We work with founders from around the world helping them go to market. As investors, that’s how we find, qualify and earn the right to invest in the best founders and companies. In doing this work, we’re often asked by our founders, “How long is this going to take? When will I see revenue?”
We get it! With all the pressure to scale and “move fast and break things” it’s no wonder that your natural expectation is that revenue will come quickly. As investors, we want to see revenue, too!
And as go-to-market experts we also know that at the early stages of market development, the first milestones are learning-based. Learning informs your best, most efficient revenue.
Even if we wanted to give entrepreneurs an estimate of how long it usually takes to go through the steps and acquire revenue, we couldn’t. There are too many different factors involved.
The question founders should be asking instead is, “What exactly do I need to do to acquire revenue, and why am I not doing it already?”
Revenue Activities, not Predictions
Before you can begin predicting time-to-revenue, you need to build data-informed hypotheses about – and test, iterate and validate – your ideal customer profile, your market messaging, your customer acquisition strategy (which informs the length of your sales cycle), pricing, etc.
Most importantly, you need to calculate and commit how much time you can spend on market development (and not just product development).
If you want to know how long it will take for you to acquire revenue look at the leading and the lagging metrics of revenue generation.
Leading and Lagging Metrics
The reason why it’s so hard for most founders to predict when revenue will come through the door is because they focus solely on one metric: revenue.
But revenue is a lagging metric. There are other leading data points that can tell you if you are on the right or wrong path.
Look at your sales funnel, for instance. Customers and revenue are at the bottom. They are the last things that you’ll see.
Instead of focusing all of your attention at the bottom of the funnel where you have the least control, focus your energy towards the one metric where you have the most control: activity.
How much time are you spending interacting with your market? How many new conversations are you starting each day or week? How many meetings with prospective customers do you have each month?
It’s a simple equation. If there’s little or no activity, you’re not going to see any revenue. Every day that you don’t engage with your market through activity is a day in the future that you rob your business of learning and revenue.
You could have the world’s largest market, but if you don’t engage with that market then your revenue strategy will primarily be reliant on hope and luck.
Activity leads to results and revenue. Increasing your market development activities – more meetings per week, sending more emails per day, etc. – yields more revenue. Activity is your leading metric.
Once you commit to activity, you’ll start tracking the progress of deals moving through your pipeline through other metrics that are further down the funnel.
Those metrics might be qualification meetings, product demonstrations, trials and proposals. As deals move down your funnel you are able to objectively get a sense of when and where revenue will come from without having to wait until the end to find out.
But remember, there will be no revenue if you don’t start with consistent activity.
Spend Time, See Results
Even before the “when will I see revenue” question, you may find yourself asking, “How do I know what the right market is and when am I going to find out?” That answer still starts with activity. You have to acquire the learning, which precedes the revenue, and both of those are simply driven by activity.
In working with hundreds of entrepreneurs every year, one of the most common causes of stalled revenue growth is a simple misalignment of revenue behaviors and revenue goals or needs. A common conversation we have with founders goes something like this:
Founder: We need to scale but we’re struggling to grow revenue.
GrowthX: What’s keeping you from scaling or growing revenue?
Founder: Well, we’re doing so much at once that there’s very little time to put towards sales.
GrowthX: What percentage of your week would you say goes into revenue?
Founder: On a good week, 15-20%
This is where the main blocker to revenue lies and it’s also the first thing we do with any founder we work with. Before you strategize and plan, you need to have an honest assessment of how much time your business puts into your market.
Think about that 15-20% for a moment. Is 15% a realistic amount of time to be spending? Is that enough time to protect your runway and grow revenue.
If you’re only spending that much time as an organization to acquire customers, what does that say about how the company values and prioritizes revenue?
In our experience, entrepreneurs should aim for 50% activity at a minimum. We’ve found that when we work with founders who make the pivot from 15% to 50%, the time to revenue gets shorter while the amount and consistency of revenue increases.
Those entrepreneurs go from pre-revenue or episodic revenue to consistent first revenue or record-breaking revenue in three to four months (or less)!
I’m Not Ready to Reach Out
The main pushback we get when we tell entrepreneurs that the key to revenue is to increase activity is that they don’t know if it’s the right time. They want to keep building products and pitch decks, or do other non-revenue related tasks.
Going to market is like planting a tree, the best time to do it was yesterday so the best time to start is now. Just like investing in the stock market, when trying to grow revenue what’s important is time in the market rather than timing the market.
There is never going to be a perfect time to start and so this causes founders to stall. The problem is, the longer you wait to get started, the longer it’ll be until you see revenue. If you wait too long you’ll find yourself running low on runway and, in turn, options to solve for it.
To acquire learning and revenue you need to be consistent and persistent. It’s about stringing together more “good” activity days in a row than bad ones and not letting a bad day turn into a bad week or bad month where you failed to work your market.
Believe it or not, the change is simple. All you need to do is commit to one market activity every day. That’s as low as the bar needs to be for most companies to start seeing results.
We know it can be uncomfortable at first if you aren’t used to interacting with potential customers regularly. Many people are naturally afraid of rejection. If you never reach out to anyone, they can’t say no, and your ego isn’t bruised. But…they can’t say yes either.
Start Implementing Your Revenue Strategy Today
When you’re done reading this blog post, send a message on LinkedIn or pick up the phone. Every day you don’t do something is a day in the future where you don’t see learning or revenue. And if you don’t have those two things, you’re stalled.
Start today, but don’t seek perfection. Just seek activity. It’s okay if you miss a day. But don’t let missing one day turn into missing a whole week or month.
This process is like healthy eating. You can’t go from someone who eats junk food every day to someone who eats salads for every meal overnight. You need to start with small, manageable changes that you can maintain for years to come.
Block out 30 minutes a day to reach out to potential customers. Make no mistake, it will likely feel uncomfortable to do at first because you are growing a new muscle and skill. But time and time again when founders commit to do this, they are far more likely to acquire revenue, have a positive experience with potential customers, and ultimately they get addicted to doing it.
The key is to start. These are very simple behaviors, and if you do them consistently, you’ll extend your runway and build a traction story that will attract investors to fund the next phase of growth.