# The Power of Incremental Progress

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?

## One thought on “The Power of Incremental Progress”

1. Hi David,
This is a great post and a very instructive one. The one thing one must add is that assuming 12m payback on the \$30 ARR, this will still take at least \$2M in sales and marketing to work! Running lean and with very little R&D investment, you’re still looking at least at an additional \$1M to build out the product. If you factor in even 1% churn, the timeframe goes from 3 years to 3.5 years to get to the \$2M Run-Rate, extending the total burn from \$3M to approx \$4M… so even if you can pull it off using the power of incremental progress, growing a SaaS company takes a great product + discipline + time + money!
Thanks,
Max

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