There are five stages of a company growing to $100M.

  1. $0 - 500K
  2. $500k - 2M
  3. $2M - 5M
  4. $5M - 20M
  5. $20M - 100M

At each stage there are things to do and things to avoid.

$0 - 500K

This is where you just sell and test the market to see if what you provide is something that the market needs and people are willing to pay for it.

You do not need to think of building a team or a system. You just do marketing and sell to test the market.

You sell and deliver. Maybe a partner or someone helping fulfillment.

$500K - 2M

This is where you have proved that the market wants what you provide. So what should you do next? You just focus more on marking and sales.

You still do not need to obsess over systems or SOPs.

As you approach $2M, as your main focus is still marketing and sales. You should also improve margin, pay yourself well and also build a cash reserve.

What about hires? At this stage it is time to think of your first major hire. This hire should be for a function you are not good at. For example, you can have a major hire for fulfillment.

One mistake to avoid is to not go for hiring a team of people who you need to assign tasks to. This will shift your focus away from marketing and sales and makes you a full time manager of people who can only do low value tasks.

$2M - 5M

This is where it is okay to slow the growth and start building systems.

It's also time for you to hire for areas you are good at.

$5M - 20M

Now that you have the system, you can start building your leadership team on top of it.

This is where you should have people like head of sales, marketing, fulfillment, engineering, etc.
These are people who are better than you at each of these functions. They have also worked at companies that scaled from $5M to 20M.

Towards end of this stage, it is also okay to think of hiring a head of operations.

This is big mistake I did when I started RealPars. I hired a head of operations two times at the $0 - 500K stage. And no surprised, I failed both times.

And if that was not enough. I also hired a head of sales at the $0 - 500K stage and I failed again.

In my experience, anytime you get excited and you are looking for a shortcut, things will go wrong. That is a way for the universe to remind you that there is no shortcut. You should be patient and put in the work.

$20M - 100M

This is where you have the system and a leadership team in place and it is finally time to scale.

However, it is not that easy. You should upgrade your system to handle scale at this stage.

Also, most of the people in your leadership team who helped you go from $5M to $20M may not be able to get you from $20M to $100M. So your leaders also need to upgrade or if they are not willing to do that they need to be replaced or have someone place above them.

And your role also transform from the best player on the field to the coach on the sidelines.

So these are the five main stages. It is important as an entrepreneur to know where you are from these five stages and how you should play the game.

Until recently I was not aware of these stages so I made some big mistakes. I am writing this as a note to myself so I can refer back to it when I need to.

I also need to add that this works for a bootstrapped business. If you are a VC-backed company, you are playing a different game and what I just discussed does not apply to you. When you raise capital, you try to bypass the cash constraint and pull the future forward. And of course, you pay for that by giving a chunk of your company to the investors and also sharing control.

I learned this from Ryan Deiss on this podcast. They talk about this 5 stages around the middle of the podcast.