most important ones for investors. If you feel the same way, you should start sharing them with your investors as soon as possible.
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