WELCOME TO ISSUE NO #046

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📆 Today’s Rundown

Hey 👋, hope you had a great week! In the last issue, we discussed why tracking AP Turnover Ratio matters, and now we are moving with the next topic from Cash Flow & Expenses content.

Let’s talk about ⬇️

Burn Multiple

The metric investors are watching closely in today’s market.

For years, SaaS companies could get away with “growth at all costs.” But now? Efficiency is king.

And Burn Multiple is one of the simplest, yet most powerful ways to measure how efficiently you turn cash into revenue.

Newsletter highlights

1. What Is Burn Multiple? 📊

2. What’s a Good Burn Multiple? ✅

3. How to Improve Your Burn Multiple? 💹

4. What’s Your Burn Multiple? ⚠️

5. Exclusive Content Drop 🆓

What Is Burn Multiple?

It tells you how many dollars you burn for every $1 of net new ARR.

📊 Formula:
Net Burn / Net New ARR

Example: If your company burns $1M in a quarter and adds $500K in ARR…

➡ Burn Multiple = 2.0 (Not great, not terrible.)

What’s a Good Burn Multiple?

Investors use these benchmarks:

✅ <1.0 → Excellent (You’re an efficiency machine)
✅ 1.0 - 1.5 → Strong (Scaling well)
⚠️ 1.5 - 2.0 → Borderline (May raise eyebrows)
🚨 >2.0 → Dangerous (Investors will hesitate)

If your Burn Multiple is creeping up, it’s time to act.

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How to Improve Your Burn Multiple?

1️⃣ Lower CAC → Streamline sales, optimize marketing spend.
2️⃣ Boost Margins → Cut unnecessary costs, improve pricing strategy.
3️⃣ Increase Retention → Reduce churn, upsell existing customers.
4️⃣ Forecast Smarter → Run scenario planning to optimize spend.

Getting this right isn’t just about impressing VCs—it’s about surviving downturns and scaling profitably.

What’s Your Burn Multiple?

Take a few minutes to check yours:

1️⃣ Look at your net burn (total cash outflow minus cash inflow).
2️⃣ Divide it by your net new ARR (new recurring revenue added during the same period).

Once you have your number, compare it to the benchmarks above.

If your Burn Multiple is above 1.5, it might be time to optimize your spending, retention, or pricing strategy.

Not sure where to start? Hit reply and let’s talk.

Exclusive Content Drop

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