Research tells us that fewer than 5% of all startups reach a million dollars in annual revenue and fewer than 1% reach $10M in annual revenue.
The 5% club is more exclusive than it should be, and I believe this is an execution problem versus an idea problem. Growth is not a one-dimensional challenge.
While working with many B2B startups over the years, as well as studying many successful - and unsuccessful - startups while interviewing Founders on my podcast, it became clear to me that there are five key steps to breaking through the million-dollar threshold and beyond.
For those looking to break the barrier effectively, I’ve outlined them below. The first three are foundational in nature and EVERY startup needs to go through these exercises. The last two are critical in scaling your business and breaking through.
Please note, following these steps do not guarantee that you and your B2B company will join the elusive 5% Club, but it will eliminate some of the guesswork and will give you the best chance to get there. The key is to reduce your learning curve, accelerate new business sales and reduce your churn. Here they are:
1: HAVE A PLAN
Start with goals and objectives, then develop a strategy to achieve those goals. Remember, hope is not a strategy. It sounds simple, but the number of Founders that I work with who don’t have a plan for where they want their company to go is surprisingly large.
Let’s use the million-dollar mark as the goal. You can do the math: If your average deal size is $500, you’ll need to sell 2,000 deals to reach $1M. Then, you can build the tactical plan to drive towards your goal. Can you reach 2,000 prospects? Are there even 2,000 prospects in the market? Are your processes set up to support that many customers? You can pivot, but you must always have a plan.
2: UNDERSTAND KEY INSIGHTS (MARKETING, CUSTOMER, AND COMPETITIVE)
This step is so important and really should be your go/no-go decision point. The first question to answer from a customer perspective: Is my solution/product a “need to have” or a “nice to…