Silicon Valley investor tips 16 indicators to avoid pit

Good words: You can’t manage what you don’t measure.

We see a variety of start-ups, everyone seems to have got the money and live well. But, what is real?

Question to answer is: how to measure the real situation of a start-up business?

An article it is hard to say about it, we can only roughly the way to measure the real tools may be used. Concrete application between industry, business model, business development combined with the valuable future strategic layout.

This article is divided into three parts:

A) operational and financial indicators;

B) and user product specification;

C) indicator presence

When using them:

First of all, users need to know which indicators should be selected, which needs to be selected according to the real business;

Secondly, users must understand that the use of indicators represent what reality is behind, including past, present, and future;

Finally, according to the indicators reflects the real situation of those decided further investment, strategic or operational actions.

Here, “user” refers to the (potential) investors and entrepreneurial management.

We have the privilege of meeting with thousands of entrepreneurs every year, and in the course of those discussions are presented with all kinds of numbers, measures, and metrics that illustrate the promise and health of a particular company. Sometimes, however, the metrics may not be the best gauge of what’s actually happening in the business, or people may use different definitions of the same metric in a way that makes it hard to understand the health of the business.

So, while some of this may be obvious to many of you who live and breathe these metrics all day long, we compiled a list of the most common or confusing ones. Where appropriate, we tried to add some notes on why investors focus on those metrics. Ultimately, though, good metrics aren’t about raising money from VCs — they’re about running the business in a way where founders know how and why certain things are working (or not) … and can address or adjust accordingly.

Part one: business and financial metrics

For most early-stage startups, financial indicators is not a decisive factor in making judgments, but it is an important quality indicator of investment. For example, O2O company in a certain period of time may indeed need to burn money to expand market share, but it got to a certain stage, represented by the income of the financial indicators will show a lot of problems.

Many people do not know the difference between operational and financial numerals. The difference between the two is very clear, not to be confused. Financial figures are in the language of accounting system under the description of company business results. To understand the company’s actual situation, financial and supporting one another is essential to the business of numbers.

First, the contract amount vs. revenue (Bookings vs. Revenue)

We can be understood as a booking agency records. In an accounting period (usually a year) who signed the sales contract, contracted amount is how much of the contract, the company will get a book record (book). After these contracted amounts rolled together constitute corporate records signed new contract in a year (bookings). It does not belong to the accounting concept, this figure is too rough, for the analysis of the real situation of the company usually does not have much significance.

Revenue (Revenue) is a contract according to the accounting standards for the recognition and measurement of accounting elements. In accordance with the definition of accounting language, income is formed in the day-to-day activities of enterprises, can result in owners ‘ equity increased, non-capital invested by the owners of the gross inflow of economic benefits. In General, income only if the economic benefits are likely to flow into the leading enterprise assets or liabilities, and inflow of economic benefits can be measured reliably can be confirmed. This requirement is designed to meet the financial statements of the principle of caution, to minimize the formation of exaggerating the company’s business advantages to investors decision to mislead.

Income is the main entrance of enterprise economic benefit flows. Income and growth in absolute terms is one of the investors first look at the numbers. The index itself has its meaning, but only one filter at the beginning of the function mode clear the company liquidated, if the earnings performance standards is that there are few people who will not continue to analyze.

In addition, the somewhat popular, accounting for a total of 6 a, respectively table of profit income, expenses, profits and assets, responsible, and owners ‘ equity in the balance sheet. Accounting standards for these elements of recognition and measurement methods are clearly defined.

A common mistake is to use bookings and revenue interchangeably, but they aren’t the same thing.

Bookings is the value of a contract between the company and the customer. It reflects a contractual obligation on the part of the customer to pay the company.

Revenue is recognized when the service is actually provided or ratably over the life of the subscription agreement. How and when revenue is recognized is governed by GAAP.

Letters of intent and verbal agreements are neither revenue nor bookings.

Second, recurrent revenues vs. income (Recurring Revenue vs. Total Revenue) GOME also carry consumer data into the era of

The literal meaning of Recurring “recurring”, we can understand it as recurring revenue generated by the daily business. The financial index is a measure of a company’s normal business ability to generate economic benefits flow.

When the investors for financial due diligence, non-recurrent income will generally be excluded. Typical non-recurrent revenue, including disposal of assets, asset gains, subsidy income, tax benefits, unfair affiliated transactions, and so on.

A16Z investors raise three recurrent revenue measures:

1) ARR (annual income) are indicators of doing business at the most basic regular income, it is truly “business income”.

2) ARR per customer (single user ARR) is measured from a single user who gets the annual recurrent revenue. Analysis users can be distinguishing between categories, different categories of individual user ARR up/down the chain changes. Upselling can be judged on a single user (up-selling, sales in infrastructure projects upgraded products) or cross-selling (cross-sell, provide other sales were sales related project) effect.

3) MRR (monthly recurring revenue) is a frequency of monthly recurring revenue, which are important indicators of when business analysis for SaaS companies. Areas in need of attention, don’t count came in non-recurring income; not the contract amount as income.

Investors more highly value companies where the majority of total revenue comes from product revenue (vs. from services). Why? Services revenue is non-recurring, has much lower margins, and is less scalable. Product revenue is the what you generate from the sale of the software or product itself.

ARR (annual recurring revenue) is a measure of revenue components that are recurring in nature. It should exclude one-time (non-recurring) fees and professional service fees.

ARR per customer: Is this flat or growing? If you are up-selling or cross-selling your customers, then it should be growing, which is a positive indicator for a healthy business.

MRR (monthly recurring revenue): Often, people will multiply one month’s all-in bookings by 12 to get to ARR. Common mistakes with this method include: (1) counting non-recurring fees such as hardware, setup, installation, professional services/ consulting agreements; (2) counting bookings (see #1).

Thirdly, gross margin (Gross Profit)

Gross profit = sales-cost of sales.

Gross profit (ratio) measured during the main business in the event of sell at a profit before the cost level.

In determining the gross profit in the process, the most important is the need to carry clear part of cost of sales. Cost of sales cost items contained within are and the cost of sales of goods and services directly related to the project. Cost of sales consists of, note that the company is working on the allocation of the cost of compliance with the accounting “cost” method requests.

Generally, gross margins to be lower in the manufacturing sector, while the software and FMCG industry gross margin of conservative talk, at least in 60%.

In fact, investors in financial indicators to measure project adjustments may not be strictly in accordance with the accounting rules, industry practices and reflects the economic substance do report adjusted the reasons behind.

While top-line bookings growth is super important, investors want to understand how profitable that revenue stream is. Gross profit provides that measure.

What’s included in gross profit may vary by company, but in general all costs associated with the manufacturing, delivery, and support of a product/service should be included.

So be prepared to break down what’s included in — and excluded — from that gross profit figure.

IV, the total contract value vs. annual contract value (Total Contract Value (TCV) vs. Annual Contract Value (ACV))

The total contract value (TCV), refers to the amount of a business contract signing, regardless of the duration of the contract is one month, several months, or longer than a year.

Annual contract value (ACV), referring to years of treatment after the contract amount. Generally speaking, the average ACV for sale as a single user and user acceptance analysis. This is SaaS business analysis of commonly used indicators.

It is to be noted that, analysis of the ACV cannot leave referred to below CAC (cost), which combine together to see the pros and cons of business.

TCV (total contract value) is the total value of the contract, and can be shorter or longer in duration. Make sure TCV also includes the value from one-time charges, professional service fees, and recurring charges.

ACV (annual contract value), on the other hand, measures the value of the contract over a 12-month period. Questions to ask about ACV:

What is the size? Are you getting a few hundred dollars per month from your customers, or are you able to close large deals? Of course, this depends on the market you are targeting (SMB vs. mid-market vs. enterprise).

Is it growing (and especially not shrinking)? If it’s growing, it means customers are paying you more on average for your product over time. That implies either your product is fundamentally doing more (adding features and capabilities) to warrant that increase, or is delivering so much value customers (improved functionality over alternatives) that they are willing to pay more for it.

V, the cost/CAC (Customer Acquisition Cost) … (Blended vs. Paid, Organic vs. Inorganic)

Cost (CAC) that is eighth in the original article, because of its importance, we will advance to fifth.

CAC is required to get a single new user takes full costs.

Its formula is: CAC= sales period/total number of new users.

CAC is determined, in General should follow the principle of prudence:

First, you need to follow the principles of integrity in economic substance belonging to include all the costs of acquiring new customers (sales discounts, rebates that belong to this category).

Secondly, we must distinguish new customers from different sources. The CAC users from different sources may be different. In addition, because there will always be a part of the user is on your own instead of through your marketing investment attracted, these users may not enter the CAC the denominator of the formula.

Therefore, the CAC is the so-called paid CAC in the strict sense, that is, allowing you to pay market costs for users of the CAC.

Users from different channels corresponding to the ARR and paid CAC compared a specific category the user’s profit contribution and the feasibility of marketing spending. In addition, on certain channels to invest in the market may lead to changes in the channel paid CAC, changes and the reasons behind it can be very important.

Customer acquisition cost or CAC should be the full cost of acquiring users, stated on a per user basis. Unfortunately, CAC metrics come in all shapes and sizes.

One common problem with CAC metrics is failing to include all the costs incurred in user acquisition such as referral fees, credits, or discounts. Another common problem is to calculate CAC as a “blended” cost (including users acquired organically) rather than isolating users acquired through “paid” marketing. While blended CAC [total acquisition cost / total new customers acquired across all channels] isn’t wrong, it doesn’t inform how well your paid campaigns are working and whether they’re profitable.

This is why investors consider paid CAC [total acquisition cost/ new customers acquired through paid marketing] to be more important than blended CAC in evaluating the viability of a business — it informs whether a company can scale up its user acquisition budget profitably. While an argument can be made in some cases that paid acquisition contributes to organic acquisition, one would need to demonstrate proof of that effect to put weight on blended CAC.

Many investors do like seeing both, however: the blended number as well as the CAC, broken out by paid/unpaid. We also like seeing the breakdown by dollars of paid customer acquisition channels: for example, how much does a paying customer cost if they were acquired via Facebook?

Counterintuitively, it turns out that costs typically go up as you try and reach a larger audience. So it might cost you $1 to acquire your first 1,000 users, $2 to acquire your next 10,000, and $5 to $10 to acquire your next 100,000. That’s why you can’t afford to ignore the metrics about volume of users acquired via each channel.

/LTV VI, user life-cycle value (Life Time Value)

Strictly speaking, the LTV is defined as specific users to the company contribution to the present value of all future net profits for the period. Present value is a concept in financial management, simply speaking, money is not worth the money now in the future, so discounting is the conversion of face value of future economic benefits into present value.

We do not show and tell to readers of LTV calculation formula merely shows that LTV use and matters need attention.

For start-ups, LTV’s primary purpose is to measure the company (especially SaaS company) the effectiveness of marketing spending as well as determining the need for accelerated expansion stage of marketing expenditures. Ideally, SaaS company LTV/CAC experience rate number should be greater than 3.

Factors associated with LTV: ARPU (average revenue per individual users), user churn rate (the countdown for user life-cycle), the cost of services to individual users, CAC (cost). Of the interaction between these factors, their substance behind the results is the interaction between company and user behavior. Therefore, the assumptions used in calculating the LTV should be based on the business practice of prudent and reasonable inference. Starting point for investors and management from time to time may be different, investors need to reduce risk, entrepreneurs need to invest to promote business. This creates all the assumptions used may be different, the reasonableness of assumptions or not depends on the individual’s professional judgment.

In fact, calculate the LTV does not need to be particularly accurate figures, as long as the balance of prudence and rational principles of individual parameters are assumed to be the value of the results.

Lifetime value is the present value of the future net profit from the customer over the duration of the relationship. It helps determine the long-term value of the customer and how much net value you generate per customer after accounting for customer acquisition costs (CAC).

A common mistake is to estimate the LTV as a present value of revenue or even gross margin of the customer instead of calculating it as net profit of the customer over the life of the relationship.

Reminder, here’s a way to calculate LTV:

Revenue per customer (per month) = average order value multiplied by the number of orders.

Contribution margin per customer (per month) = revenue from customer minus variable costs associated with a customer. Variable costs include selling, administrative and any operational costs associated with serving the customer.

Avg. life span of customer (in months) = 1 / by your monthly churn.

LTV = Contribution margin from customer multiplied by the average lifespan of customer.

Note, if you have only few months of data, the conservative way to measure LTV is to look at historical value to date. Rather than predicting average life span and estimating how the retention curves might look, we prefer to measure 12 month and 24 month LTV.

Another important calculation here is LTV as it contributes to margin. This is important because a revenue or gross margin LTV suggests a higher upper limit on what you can spend on customer acquisition. Contribution Margin LTV to CAC ratio is also a good measure to determine CAC payback and manage your advertising and marketing spend accordingly.

VII, the total turnover vs. income (Gross Merchandise Value (GMV) vs. Revenue)

This is a very traditional e-commerce and trading platform, indicators, set on the trading platform for.

GMV is usually trading platform, it is a measure of total amount of transaction flow occurs on the platform in a specific period. It describes the trading platform ability to absorb the flow.

The income of the trading platform including GMV’s royalty (takes), advertising income, and other value-added services.

In marketplace businesses, these are frequently used interchangeably. But GMV does not equal revenue!

GMV (gross merchandise volume) is the total sales dollar volume of merchandise transacting through the marketplace in a specific period. It’s the real top line, what the consumer side of the marketplace is spending. It is a useful measure of the size of the marketplace and can be useful as a “current run rate” measure based on annualizing the most recent month or quarter.

Revenue is the portion of GMV that the marketplace “takes”. Revenue consists of the various fees that the marketplace gets for providing its services; most typically these are transaction fees based on GMV successfully transacted on the marketplace, but can also include ad revenue, sponsorships, etc. These fees are usually a fraction of GMV.

The eighth, unrealized gains (AR) as well as open seats (Unearned or Deferred Revenue … and Billings)

This is a recognition of the problem. According to the accounting standards, the company had outstanding service should not be the economic flows are recognized as revenue of the project.

In form, the AR project record users have signed up but not yet fulfilling service contract payments to the company ahead. So the company must finance payments received in advance as part of customer’s liabilities recorded on the balance sheet.

When the company performed ar after the service, who will be in that month as a liability which is “unrealized gains” from the exterior and interior are recognized as revenue balance sheet go to profits (the so-called “realized”).

Billing is a receipt, in the company upon receipt of customer advance payments required receipts and records when appropriate amount invoiced to the customer when you meet the revenue recognition criteria. Billing is the process of movement, itself not part of the financial reporting concepts.

When Billing this figure represents all the cash is received from a user of the company. It reflects the company’s bargaining power to users, armoured capacity, if Billing growth is good, may indicate that the company’s business into a strong growth phase.

In a SaaS business, this is the cash you collect at the time of the booking in advance of when the revenues will actually be realized.

As we’ve shared previously, SaaS companies only get to recognize revenue over the term of the deal as the service is delivered — even if a customer signs a huge up-front deal. So in most cases, that “booking” goes onto the balance sheet in a liability line item called deferred revenue. (Because the balance sheet has to “balance,” the corresponding entry on the assets side of the balance sheet is “cash” if the customer pre-paid for the service or “accounts receivable” if the company expects to bill for and receive it in the future). As the company starts to recognize revenue from the software as service, it reduces its deferred revenue balance and increases revenue: for a 24-month deal, as each month goes by deferred revenue drops by 1/24th and revenue increases by 1/24th.

A good proxy to measure the growth — and ultimately the health — of a SaaS company is to look at billings, which is calculated by taking the revenue in one quarter and adding the change in deferred revenue from the prior quarter to the current quarter. If a SaaS company is growing its bookings (whether through new business or upsells/renewals to existing customers), billings will increase.

Billings is a much better forward-looking indicator of the health of a SaaS company than simply looking at revenue because revenue understates the true value of the customer, which gets recognized ratably. But it’s also tricky because of the very nature of recurring revenue itself: A SaaS company could show stable revenue for a long time — just by working off its billings backlog — which would make the business seem healthier than it truly is. This is something we therefore watch out for when evaluating the unit economics of such businesses.

Part II: user product specification (Product and Engagement Metrics)

Definition of products and users indicators vary widely, target selection and define criteria for making the right investment analysis and business decision making is essential.

Ninth, the number of active users (Active Users)

Active users that need to be defined, in principle, investors must give a cautious evaluation criteria to measure what kind of user is “active”. According to industry characteristics be defined through specific scenarios.

Different companies have almost unlimited definitions for what “active” means. Some charts don’t even define what that activity is, while others include inadvertent activity — such as having a high proportion of first-time users or accidental one-time users.

Be clear on how you define “active.”

Tenth, sequential growth rate (Month-on-month (MoM) growth)

Ordinary sequential growth rate fluctuations are more likely affected by the short-term factors, their limited comparative value.

Therefore, investors have chosen to use a compound from the growth rate (CMGC) as an indicator of sequential data analysis.

CMGC= (current month month for digital/digital) ^ (1/number of months)-1

CMGC is a concept of compound interest, which removed short-term volatility factors, product or industry growth is potential, long-term perspective to assess the trend of changes.

Common CAGC is the compound annual growth rate (Compounded Annually Growth Rate, compounded annual growth rate). For high growth start-ups use the CMGC is more easy to see high-speed growth compares the growth trend in the industry.

It is a gauge (ruler), is roughly where the level is not very accurate.

Often this measured as the simple average of monthly growth rates. But investors often prefer to measure it as CMGR (Compounded Monthly Growth Rate) since CMGR measures the periodic growth, especially for a marketplace.

Using CMGR [CMGR = (Latest Month/ First Month)^(1/# of Months) -1] also helps you benchmark growth rates with other companies. This would otherwise be difficult to compare due to volatility and other factors. The CMGR will be smaller than the simple average in a growing business.

11th, turnover (Churn)

Indicators of turnover are important for a SaaS business. Subscribers may cause MRR (monthly recurring revenue) declines.

MRR wastage rate has two dimensions:

One MRR rate of hair loss, namely loss of the month MRR/month MRR;

MRR is a net turnover, (loss of the month MRR-MRR for several of the original user) MRR/month.

MRR gross loss of rate response by users due to natural wastage of MRR under the steady state level, reflects the company’s products/services on the user’s ability to sustain.

MRR net loss rate for the company’s incremental sales to existing users. For SaaS services companies, this indicator is very important because it shows the company’s ability to service upgrades in the future.

For SaaS companies, simply wish to seek access to new customers and achieve long-term growth are almost impossible things, so up-selling and cross selling skills is particularly important. What do you rely on retaining existing customers for a long time? how to make them willing to spend more money to buy more services? to consider here is not just the product, and must also take into account the strategic path arrangements.

There is a cohort analysis (cohort analysis), the concept of grouping is new users every month (called a cohort of users per month) after recording its retention rate.

Longitudinal comparison of the group can see the retention rate trends;

Lateral correlation can be seen between the groups behind the cohort are compared to previous cohort on the retention rate has improved.

In addition, for fast-growing SaaS company, user renewal rates (Customer Renewal Rate) is also a key indicator. This indicator is a measure of the current renewal of expired users, a large number of the simultaneous expiry of the contract need to be concerned, it reflects the user’s stickiness and the satisfaction of service.

There’re all kinds of churn — dollar churn, customer churn, net dollar churn — and there are varying definitions for how churn is measured. For example, some companies measure it on a revenue basis annually, which blends upsells with churn.

Investors look at it the following way:

Monthly unit churn = lost customers/prior month total

Retention by cohort

Month 1 = 100% of installed base

Latest Month = % of original installed base that are still transacting

It is also important to differentiate between gross churn and net revenue churn —

Gross churn: MRR lost in a given month/MRR at the beginning of the month.

Net churn: (MRR lost minus MRR from upsells) in a given month/MRR at the beginning of the month.

The difference between the two is significant. Gross churn estimates the actual loss to the business, while net revenue churn understates the losses (as it blends upsells with absolute churn).

12th, cash burn rate (Burn Rate)

Cash is the blood of enterprise operations, expansion, offensive, defensive, and ammunition to resist risks, therefore, entrepreneurs, entrepreneurs for the company’s cash flow and cash consumption must be very concerned about.

Burn rate commonly called the burn rate, and represents the rate of consumption of cash reserves. How should we understand it?

Pure cash burn rate, net cash burn and cash burn rate is divided into:

Cash burn is being driven company in the total cash outflow for a specific period;

Net cash burn is in the cash portion of their income for a specific period of the company minus the cash burn figures. Its cash balance at beginning of period reflects cases without financing the company’s future cash to support the length of time.

Investors need to know team cash spending, money entrepreneurs need to know to what extent it should meet business levels, when the need for subsequent financing. By cash budget, entrepreneurs can better grasp of the company’s cost structure

Cash consumption rate (net cash flow) by the combined effect of the three types of activities. These three types of activity are business activities (production and sales of goods, service activities), investment activities (construction and disposal of long-term assets) and financing activities (activities that directly results in liabilities and owner’s equity). Distinction between the three different types of activities in order to understand the nature of impact factor when analyzing cash movements and their sources.

Due to the combined effect of the three types of activities, cash consumption rate is not set in stone, or even each month will have higher volatility.

Cash burn rate is not good or bad, must be combined with industry background, development stage to analyze the situation and the future of the company.

Burn rate is the rate at which cash is decreasing. Especially in early stage startups, it’s important to know and monitor burn rate as companies fail when they are running out of cash and don’t have enough time left to raise funds or reduce expenses. As a reminder, here’s a simple calculation:

Monthly cash burn = cash balance at the beginning of the year minus cash balance end of the year / 12

It’s also important to measure net burn vs. gross burn:

Net burn [revenues (including all incoming cash you have a high probability of receiving) – gross burn] is the true measure of amount of cash your company is burning every month.

Gross burn on the other hand only looks at your monthly expenses + any other cash outlays.

Investors tend to focus on net burn to understand how long the money you have left in the bank will last for you to run the company. They will also take into account the rate at which your revenues and expenses grow as monthly burn may not be a constant number.

13th, the number of downloads (Downloads)

For investors, simply downloads doesn’t make too much sense, can show the users activity is to assess the value of a number.

And above the churn rate (churn), cohort analysis (cohort analysis) can also be used for the analysis of user activity.

Longitudinal comparison of the group can see user-activity trends;

Lateral correlation can be seen between the groups behind the cohort are compared to previous cohort on the user’s activity has improved.

Downloads (or number of apps delivered by distribution deals) are really just a vanity metric.

Investors want to see engagement, ideally expressed as cohort retention on metrics that matter for that business — for example, DAU (daily active users), MAU (monthly active users), photos shared , photos viewed, and so on.

Part III: indicators of presence (Presenting Metrics Generally)

Indicators show often involves the use of charts, pragmatic entrepreneurs will show real shown information not misleading to investors. In fact, the wise investor will not be deceived by a head fake charts. You know, making chart can be shown the entrepreneur attitude, motivation and ability.

14th, cumulative data chart vs./Cumulative growth chart Charts (vs. Growth Metrics)

If you want to see growth in months of data will need to be a longitudinal comparison typically, aggregate figures illustrated can’t draw too many questions.

Cumulative charts by definition always go up and to the right for any business that is showing any kind of activity. But they are not a valid measure of growth — they can go up-and-to-the-right even when a business is shrinking. Thus, the metric is not a useful indicator of a company’s health.

Investors like to look at monthly GMV, monthly revenue, or new users/customers per month to assess the growth in early stage businesses. Quarterly charts can be used for later-stage businesses or businesses with a lot of month-to-month volatility in metrics.

Tricks on the 15th, charts (Chart Tricks)

This is more of a reminder for entrepreneurs in attitude because gimmick on the chart is not valid for wise investors.

Do not mark the y axis scale, only shows percentage growth and talent do not show absolute values, and so on belong to this class.

There a number of such tricks, but a few common ones include not labeling the Y-axis; shrinking scale to exaggerate growth; and only presenting percentage gains without presenting the absolute numbers. (This last one is misleading since percentages can sound impressive off a small base, but are not an indicator of the future trajectory.)

16th, index display order (Order of Operations)

And investors during the initial Exchange, logical order should be as follows: business index, growth index, before it could go into a deeper level of assessment and Exchange.

As we know each other, subsequent exchanges will become more intensive and targeted.

It’s a bit like dating, simply talking to investor logic will not be rearranged depending on order. So, it is actually more like a doctor diagnosing process.

It’s fine to present metrics in any order as you tell your story.

When initially evaluating businesses, investors often look at GMV, revenue, and bookings first because they’re an indicator of the size of the business. Once investors have a sense of the the size of the business, they’ll want to understand growth to see how well the company is performing. These basic metrics, if interesting, then compel us to look even further.

As one of our partners who recently had a baby observes here: It’s almost like doing a health check for your baby at the pediatrician’s office. Check weight and height, and then compare to previous estimates to make sure things look healthy before you go any deeper!

Summary

Index is a mirror, is the true response of mirror.

Target ages to the three abilities are required:

According to essence of business, finding the right set, the ability to avoid holding a magic mirror plane mirror;

An assessment of these indicators to see the past, present and future of the true situation, make the probability of correct decisions;

Mirror indicators as investment and operational decision-making and efficient implementation of the capacity.

This English text is not very rigorous, our interpretation can only be valuable. Specific application requires readers to feel it in practice.