SaaS Business Health Diagnostic
Diagnose SaaS business health across growth, retention, unit economics, and capital efficiency. Identify red flags by urgency and get a prioritized action plan with stage-specific benchmarks.
Revenue is growing 50% YoY but you're burning cash fast and the board meeting is in two weeks. Is your business healthy, moderate, concerning, or in existential crisis? Single-metric check-ins miss the systemic picture — and by the time lagging indicators flash red, it's late.
Who it's for: CPOs and founders preparing for board meetings, operators running QBRs, finance leads prepping fundraising materials, Heads of Product assessing PMF and scaling readiness, new execs needing a 90-day business health read
Example
"Our growth is strong but we're burning cash — assess our business health before the Series A board meeting" → Full scorecard across 4 dimensions, red flags categorized Critical/High/Medium, root cause analysis on the primary issue, 30/90-day action plan with expected revenue impact, and stage-specific benchmark comparison
New here? 3-minute setup guide → | Already set up? Copy the template below.
# Business Health Diagnostic
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, QBRs, or fundraising prep.
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.
## The Business Health Framework
Four dimensions that must work together:
1. **Growth & Retention** — Revenue growth rate, NRR, Churn rate, Quick Ratio
2. **Unit Economics** — CAC, LTV, LTV:CAC, Payback period, Gross margin
3. **Capital Efficiency** — Burn rate, Runway, Rule of 40, Magic Number
4. **Strategic Position** — Market positioning, moat, revenue concentration, operating leverage
## Stage-Specific Benchmarks
**Early Stage (Pre-$10M ARR):**
- Growth: >50% YoY, LTV:CAC: >3:1, Gross Margin: >70%, Runway: >12 months
**Growth Stage ($10M-$50M ARR):**
- Growth: >40% YoY, NRR: >100%, Rule of 40: >40, Magic Number: >0.75
**Scale Stage ($50M+ ARR):**
- Growth: >25% YoY, NRR: >110%, Rule of 40: >40, Profit Margin: >10%
## Red Flag Categories
**Critical (Fix immediately):** Runway <6 months, LTV:CAC <1.5:1, Churn accelerating cohort-over-cohort, NRR <90%, Magic Number <0.3
**High Priority (Fix within quarter):** Rule of 40 <25, Payback >24 months, Quick Ratio <2, Gross margin <60%, Revenue concentration >50% in top 10 customers
**Medium Priority (6 months):** NRR 90-100% flat, Magic Number 0.3-0.5, Operating leverage negative, Churn stable but >5% monthly
## Application
Ask 4 adaptive questions covering the four dimensions, then deliver a comprehensive diagnostic with:
1. **Overall Health Score** — Healthy / Moderate / Concerning / Critical
2. **Dimension Scores** — Growth, Retention, Economics, Efficiency
3. **Red Flags** — Critical, High Priority, Medium Priority
4. **Prioritized Recommendations** — Top 3-5 actions with expected impact
5. **Stage-Appropriate Benchmarks** — How you compare to peers
## Four Diagnostic Patterns
### Pattern 1: Healthy Business
All dimensions meet stage benchmarks, no critical red flags, improving trends. Output: scorecard, key strengths, optimization opportunities, scaling actions, metrics to monitor weekly/monthly/quarterly.
### Pattern 2: Moderate Health (Fixable Issues)
Most metrics acceptable, 1-2 dimensions have problems. Output: red flags by priority, root cause analysis, prioritized action plan (30/90 days), success criteria, what-not-to-do list.
### Pattern 3: Concerning (Urgent Action Required)
Multiple critical red flags, 2+ dimensions problematic. Output: survival plan (90 days: triage → stop the bleeding → stabilize), fix unit economics + retention simultaneously, runway extension plan, milestone tracking.
### Pattern 4: Critical (Existential Crisis)
Runway <3 months OR multiple critical failures. Output: emergency actions this week (board meeting, fundraise/cut burn 50%+, stop non-essential spend, fix top 1-2 critical issues).
## Common Pitfalls
1. **Celebrating Single Metrics** — "Revenue growing 50%!" while ignoring burn, churn, unit economics
2. **Ignoring Stage-Specific Benchmarks** — Early-stage burn is acceptable; scale-stage burn is a problem
3. **Focusing on Lagging Indicators Only** — By the time churn shows problems, it's late; track leading indicators
4. **Not Acting on Red Flags** — "We'll fix it eventually" → problems compound → crisis
5. **Trying to Fix Everything at Once** — Resources spread thin; prioritize top 1-3 issues; fix sequentially
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What This Does
Diagnoses SaaS business health holistically across four dimensions — Growth & Retention, Unit Economics, Capital Efficiency, and Strategic Position — and produces a scorecard, categorized red flags, root cause analysis, and a prioritized action plan calibrated to your stage (Early, Growth, or Scale).
Not a single-metric check. Connects revenue, retention, economics, and efficiency to reveal systemic issues and opportunities.
Quick Start
mkdir -p ~/Documents/BusinessHealth
mv ~/Downloads/CLAUDE.md ~/Documents/BusinessHealth/
cd ~/Documents/BusinessHealth
claude
Provide metrics across the four dimensions (you can say "unknown" where you don't have data) plus stage and business model. Claude returns a diagnosis + action plan.
Stage-Specific Benchmarks
| Stage | Growth | NRR | LTV:CAC | Rule of 40 | Runway |
|---|---|---|---|---|---|
| Early (<$10M ARR) | >50% YoY | — | >3:1 | — | >12 mo |
| Growth ($10-50M) | >40% YoY | >100% | >3:1 | >40 | — |
| Scale ($50M+) | >25% YoY | >110% | >3:1 | >40 | Profitable |
Four Diagnostic Patterns
- Healthy — All dimensions meet benchmarks. Scale what's working, expand within base, improve efficiency.
- Moderate (Fixable Issues) — 1-2 dimensions problematic. Root cause analysis + 30/90-day plan. Don't scale acquisition until retention is fixed.
- Concerning (Urgent Action) — Multiple critical red flags. 90-day survival plan: triage → stop the bleeding → stabilize.
- Critical (Existential Crisis) — Runway <3 months or multiple critical failures. Emergency actions this week.
Red Flags Quick Reference
- Critical: Runway <6mo, LTV:CAC <1.5:1, NRR <90%, Magic Number <0.3, cohort degradation
- High Priority: Rule of 40 <25, Payback >24mo, Gross margin <60%, >50% revenue concentration in top 10
- Medium: NRR 90-100% flat, Magic Number 0.3-0.5, Churn stable but >5% monthly
Common Pitfalls
- Celebrating single metrics while ignoring the rest (growth alone doesn't pay bills)
- Using stage-agnostic benchmarks (early-stage burn ≠ scale-stage burn)
- Tracking only lagging indicators (by the time churn flashes red, it's late)
- Not acting on red flags fast enough — problems compound
- Trying to fix everything at once — pick the top 1-3 and sequence them