How Will Your Startup Scale? The Revenue Star Approach

A critical “dot” in a startup’s life cycle is proving that your sales can scale. Whether you’re proving it to your investors, employees, co-founders, or just yourself, reaching this point is when you begin to see the light and sleep well at night.

In this article, I’m focusing on scaling sales. Your architecture, supply chain, customer service, and other metrics that affect margins are a different discussion. Why the focus on sales? Simply put – more revenue solves all problems. Issues around margins can often be addressed more easily than issues with revenue.

Another assumption here is that you’re shipping some sort of product. It might be a v1, minimal viable product, or beta, but you have people using your product or service, and at least some form of initial revenue.

What does “proving” your sales can scale even mean?

1. Someone other than just the founder / co-founders can generate revenue. Ironically, in the best businesses, founders work hard to work themselves out of a job. If your business scales without you needing to be there, you’re sitting on a goldmine.
2. You know where your revenue comes from.
3. You can predict with a measured degree of confidence how much revenue you’ll make in the near future.

To achieve this goal, we developed a “Revenue Star” to capture and organize the necessary data. Below I’ve outlined our process on the hopes that you can create a similar Revenue Star for your own business.

As a B2B business, we first identified the five primary ways that revenue comes in our front doors.

1. Inbound
2. Outbound
3. Customers
4. Channel
5. Influencers

Then for each point of the star, we defined associated roles and key performance indicators (KPIs). For example, the Inbound point requires a marketing role who is measured by quantity of content (e.g. blog articles and guides) and traffic / downloads. Once a lead came in from the Inbound door a response rep would be responsible for qualifying the leads.

With each point of our star now well-defined, we next created six charts. Each of the five points was given their own chart. Each column in the chart was a KPI and each row was a month. The sixth chart was an overview chart that summarized what we believed were the most important KPIs for each point of our star.

Our goal was to learn over the following quarter which points were most effective, roles most necessary, and KPIs most important. A month to a startup can be a long time, so not surprisingly after one month we started getting ideas about how things would pan out, and after two months we started moving resources toward our most effective points.

It’s now been several months, and we confidently feel we are using our resources in the best way possible. We are also starting to see the light as the metrics are looking like they will not only work, but work at scale. Each month that goes by we continue to learn from the Revenue Star. As new members join our team, new opportunities to re-evaluate our use of resources arise as our bandwidth expands.

If you believe a Revenue Star will prove helpful to you, we’ve gone ahead and created a template you can have for free.