How Many Businesses Reach $1 Million Revenue? The Truth Might Shock You
I was surprised by the number of businesses that achieve this milestone
How many businesses reach $1,000,000 in revenue? The first time I heard the number I thought it was a mistake. It seemed shockingly low but I didn’t have anything to base it on. Then this graph appeared on the screen for our Scaling Up group to see. Since then, I can’t unsee it.
At the time this was published, there were 32 million businesses (firms) in the US. Approximately 30,700,000 never achieve $1,000,000 in revenue. That means only 4%, or 1,200,000 businesses will achieve this threshold.
Why was I so surprised? We see so many successful entrepreneurs and business owners on social media, surely they all achieve $1,000,000 in revenue. What about the businesses we see in our community. They must all break $1,000,000. Right? The business I lead and most of our customers, they all break this barrier. So why do so many come up short?
Why Businesses Don’t Achieve $1 Million Revenue
As I dug a little deeper and continued on our journey, I started learn more and find out why the numbers are what they are. Here are some of things I discovered:
It’s Harder Than You Think
A million dollars is a lot of money. To achieve this you would need to average $83,333.33 per month. Many businesses are sole proprietors or partnerships with two people. As the business increases revenue, there is more work to be done which takes away from selling and customer service. That is, unless you add people… which you’ll read more about below. Scaling is hard, no matter how easy some people make it look.
Not Everyone Business Owner Cares About This Number
Before I became CEO, I asked the founder/owner of our company if his goal was to grow or was he comfortable with where his business was. He said growth and we started working towards it. Many business owners are ok with making a living and don’t need to reach $1,000,000 to earn the living they want. It’s a big reason 96% of the businesses never get here, they were not started to achieve it and even if they do have the vision at first, see #1.
It Comes Down to People
If the goal is $1,000,000 revenue, they realize it can’t be done alone and their success is in the hands of other people. As a small business, you’ll need to recruit talented people that can help you achieve this. Those same people will have opportunities with bigger companies that pay more, offer vacation time, health insurance, 401k, and the list of perks goes on. Once you hire this person, at some point, they look for growth (often monetary) and you may not be able to provide what they need. So the person, or people, you relied on go and you start over.
After my deeper dive, the number became less shocking. Most people don’t want, or know how, to manage people so it makes sense to achieve what you can on your own. But then, don’t you just have a job you can’t leave?
What do you think?