An amazing and massive accomplishment.
What should be highlighted here is just how difficult it is to hit $1M in ARR (took them 3.5 years and they have a staff of 9 employees ... which is only ~$110k in revenue per employee)
What should be highlighted here is just how difficult it is to hit $1M in ARR (took them 3.5 years and they have a staff of 9 employees ... which is only ~$110k in revenue per employee)
No, I would say almost everyone who bootstraps either goes into debt or uses savings to fund the business, hoping to break even and make a profit eventually.
If you can get enough revenue from the first day to cover cost of living for even 1 person, that's a good start, but unusual. Bootstrappers who start with an existing client or product that's already selling can do that.
Also, depending on circumstances $1m ARR may be enough to cover costs for a team of 9. Many people earn much less than $100k even accounting for costs, and some SaaS don't need high operating costs (hint: cloud services are not the cheap way), or are still working their way through AWS/IBM/Google free credits.
At some point your access to capital dries up when banks see your level of risk increase. You might be able to survive moderate losses for a year or two and cover it with personal debt financing, depending on how much money and access to capital you have personally, but 3.5 to 4 years covering losses with personal debt is REALLY pushing it. You're most likely talking several hundred thousand dollars at that point even for a small startup.
And $1M ARR is only enough to support a team of 9 if the average salary being paid is around $50k-$55k/year (or if 2 or more people aren't even drawing a salary). Which makes sense because, in their blog, they describe hiring someone for marketing that was much less "senior" - i.e. cheaper - and not being happy with it. Taxes, fees, registrations, legal/accounting, benefits (if any), insurance, hosting, technical infrastructure, etc. can easily eat up over $300k/yr for a team of 9 - not including direct payroll.
That’s an amazing accomplishment.
Would you mind sharing,
- how many employees you have
- biggest driver to your revenue success
- biggest mistake the company made
- anything else you might find of interest to share
Still I'm sure it takes dedication when you could just as easily make FAANG money.
This is speaking as someone who's trying to move an older software shop from a one-time on-premise cost to SaaS. Fortunately the current business's revenues are directly being reinvested towards new products that are on the recurring SaaS model.