In an entrepreneurial landscape dominated by headlines of unicorn startups and billion-dollar acquisitions, getting a company to $1 million in annual recurring revenue (ARR) may sound like small change. Let’s be real, though, hitting $1 million ARR is an aspirational milestone most young companies can relate to. And it’s not that easy, especially if you’ve secured modest investments or no investment at all.
The software-as-a-service (SaaS) company I work for falls in the latter category. We’ve never raised a single investment dollar, and it took us four years to reach the $1 million ARR threshold. It was a wild four years. Frustrating, fun, scary: you name the emotion, and we’ve felt it.
But more than anything, it was an instructive four years. We learned so much, and we want to share a few helpful tidbits with our peers out there in the trenches, scratching and clawing your way to your next big milestone.
Here are 10 things we think are most important that you can use in your own start-up journey:
1. Don’t quit
Steve Jobs famously said that the difference between those who make it and those who don’t is perseverance. At one point I remember hearing “Folks, I don’t know if we’re going to be here next month.”
It’s frightening not to know where you’re going to be next month, but you have to continuously figure out how to get a few more customers and extend your runway. You can’t “make it” or succeed if you don’t exist, so you can’t quit.
2. Give your customers everything
At the company I work for, Text Request, we spent hours with our customers. We built whatever they asked for (if it fit with our goals and other customers could use it too). We also gave away a lot of free software.
If you want to grow and gain customers, you have to create a needed product that solves your target customers’ problems. Determine who your target customers are, ask them what they need, and then tailor your solutions for them.
3. Try everything you can think of
The book Traction by Gabriel Weinberg and Justin Mares covers 19 sales and marketing channels for startups to test. We tried all of them. We went to events. We advertised. We started a referral program.
For us, cold calls and cold emails worked surprisingly well. We took an industry, looked for companies in a given city, and reached out to set up product demos. Organic search has increasingly helped our sales funnel, too.
Either of those could be the best plan for you, or it could be advertising in a particular channel. Every startup is different and targets a different niche, but you’ll only find successful strategies and channels for growth by testing all your options.
4. Focus on the basics
When you focus on doing the basics, opportunities open up. When you commit to SEO basics, your targets will find you online, and a big fish will occasionally swim by. When you provide fantastic customer service, a few users will leave reviews and tell their friends. When you keep your head down and do the work, eventually you’ll look up and have hit a big milestone.
5. Get the right people on your bus
This is one of the critical lessons from Jim Collins’ Good to Great. Thankfully, our small team had the right people from the beginning. Brian and Jamey Elrod, our husband and wife co-founders, had already started a successful company from scratch (Educational Outfitters). Our third co-founder Rob Reagan has created software for twenty years and published a book last year on building apps for global scale.
Rob brought a couple of top-notch developers with him, and the rest of us showed up determined to figure the business out. If you’re going to take a company from $0 to $1 million, every member of your team has to be dedicated to working together for the long-term benefit of the company over self-interest.
“Coming together is a beginning. Keeping together is progress. Working together is success.” – Henry Ford
There’s always something that keeps entrepreneurs up at night, but you can put the questions below to rest:
1. How do you build it fast enough?
In the early days, we worried about losing a customer because we didn’t have [X]. It was stressful knowing that So-and-So would move on to the next option if we couldn’t deliver fast enough, and many times they did. But that doesn’t matter.
Losing one customer isn’t worth pushing out a faulty product. Despite the pervasive Lean Startup mindset, it’s more important to your customers that you create needed features (read: solutions) that work great the first time. They have to trust that you’ll give them the tools they need to accomplish their goals, or they’ll leave.
2. How do you keep customers longer?
Our support is perhaps our #1 competitive advantage. One of the things we’ve learned is that a lower price, and sometimes even new features, won’t keep customers around longer.
To keep your customers from churning, you’ve got to do two things: First, provide a smooth onboarding process that immediately teaches customers how to gain value (solve their problems) with your product. Otherwise, they won’t pick it up, and they’ll eventually leave.
Second, always be there with kind words and helpful content whenever a customer needs help. If you aren’t, they’ll get frustrated and find someone else to help them.
“People do not care how much you know until they know how much you care.” – Teddy Roosevelt
3. How do you get people to your website?
Advertising might be a good option, but if targets aren’t already thinking about what you can do for them, they probably won’t care about your ad or purchase. Instead, create content to educate viewers and help them solve their problems.
Focus on growing your organic traffic, becoming a trustworthy source, and honing your brand’s voice before spending lots of money on ads.
4. Do you need investment money?
When you’re floating in the middle of the ocean, you’ll do anything for a ship to pick you up. But sometimes you just need to swim. We chose to swim, and you might want to do the same.
When every dollar spent has to fight to prove its worth, you’re inevitably going to build something more valuable and more sustainable. Plus, bootstrapping gives you more control over what decisions you do make to grow your company.
5. How do you pursue 10X growth?
A growth hack is not going to propel you from 100 customers to 10,000 overnight. It doesn’t take one trick, but lots of little and big things working together to create exponential growth. It also takes time.
Instead of looking for a golden goose, create complete and actionable strategies. Those, and a little patience, will help you achieve exponential growth.
Growing your startup to $1 million ARR is not easy, but it’s possible – even without investors lining up to give you money. Put the 10 lessons above into practice, and, with a little time and a lot of work, you’ll get there.
Is there a business you’d like to start or have started? Share your ideas and suggestions for our readers!
from
https://addicted2success.com/startups/10-lessons-for-bootstrapping-your-startup-to-1m-annual-revenue/
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