Like I said in my earlier blog, ” Copycat or Lack of Innovation”, any entrepreneur should have a strong concept before he starts his venture. New ideas and brand new concepts are very important to maintain the growth of any business.
A business could be product based or service based. This article was written on the service based perspective.
A software service company can be started based on two scenarios. There is a strong financial back up to build step by step and reach a sustainable stage, OR we already have a client who is ready to give projects so that we can grow the company on back of that project.
On both the above two scenarios the initial growth is very steep. Risk level is low and building the team is not a big task or deal.
There is another scenario which is very rare. Business getting started by SME – Subject Matter Experts. Initial period of this scenario will be very tough and also the risk level is very high. But this will be a real Unique achievement.
Team Size Vs Revenue Ratio
On both the scenarios, one thing can be a common factor. We will never start a business as a 100 member initial team. It will be from 1-10 and then it will grow to 11-50, 51-200, 201-500, etc.
Initial strength up to 200 members is what we normally see from any start up company in the first 3 – 5 years.
Alternatively on the revenue side it is easy to reach to .75 to 1 Million dollar revenue in the first 3 -5 years along with 51-200 member company.
But there will be a stagnation stage at this level for every business. Either we will see the revenue remains the same for years along with the number of team members or the revenue will not change but the team size will come down to 120 – 160 level.
Both the above scenarios will require a total new business and operational change with new set of clients and deal sizes. If a company is able to cross this chasm with in a period of 12 – 18 months then their growth will accelerate to the next stop gap at 1001 – 5000 member company and 12 – 60 million growth.
This science is a cycle and it will happen at each level of the growth.
What will make you cross that chasm?
It can happen only if we have a strong vision and all new Next Level Growth Plan with real leaders with you to implement it. It will be a real litmus test for any Entrepreneur at this stage and those who have the following commitment only can survive that and cross the chasm.
What are those Commitments?
“Dominate or Dissolve. No more Compete”
Yes, we can take a tough stand to Dominate the market with our New Strategy or all new Next Level Growth plan or to Dissolve or windup the show forever. Because we cannot call ourself as an Entrepreneur if we Compete with others with a stagnated Revenue or Head Count or Same level of Clients for a long period.
So remember the phrase “Dominate or Dissolve. No more Compete”, if you really want to get called or call yourself as an Entrepreneur!!!