5 key metrics your board actually cares about

The five key metrics a board most often bases its decisions on are cash flow and runway, gross margin, burn rate, customer acquisition cost relative to customer value, and growth rate. Here's what they mean, how to calculate them and how to present them so the board meeting is about decisions, not about hunting for numbers.

Many board meetings are filled with reports full of numbers, but the board actually bases its decisions on only a few of them. These are the five.

1. Cash flow and runway

Runway shows how many months the company can keep going on the cash it has today, if nothing changes.

How to calculate it: cash divided by monthly burn rate. If the company has SEK 1,200,000 in the account and uses SEK 150,000 a month, the runway is eight months.

Why the board cares: it determines when new funding needs to be in place, and how much time you have to turn a trend around. If you need a plan for your cash going forward, read our guide to cash flow forecasting.

2. Gross margin

Gross margin shows how much of every krona of revenue is left once the direct costs are paid.

How to calculate it: revenue minus direct costs, divided by revenue. If your sales are SEK 500,000 and the direct costs are SEK 200,000, the gross margin is 60 per cent.

Why the board cares: it shows whether the business model scales. If the margin drops as you grow, growth just means losing money faster.

3. Burn rate

Burn rate is how much the cash balance decreases each month.

How to calculate it: opening cash minus closing cash for the month. If cash went from SEK 1,350,000 to SEK 1,200,000, the burn rate is SEK 150,000.

Why the board cares: together with runway, it gives you a clear deadline for the next funding round, or for when the company needs to become self sufficient. We've written more about it in What is burn rate, and why do investors care?

4. Customer acquisition cost relative to customer value

Customer acquisition cost (CAC) is what it costs to win a new customer. Customer lifetime value (LTV) is what that customer is worth over the whole time they stay.

How to calculate it: CAC is your sales and marketing costs for a period, divided by the number of new customers in the same period. LTV is the average gross profit per customer per month, multiplied by the average number of months a customer stays.

Why the board cares: side by side, they show whether growth is profitable or just expensive to keep up. A common rule of thumb, especially for subscription businesses, is that customer value should be at least three times the acquisition cost.

5. Growth rate

Growth rate shows how fast revenue is increasing, month over month or year over year.

How to calculate it: revenue this period minus revenue last period, divided by revenue last period. If revenue went from SEK 400,000 to SEK 440,000, growth is 10 per cent.

Why the board cares: compared with the budget and what has been promised to investors, it shows whether the company is delivering on plan. Read more about the difference between a budget and a forecast.

How to present the key metrics to the board

• The same five numbers every month, in the same order, so trends are visible at a glance

• Actuals against budget and the previous month, not just the number

• One sentence per metric explaining what happened and why

• Items requiring a decision first, everything else in an appendix

To see how the key metrics connect to the income statement, balance sheet and cash flow, read our guide to the three-statement model. For more questions every CEO should have on their radar, read 7 finance questions every CEO should be able to answer.

How to get started

MinCFO sets up ongoing reporting and board materials for every meeting as part of our reporting and control service, so the numbers are ready when the meeting starts. Book a short call and we'll go through which key metrics suit your company.

Frequently asked questions

Which key metrics should be in every board report?

The five above cover most of what a growing company needs, but which ones matter most depends on the company's stage and industry.

What's the difference between burn rate and runway?

Burn rate is how much the cash balance decreases each month. Runway is how many months the cash will last at that pace.

How often should the key metrics be updated?

Monthly is standard for most growing companies. Quarterly is rarely enough for the board to act in time.

Can MinCFO help us produce the key metrics?

Yes, setting up reporting and board materials for every meeting is part of our reporting and control service.