How Startups Grow Their Revenue Beyond Their Resources
Are you turning a little into a lot? And is that showing up in your bottom line?
Question: What does peak success look like with the resources you have today?
In other words, if everything went your way — with the talent, the money, and the traction you currently have — would that result in a break-even return to your bottom line? Could that return be double? Triple?
And is that enough?
At some point, every good company reaches resource perfection, when all the company assets — money, equipment, talent, and so on — converge to produce a state of harmony in perpetual execution at a steady burn rate.
Good leaders know that this is the sign of a problem in the making.
The return needs to be more than the sum of the parts
When you’re a startup or a young company, you need a larger-than-normal multiplier of revenue return on your resources.
In other words, if your company has 10 people who each put in $10 worth of something — money, time, equipment, outside services — the return on that input can’t be $100 in revenue. It has to be $200, preferably $1,000.
Furthermore, this is an inescapable truth at all stages of a company’s life, whether you’re a startup ideating its way through a minimum viable product (MVP) all the way up to a publicly held corporation, where that multiplier is somewhat vaguely quantified in the form of earnings per share (EPS).
All companies need to know their revenue multiplier, and how much each cog is adding to the top and bottom line of the machine.
Now, at Fortune 500 companies, there are entire teams who focus on these calculations. At a startup, there are a handful of leaders who need to make those multipliers happen — in the free time they have outside of their primary role(s) and function(s).
Furthermore, when you’re a startup, you’re saddled with the extra weight of high expectations and low fuel. A public company, with access to cash through the public markets, can maintain an equilibrium of resource stability that generates perpetually low…