Here are some of the most common mistakes made by today’s entrepreneurs.
No. 1: Focus on the wrong numbers
Entrepreneurs commonly focus on revenue growth as the sole indicator of success, when they should look toward granular financial data. Revenue growth will indicate if a company is on track, but won’t yield the data needed to properly allocate resources and grow a company.
You need to understand how each dollar is derived. For instance, average revenue per customer (ARPU) gives a general look at the financial health of a company and can be used to measure against a peer group, but analyzing high revenue accounts will provide valuable data on a company’s most lucrative customers.
Know your numbers.
No. 2 Focus on external, instead of internal, capital
Entrepreneurs spend a great deal of time focused on outside capital (which is dilutive) instead of internal capital (which is non-dilutive). Ironically, the higher the internal capital (i.e. revenue) the more attractive a company is to outside capital.
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