Levers

The framework is a set of five tools, and behind those tools are five fundamental questions about your business. They are: Who is my customer, what are they buying, and why? How do I create value and ultimately revenue? What do I do now and next? Is what I’m doing working? What’s my plan? (Location 43)

Levers is designed to bridge the gap between tactics and vision for entrepreneurs, aligning your team toward a compelling, metrics-driven strategy. If you read this book and put in the work the exercises require, you’ll start to see a few major things change. (Location 68)

Identifying Your Revenue Formula (Location 554)

Similarly, you should spend your time executing your business rather than fiddling around with your product process or sweating about creating a perfect product roadmap. (Location 689)

Build a Roadmap The last note I will leave you with on this overall topic is that every company has to have a roadmap, a picture of where the business is headed. If not to run the day-to-day product, then at least to share with your staff, potential investors, future investors, board members, new hires, and so forth. (Location 939)

After working with hundreds of companies, I’ve discovered there are three fundamental questions that, if you can answer, you’ll be well on your way to finding KPIs. Here they are: What’s the single most important thing we have to achieve as a business right now? Why does that thing matter? How will you know you’ve achieved it? What number tells us the status of that thing—whether what we are trying right now is helping us get there or not? Once we’ve achieved that most important thing, what will it enable us to achieve next? (Location 1044)

By literally copy/pasting your weekly numbers from the revenue formula and zooming in the one that’s most critical to prove right now, you already have the basics of your company’s KPIs. Figure 4.2 shows an example using MDaaS. (Location 1087)

Download a copy of Dollar Cave Club’s financial model at leversbook.com/DollarCaveClubModel. (Location 1348)

We can use spend on Google ads as an example. Here’s what I know about spending on Google ads: Google charges me for every person who clicks on my ad and visits my site. This is the Cost per Click (CPC). I can divide the amount of money I spend on ads by the CPC to calculate the number of visits to my site from Google ads. (Location 1422)

SEO and direct visits are much harder to directly control, but I can still make some assumptions around how they grow. For direct visits, it turns out that the more visits from ads and social media, the more direct visits you get, so I can make the number of direct visits to the site a function of the total other visits. To do that, I add a multiplier of 0.33 in the “Assumptions” tab. In other words, I assume I will get thirty-three direct visits for every hundred other visits. For simplicity’s sake, I assume a monthly growth rate of SEO traffic of 10 percent and add that to the “Assumptions” tab. Eventually, I might decide to break down the SEO drivers, and when I do, I can incorporate them into the model. I’ve summarized the formulas we just created in the following table. (Location 1431)