business-health-diagnostic

The saved excerpt is a snapshot from review. The external source remains the complete and most current version.

---
name: business-health-diagnostic
argument-hint: "[metrics or business context]"
description: Diagnose SaaS business health across growth, retention, efficiency, and capital. Use when preparing a business review or prioritizing urgent fixes.
intent: >-
  Diagnose overall SaaS business health by analyzing growth, retention, unit economics, and capital efficiency metrics together. Use this to identify problems early, prioritize actions by urgency, and deliver a comprehensive health scorecard for board meetings, quarterly reviews, or fundraising preparation.
type: interactive
theme: finance-metrics
best_for:
  - "Getting a complete read on your SaaS business health across all dimensions"
  - "Identifying which metrics are red flags vs. leading indicators"
  - "Preparing for a board meeting or investor review"
scenarios:
  - "Our growth is strong but we're burning cash fast — I need to understand our unit economics before the board meeting"
  - "I'm preparing for a Series A board meeting and need to assess our business health across growth, retention, and efficiency"
estimated_time: "20-30 min"
---


## Purpose

Diagnose overall SaaS business health by analyzing growth, retention, unit economics, and capital efficiency metrics together. Use this to identify problems early, prioritize actions by urgency, and deliver a comprehensive health scorecard for board meetings, quarterly reviews, or fundraising preparation.

This is not a single-metric check—it's a holistic diagnostic that connects revenue, retention, economics, and efficiency to reveal systemic issues and opportunities.

## Input

**Works best with:** Whatever business metrics you have access to — growth rate, NRR/GRR, CAC payback, burn multiple, runway. Partial data is fine; the diagnostic flags what's missing.
**Also useful:** The occasion (board meeting, quarterly review, fundraise prep) and what you already suspect is wrong.

Anything supplied with the invocation itself — text after the skill name, a pasted context dump, or an appended `ARGUMENTS:` line — counts as answers already given. Use it and skip whatever it covers; don't re-ask.

**Arriving empty-handed? That works too.** The diagnostic opens by asking your company stage and which metric families you can pull.

**Example invocation:** `Run a health check: $8M ARR, 60% YoY growth, NRR 96%, CAC payback 21 months, 14 months runway — board meeting in 3 weeks.`

## Key Concepts

### The Business Health Framework

A SaaS business is healthy when four dimensions work together:

1. **Growth & Retention** — Are you growing and keeping customers?
   - Revenue growth rate
   - NRR (Net Revenue Retention)
   - Churn rate
   - Quick Ratio

2. **Unit Economics** — Is the business model profitable at the customer level?
   - CAC (Customer Acquisition Cost)
   - LTV (Lifetime Value)
   - LTV:CAC ratio
   - Payback period
   - Gross margin

3. **Capital Efficiency** — Are you using cash efficiently?
   - Burn rate
   - Runway
   - Rule of 40
   - Magic Number

4. **Strategic Position** — Are you positioned for sustainable success?
   - Market positioning (below, at, above market pricing)
   - Competitive moat (network effects, data, brand)
   - Revenue concentration risk
   - Operating leverage

### Stage-Specific Benchmarks

**Early Stage (Pre-$10M ARR):**
- Focus: Product-market fit, unit economics
- Growth: >50% YoY
- LTV:CAC: >3:1
- Gross Margin: >70%
- Runway: >12 months
- Acceptable: Negative margins, high burn (if unit economics work)

**Growth Stage ($10M-$50M ARR):**
- Focus: Scaling efficiently
- Growth: >40% YoY
- NRR: >100%
- Rule of 40: >40
- Magic Number: >0.75
- Acceptable: Moderate burn if growth is strong

**Scale Stage ($50M+ ARR):**
- Focus: Profitability, efficiency
- Growth: >25% YoY
- NRR: >110%
- Rule of 40: >40
- Profit Margin: >10%
- Required: Positive or near-positive cash flow

### Red Flag Categories

**Critical (Fix immediately):**
- Runway <6 months
- LTV:CAC <1.5:1
- Churn accelerating cohort-ov