Case studies on profitable SaaS, software, and digital product companies.
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Story: "What happened to your startup?"
I was talking to a friend who is the founder of a massively popular SaaS. We're talking thousands of users, tons of press coverage, and millions of dollars in sales.
During our conversation he turned to me and said:
"Justin, I had to lay off all my staff."
I was shocked.
"What happened? I thought you had a ton of revenue."
He'd run out of cash. The company had high revenues, but even higher expenses. He wasn't generating profits he could invest back in the business.
He tried to raise another round of capital, but couldn't get investors to bite. So, he had to downsize.
Here's what I learned: revenue is important, but profit is king.
"Companies don't go out of business because they run out of sales. They go out of business because they run out of cash."
- Thanh Pham
For most small businesses, profit is the cash you have leftover in your account at the end of the year. It's the money (after revenue) your business didn't spend.
If you're a founder, I urge you to get profitable
It's surprising how many of us feel like we're doing OK. We say things like:
"The business is doing fine! We're paying our bills."
But the truth is, you're probably operating in survival mode, and you don't even know it. Here are some signs that you're not profitable enough:
- You don't have 3-6 months cash reserves in the bank
- You're not paying yourself a reasonable founder's salary
- Your expenses increase at the same rate as your revenues
- You need to run last-minute sales to cover your bills
- You don't have enough cash to hire or invest in growth
If this describes you, it's time for you to get mega profitable. Sign up to get four free preview lessons and details about early access:
Who's behind this?
I've been the Product Manager at two startups: Mailout.com and most recently at Sprint.ly.
In 2016 (after building up side-project revenue) I switched to building products full-time.
Email me here: firstname.lastname@example.org