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> When do you collect cash from customers? When do you pay bills? How fast can you cycle cash? (Meaning if you pay back marketing over 2 years vs 2 months) a LT
by shoo 7y ago
> When do you collect cash from customers? When do you pay bills? How fast can you cycle cash? (Meaning if you pay back marketing over 2 years vs 2 months) a LTV/CAC ratio of 1.5 is not great,
i recall seeing a talk from some saas company that was really driving home the importance of how quickly the business can generate cash to pay for customer acquisition costs. i think they talked about offering plans to sign up for 12 months in advance (with a fair discount) versus monthly, with the idea that if enough customers sign up to the 12 month plan at a 20% - 30% discount then if you still get enough cash in the short run to pay for the customer acquisition costs, and enough cash in the long run to operate at a profit, you can start to pour excess cash into customer acquisition
(apologies, dont remember the exact talk)