Building a successful startup is a daunting task. Say $2 million in recurring revenue is the initial goal for a sustainable business, and the business model is $30/user/month, you have to sell 5,555 seats (assumes $360/user/year). Over five thousand seats!
Instead of looking at it and saying, “I need to sign up over five thousand customers to meet my goal” a better way to do it is to break it down:
- Quarter 1 = 0 paying users (just getting started)
- Quarter 2 = 24 new paying users (2 per week)
- Quarter 3 = 48 new paying users (4 per week)
- Quarter 4 = 96 new paying users (8 per week)
- — End Year 1 —
- Quarter 5 = 192 new paying users (16 per week)
- Quarter 6 = 288 new paying users (24 per week)
- Quarter 7 = 384 new paying users (32 per week)
- Quarter 8 = 480 new paying users (40 per week)
- — End Year 2 —
- Quarter 9 = 576 new paying users (48 per week)
- Quarter 10 = 672 new paying users (56 per week)
- Quarter 11 = 768 new paying users (64 per week)
- Quarter 12 = 864 new paying users (72 per week)
- — End Year 3 —
- Quarter 13 = 960 new paying users (80 per week)
Total: 5,352 users (assuming no churn).
With this model it’ll take slightly more than three years to build a ~$2 million/year run-rate business with each quarter being incrementally better than that previous quarter. These quarterly numbers are much more manageable and understandable, especially when rallying the team around a goal.
Incremental progress is powerful, especially in recurring revenue businesses.
What else? What are some other examples of incremental progress that add up over time?