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Big Business and Getting To $100M In Annual Revenue

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I have thought a lot lately about strategy, growth and other big picture decisions that can help push a company forward towards lofty goals ($100M+ in annual revenue).

I’ll be the first to admit, my mind gets a little mushy sometimes when I think about all the moving pieces it takes to get to that level.

There are a few revenue related milestones that are significant in an entrepreneurs career.

The first is the almighty $1 million dollars (in Dr. Evil style voice).

Some readers are starting companies or own a business and have high hopes to generate $1M in annual revenue in 2011. It’s not an easy thing to do. I realize that revenue can eventually mean little without profit, but for the purposes of this blog post, I’m focusing on top line revenue goals.

The Beginning

What kinds of things do you do when building a company from $0 to $1M in sales?

All of the really scrappy, dirty, I-wanna-hire-someone-else-to-do-this kind of stuff. This stage can be the scariest sometimes because it can feel the most risky. You don’t have revenue to fall back on if you screw up bad, and you are likely taking financial risks that you aren’t getting a return on (i.e. putting money in, not taking any out). Doing the “dirty work” is some of the stuff that not only gets you to $1M, it gets you well past it – so doing it and learning to love it will serve you well for a long while.

$0 – $1M means you make lots of fast decisions, your team is really close (because it is small), and you get to celebrate critical ‘wins’ that propel the business forward. Every single customer and sale is followed by every team member. Energy is perhaps at an all time high here as you are so completely consumed by your new shiny business that you cannot sleep. Every extra minute is spent thinking about your product and ways to sell more, add more, and find more users and customers. While I said it can be scary, it can also be the most fun. Quite the combo. This is why people start companies though; the feeling of fear mixed with excitement is the entrepreneurs version of skydiving.

The Next Stage

The next step up in revenue seems to be around $10M in annual sales. Surely between $1M and $10M some incredible things have to happen.

I have been fortunate enough to experience this stage a few times in my career. There are a lot of things that go on during this stage of growth that are entirely different then the earlier stages. A lot.

The company undergoes drastic change in almost every area. The team gets a lot larger. So do the bills. Hopefully, so do the profits! Decisions “feel” bigger and unfortunately that can sometimes take them longer to make. Office politics can creep in (don’t let it!) and you have to fire or replace some people that perhaps felt indispensable in the past. It’s a Dickens novel; the best of times and the worst of times.

A lot of what happens here though depends upon how fast you go from $1M to $10M. The longer it takes, the more the companies are likely to feel and act totally different.

Case in point; if you go from $1M to $10M in sales in a year, is it likely you are a technology/internet/viral consumer business? Yes. If it takes you seven years to do it, are you more likely to be a ‘traditional’ type of business that acquires customers in ‘old school’ formats (direct sales, retail, etc.)? Yes.

Let’s assume you are trying to build a business that will go from $1M to $10M in less than seven years. Heaven knows, every business I have been involved with certainly fits into this assumption – although only a few have actually been successful in doing it.

If you want to grow your business at a brisk pace, and get into the double-digit millions, you have to take some pretty decent risks. You have to push HARD. The company needs to roll at break-neck speed. There are always exceptions, but I’m talking about the rule, since 9 times out of 10 that is what I seem to relate to most. If you aren’t breaking some stuff and pissing people off on occasion, then you likely won’t make it to $10M in under 3 years. Get used to that.

There is no way to sludge your way to $10M in sales in under three years. It just doesn’t happen.

Pushing Past $10M

So you’re sprinting towards $10M by adding employees, customers, financing, products, services and maybe some square footage. You are also likely adding partners, debt, complaints, stress, turnover, and hours.

There are a lot of trade-offs as you can see.

It’s worth it though if you manage it right. What does ‘manage it right’ mean you say? It’s different for everyone.

I’ve done a pretty good job at making it ‘worth it’ for my family – with emphasis on the phrase ‘pretty good‘. I can do better and it seems that over time, for the most part, I’ve improved. Just be ready for the biggest challenges you will ever face though in terms of tough decisions, both professionally and personally.

You will have to fire some friends, put added stress on your personal life and go thru frustrating choices all in the name of revenue. Does that mean it isn’t worth it? Of course not. It’s totally worth it. Why? Because you are going to have a bunch of crappy stuff happen to you whether you hit $10M in revenue or not – so you might as well just do it.

$100M? WHOA

This is the part in the post where I have zero experience to call upon. Going from $10M to $100M in sales is something I have never been a part of. I have been a ways north of $10M before, but nowhere close to $100M. Everything that happens from here on out is based on several things that are strictly my opinion from observation and listening/watching (they are in no particular order):

  • Quality of people that you hire – they know their stuff and are a great fit within the company culture
  • Expanding direct sales and adding channel sales
  • Potential VC’s on board to accelerate growth, help with key hires and use experience to help with strategic decisions
  • Maintaining momentum, culture and energy amidst great change
  • Finding a way to scale what got you to $10M – add technology, partners, new monetization points and more
  • In some cases founders should move down the corporate chain and be replaced by high growth executives (not always the case – sometimes this backfires!)
  • Don’t forget what go you here; people, hard work, being in touch with your customers – this stuff works all the way to $1B+ in sales
  • Not getting lost in too many new ideas – find that balance of focusing on core competencies while still being innovative

I know a lot more things that should be on this list. Care to add any? I welcome them in the comments.

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About Alex Lawrence

Alex has been a successful entrepreneur for 20+ years. His current venture Lendio ranks #34 on the Inc. 500 list. Alex earned a BS degree at the University of Utah and his MBA at Weber State University, where he is Vice Provost and Director of the Entrepreneurship Program. If you want to talk with Alex about business and entrepreneurship (or other questions), email him (alex AT startupflavor DOT com), or you can find him on Twitter @_AlexLawrence.
  • Being Part of an organization who is doing the 1 million to 10 million and now getting really close to the 100million mark it is a transformation. Moving production over seas, finding and continued reinvention of product to hit more mainstream revenue sources. Partnering, and relationships and than moving to a worldwide market. It is a CRAZY ride.

    • Alex Lawrence

      Eric – tell us more about the company and your ride there…

      • Jay

        What is % of new start-ups that hit &100M in sales per year?

  • As a person with zero experience in either tier, its good to hear an honest perspective from a guy who has been there. 

    I am curious to know if it is easier to go from $1 M to $10 M, or easier for a company that is doing $10 M to push $100 M?

    And another question…do the profits typically increase from $1 M to $10 M range, or from the $10 M – $100 M range?  Or is it just the goal of being acquired?   

    • alex_lawrence

      Hey Jeremy, always good to see you back here reading and commenting.  Regarding your questions:

      I don’t think $1-10m is easier than $10-100m or vice versa.  They are both enormously difficult and require a lot of hard work, great people, and some good luck.  Having said that, I can say that for me, going from $1-10m is easier.  I haven’t had any luck getting from $10-$100m and so I’m personally not as confident in that effort.

      As for profits, I guess it depends on the type of company you are building.  The ones I built definitely got more profitable as sales grew because the models were designed to be profitable per unit sold.  More units sold, more profits made.  In some cases, profits accelerated under increased volume due to efficiencies and discounts that happened with that higher volume.  Not always though.  In many technology businesses they have a model that may have a long term horizon for profits.  That is why they raise money to bridge that gap.  Neither is right or wrong, just different views on the timeline for profit based on what it is you are trying to do.  As for being acquired, I always planned to sell every single business, so indeed that was the goal.  Some companies don’t necessarily want to be acquired or only do so after a long run or a huge exit.  They swing for the big boy fences.  I’ve never had an exit like that.  I’ve been very fortunate and I’m grateful for the exits I have had – but building something so huge that it either lives on forever as a public company, or gets acquired in a blockbuster deal, is something you have to get closer to the $100m mark to achieve.  Maybe someday for me 🙂   Hopefully someday for you, too.

      Hope those answered your questions.  Again, good to hear from you here.

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