Bootstrappers don't have a finance team, so you have to be your own. The good news is that a handful of numbers tell you almost everything about the health of a small software business. Ignore the vanity metrics and watch these.
MRR: monthly recurring revenue
The heartbeat of a subscription business. Track it monthly and split it into new, expansion (upgrades), contraction (downgrades) and churned revenue, so you can see where growth comes from rather than just that it happened. ChartMogul has a clear breakdown of these MRR movements if you want the precise definitions.
Churn: the silent killer
The percentage of customers, or revenue, you lose each month. The maths is unforgiving: 5% monthly churn means you lose roughly 46% of your base over a year, so you are running hard just to stand still. Small differences compound, which is why lowering churn is often higher-leverage than chasing new sign-ups. See retention beats acquisition.
LTV and CAC
- CAC (customer acquisition cost): everything you spent to win a customer, divided by customers won.
- LTV (lifetime value): the total profit you expect from a customer before they churn.
- The ratio. The familiar rule of thumb is LTV of at least three times CAC. Treat it as a guide, not a law. The people who popularised it now caution that it only means much once you have a repeatable way to grow. The bigger point still holds: if a customer costs more to win than they are worth, growth makes you poorer.
Runway and "default alive"
Runway is how many months you can keep going at your current burn. Paul Graham's question is the one that matters: are you default alive, on track to reach profitability before the money runs out, or default dead? A bootstrapper's job is to get to default alive as fast as possible.
Pick three numbers, for most SaaS that is MRR, churn and runway, and put them somewhere you see them weekly. What you measure, you manage.
Healthy metrics usually start with pricing well and keeping the customers you already have.