Startup Realities and Expectations
There are many capitalization realities that are clouded by popular myth. Incorrect information and expectations often end up costing entrepreneurs and investors a tremendous amount of money and time. A sampling of factual realities can help you get grounded and establish reasonable expectations and approaches that increase your odds of success.
- The average business is launched for $25,000.
- $51% of all startups fail within 6 years.
- 10% achieve less than $100,000 in sales per year within 6 years.
- 22% achieve from $100,000 to $499,999 in sales per year within 6 years.
- 7.5% achieve from $500,000 to $999,999 in sales per year within 6 years.
- 7.5% achieve from $1,000,000 to $4,999,999 in sales per year within 6 years.
- 0.9% achieve from $5,000,000 to $9,999,999 in sales per year within 6 years.
- 72 in 10,000 achieve $10+ million in 6 years.
- 9.5 in 10,000 achieve $50+ million in 6 years.
- 3.5 in 10,000 achieve $100+ million in 6 years.
- The average value of a startup that survives 6 years is less than $1 million.
These numbers highlight major and justifiable reasons why experienced investors are reluctant to believe massive projections from a startup company.
If your business truly has the potential to achieve tens of millions of dollars in sales within several years, a phased capitalization approach is generally the best. In other words, raise enough capital to support the business from one stage to the next and earn your way up the ladder. This is reality, and this is what smart money is looking for.
As Mr. Spock of Star Trek would say, it is not logical to assume that your business is different until you have earned your way up. Within this framework, we can help you get grounded and establish a realistic plan for achieving your goals.
The realities facing established businesses are different. They have often proven themselves, but may need operating capital, growth capital, debt restructuring, or perhaps an owner exit. Each need presents its own unique opportunities and challenges.
In many cases, profitable revenue growth is the best option. However, if this were easy to achieve, wouldn’t you have already done it? Lack of growth capital is often given as the reason why established companies plateau. It takes money to make money, as the saying goes.
The reality is, you probably have many capitalization alternatives available that you have not had time to discover, figure out, or pursue. We can help you resolve these challenges.
So Much Information, So Little Time
Regardless of whether your business is a startup or an established company, we can help you make sense of all the data, strategies, and opportunities, and chart an appropriate course of action based on your unique needs and situation. We can do it faster, better, and ultimately at a lower cost than if you do it alone.
We look forward to demonstrating the reality of this proposition to you.