Start a Business guide
What Metrics Should a New Business Actually Track in Year One?
A guide to the commercial metrics that matter in your first year, focusing on sales evidence, cash runway, and customer acquisition rather than vanity stats.
Published 2 October 2026
The short answer
In the first year of a business, the most important metrics are those that provide evidence of commercial traction and financial viability, specifically cash runway, sales velocity, and customer acquisition cost. Avoid tracking vanity metrics like social media likes or website visitors that do not translate into paying customers or repeatable revenue.
- Focus on cash runway and burn rate to ensure the business stays solvent
- Track sales velocity to measure how quickly leads convert to revenue
- Monitor customer acquisition cost (CAC) against initial customer value
- Ignore vanity metrics that lack a direct link to commercial outcomes
- Measure lead quality over lead volume to ensure sales effort is efficient
Why most startup metrics are a distraction
It is easy to fill a spreadsheet with data that makes a new business look busy without making it successful. Metrics like social media followers, website visitors, or the number of networking events attended are often 'vanity metrics'—they feel productive but do not pay the bills. In your first year, every hour spent tracking data that doesn't lead to a commercial decision is an hour taken away from finding and closing customers.
The purpose of tracking metrics in the early stage is to answer two fundamental questions: Is the business going to run out of money, and is the market actually buying what we are selling? Anything that does not help answer those questions should be deprioritised. You need a clear, unsentimental view of the business's health, not a dashboard designed to make you feel good about progress that hasn't yet reached the bank account.
The survival metric: Cash runway and burn rate
Cash runway is the single most important figure for any new business. It is a calculation of how many months the business can survive if no further revenue is generated, based on the cash currently held and the monthly 'burn rate' (total monthly expenses). Knowing your runway allows you to make calm, rational decisions about when to push for sales, when to cut costs, and when the business model needs a fundamental change.
Burn rate should be tracked as both 'gross' (total outgoings) and 'net' (outgoings minus any current revenue). In year one, the goal is usually to reduce the net burn rate towards zero—reaching 'default alive' status where the business can sustain itself without further capital. If your runway is shortening faster than your revenue is growing, you have a commercial problem that no amount of brand building will solve.
Measuring commercial traction: Sales velocity
Sales velocity measures how quickly a prospect moves through your sales process and how much revenue they represent. It is calculated by looking at the number of opportunities, your conversion rate, the average deal value, and the length of the sales cycle. If your sales cycle is six months long and your runway is only four months, your business is mathematically likely to fail unless you change the process.
Tracking this allows you to identify where the 'bottleneck' is. Are you not getting enough leads? Is the conversion rate low because the proposition is weak? Or is the deal value too small to justify the effort? Evans would usually look for ways to shorten the sales cycle in the first year, even if it means smaller initial deals, to get cash moving and prove the process works.
Understanding the cost of a customer (CAC)
Customer Acquisition Cost (CAC) is the total amount spent on sales and marketing divided by the number of new customers acquired in a given period. In the first year, this figure is often volatile, but it must be tracked to ensure the business is not 'buying' revenue at a loss. If it costs £500 in advertising and sales time to win a customer who only pays £400, the business is not yet viable.
Compare CAC to the initial deal value or the expected first-year revenue from that customer. While 'lifetime value' is a common metric in established firms, in year one it is often speculative. Focus on the immediate or short-term return on acquisition spend to protect your working capital. If CAC is high, the solution is often more direct outreach and better customer segmenting rather than more marketing spend.
Lead quality versus lead volume
A hundred leads who cannot afford your service or do not have the problem you solve are worse than five leads who are ready to buy. Lead quality is a measure of how well a prospect matches your 'ideal customer profile'. If your sales effort is being consumed by conversations with people who will never buy, your lead generation process is failing even if the volume looks high.
Define clear criteria for what constitutes a 'qualified' lead and track how many of these you are generating each month. If lead volume is high but conversion is low, it suggests you are fishing in the wrong pool or your messaging is attracting the wrong audience. Refining this early prevents the founder's time—the business's most valuable asset—from being wasted on unproductive activity.
Customer feedback and rejection reasons
While not a traditional financial metric, tracking the reasons why prospects say 'no' is vital data for a new business. Are they rejecting the price, the specific features, the timing, or the overall proposition? Patterns in these rejections tell you exactly what needs to change to improve your conversion rate.
Keep a simple log of every lost deal and the primary reason for the loss. Over a few months, this data becomes the roadmap for your product development or service refinement. It is more valuable than any social media statistic because it represents a direct interaction with the reality of the market.
Next step
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