In my mind, $1 million in annual recurring revenue is a massive milestone for startups. There are many milestones along the way like signing the first 10 customers and getting to profitability to go along with a $1M run-rate, but it’s right near the top.
Here are a few benefits of the $1 million recurring revenue milestone:
- Approaching critical mass where the business can operate independently of the entrepreneurs
- Enough members on the team where people can take vacations without worrying about things falling apart
- Nice bump in valuation if there’s a desire to raise outside capital and a larger pool of available institutional investors (most VCs aren’t interested in businesses with less than a million in revenue)
- Qualification for the Entrepreneurs’ Organization
- Predictability of future cash flows and easier budgeting / planning
$1 million in recurring revenue is a huge milestone for entrepreneurs and I recommend adding it to the list of goals.
What else? What are some other benefits of the $1 million recurring revenue milestone?