One of the initial signs of traction for a new company is paying customers. For most entrepreneurs, reaching the first million dollars in revenue is one of the hardest milestones (if they get that far). The first million means that the company, despite being a new player, has been able to persuade buyers of its value.
We recently connected with Ben Baldwin, Founder of ClearFit, a hiring platform designed to help small and medium-sized businesses quickly and easily find applicants and make better hiring decisions. “The greatest challenge in reaching our first $1M in revenue was picking who we wanted that revenue from (target customers, versus simply being opportunistic) and when we receive it (cash flow),” Ben said.
ClearFit, like many other companies, wants to be strategic and balance building a lasting customer base with collecting revenue to support operations. It is tempting to work with any customer that comes along. Learning when to say no to a prospect is important.
Ben notes “It’s hard to get both right…sometimes a business’ first revenue comes from customers that may not be great long-term customers — it’s hard not to fall for revenue growth from the wrong customers.”
At the end of the day, all businesses need to collect money from customers and it is important to make sure that payment terms are fair. According to Ben, “…it’s still important to consider when you are actually getting the money in your bank — cash is king.”
How would you get the first million?