Here are the biggest milestones for practical SaaS startups on the way to $5 million in ARR when they get started and grow without big VC funding:
- Finding an idea that inspires you to start a company.
- Validating that customers have a problem they will pay you to solve with software.
- Building your first crappy product and crappy website.
- Getting paid by a customer for your first crappy product with founder-led sales.
- Getting 5-10 early customers who show you where your product needs to be less crappy.
- Fixing your product, website, sales process, and marketing enough so it looks like you know what you are doing.
- Getting to $100K ARR and hiring some help to get things done.
- Getting interest from investors and learning they would never invest.
- Getting to $300K ARR with a couple of employees who you pay more than you pay yourself.
- Realizing the limit to growth is the founder’s time, not cash.
- Realizing that half of the product features, sales messages, employees, and customers you sold to…didn’t work.
- Starting to say no to things that don’t work and speeding up smaller experiments of things you think should work.
- Getting to $1M ARR with some happy customers, founder-led sales, a few loyal employees, a sharper message, and execution tactics that work.
- Founders taking a livable salary and making a tiny cash profit in the business.
- Having productive internal conversations about narrowing in on your ICP, company culture, scalable customer acquisition, and pricing. Focus!
- Founder realizing being a CEO of a team of 20 employees is a completely different role and mindset than that of the do-it-all founder.
- Starting to get customers that were referred by other happy customers.
- Starting to get interest from investors now that it looks like you have a proven product and an actual company. Telling them no or ignoring them.
- Founders realizing how much they don’t know about everything. And that they need to spend time on their health to do this for another 5 years.
- Getting one or two salespeople who can sell without the founder’s help.
- Getting most customers up and running to high value in a predictable way.
- Finding your primary customer acquisition muscle that can be flexed to create efficient growth next year.
- People in your industry or market treating you like you know what you are doing.
- Realizing not every employee can report to the founders and you need a few leaders who can manage too.
- Fixing the deeper things you ignored at first but now clearly block your path to $5M ARR.
- Founder getting help (books, mentors, coaches) to learn how to be a CEO.
- Realizing that a few of those loyal, scrappy employees who joined your crazy startup aren’t doing so well when you have 30 employees.
- Realizing the work on product, company, culture, company reputation, systems, and processes will never be done.
That’s a start. What did I miss?
Where are you now?
#practicalfounders
