I’ve been seeing an increasing number of founders discussing metrics like users, conversion rate, MRR (monthly recurring revenue). Missing from these metrics is profitability. A business’s goal is to make a profit. You may run the business for lifestyle reasons, financial reasons. However, if your business is not turning a profit, you won’t be in business for very long.
Some large startups like Shopify can survive for years without turning a profit (they still haven’t yet). Eventually even Shopify must turn a profit, or the company will inevitably fail. Justin Jackson has done a great quick presentation here to show you why profitability matters, and how to calculate your profitability percentage.
Also published on Medium.