From $40 to $1.5 million: Eight entrepreneurs open up about the first time their companies made revenue
Thursday, February 8, 2018/
Every million-dollar business starts with one deal, but in the rush to grow, it can be easy to take that first paying customer for granted.
But no matter what business you’re in — whether you’ve signed your first massive contract or sold a box of cereal — entrepreneurs tell SmartCompany that from the very first moment you get money in the door, you must be ready to step up your responsibilities to build on that initial momentum.
We asked eight Aussie company founders how much their first revenue pay cheque was worth — and what they learned next about growing from hundreds to millions in sales.
Ride the emotions of that first win
No matter how small your first sale is, chances are you’ll be hit with the rush that comes with finding a first customer.
“The first amount I ever made was from Mirvac, for around $8000,” explains founder of 3D design business Diva Works, Fiona Jefferies.
“At the time, I just thought it was soooo much money,” she reflects.
Other entrepreneurs also remember the exact dollar value of their first sale, and the emotional wave that came with it, in exact detail.
Vera Yan, co-founder of Nimble Activewear, says the first ever online order the company received, for $158, was stunning because it came from a member of the general public who was interested in the business.
“It was for two pairs of tights. Katia [Santilli] and I had assumed that all of our initial orders would be from family and friends so when we didn’t recognise the name on our very first order we immediately got onto the phone with each other in excitement!” she tells SmartCompany.
Even when the dollar value of the deal is bigger, the emotional weight attached to that first deal is significant, says Michael Lambert, the founder of media buying agency Media33, a previous Smart50 finalist.
“My first ever revenue deal will always be an extremely memorable and appreciated deal,” he says.
“The deal was worth approximately $250,000 and our awesome client, who was aware of our new setup, made an upfront percentage payment to help us out. It was an amazing gesture, something I will be forever grateful for.”
However, founders say that success is intrinsically tied to what you do after than initial rush of success. For Lambert, that first win was so exciting because it validated what was to come.
“It gave me further confidence in my ability that I could do this myself without the ‘cover and security’ of big business behind me,” he says.
For Jefferies, the excitement of striking out successfully on her own was one thing, but she says it was important to immediately look beyond that first revenue deal, towards her broader goals.
“When I left paid employment in 2002, I was earning $38,000. I thought, as long as I replace that, it’ll be fine,” she says.
While chasing her first revenue-generating deals, Jefferies was also working at the bookstore Borders to ensure the bills were paid. She worked at Borders for nine months before enough revenue was coming through Diva Works to have that as a sole source of income.
Now her business is on track to book $3.5 million in annual revenue, however, Jefferies says there’s always another challenge ahead, whether you’re chasing your first pay cheque or next million.
“Getting to your first million isn’t so hard; what is hard is making it get from $1 million to $5 million,” she says.
Building on small successes and big pitches
For other founders, the path to their first ever revenue was slower going.
Naomi Simson-founded RedBalloon may turn over around $60 million today, but after using $25,000 in family savings to launch the business in 2001, Simson says she waited two months and four days to bag her first customer.
“When I finally got my first customer, he purchased a $99 stress buster massage and I made a grand total of $9 commission from the sale,” she explains.
Over the following months, the business built slowly, with Fuji Xerox getting in touch six months later wanting to use the service.
When reflecting on the slow build of revenue within the business, Simson says she kept focused on the small successes she had achieved.
“In many ways that period of my life is now a blur. Not because it was painful, but because the excitement of a few small wins would keep me enthralled. It kept my dream alive,” she says.
Small wins have also been important to Narelle Plapp, founder of Food For Health and Grain and Bake, who remembers her very first business sale was for one box of muesli.
“My very first revenue generated was direct to customer, a health food store — I think roughly $40,” she says.
It may have been a small first step, but it led to a $110.63 sale of her products through Woolworths. The supermarket giant is now a “multi-million” dollar customer of Food for Health.
“I was doing a direct-to-store trial send via Australia Post [for that sale]. With the success of the trial I gained national distribution and incremental ranging over time,” Plapp says.
Other founders say their first revenue was generated from one bigger promise, with Freelancer chief executive Matt Barrie recalling making an ambitious pitch.
In his previous business, Sensory Networks, Barrie’s team had developed a technology that they believed could be applied to complex antivirus systems, but they hadn’t yet worked with a client to realise this.
He pitched the tech to the vice-president of antivirus business McAfee, asking what the company’s targets would be for performance and then promising to beat them.
Barrie says he promised to integrate his product to a certain level for free, but told McAfee: “If we hit the target, you’ll sign a term sheet now committing to putting it in these models, at these volume and price points. Plus you’ll reimburse us for the engineering time. That’s win-win.”
The business agreed, but that initial big pitch required no shortage of hard work to actually deliver, Barrie says.
“We had absolutely no clue how to do this, but I sent my two smartest engineers to their offices in Aylesbury, UK, and said: ‘you two are not coming home until you figure this out’.”
The big promise paid off thanks to the team’s hard work.
“We won a contract that I think was about $US1.5 million to start. Our first revenue,” he says.
Pricing, emails, customer service: It all begins
If you’re looking to grow a business, you’ll no doubt already be expecting hard work. But entrepreneurs also say it was once they’d booked revenue for the first time, that they started to better understand how distributors, customers and clients interacted with their products.
When Anna Ross, founder of nail polish brand Kester Black, sold her first ever product, it started an email rush.
She’d made $270 selling a jewellery collection to a Melbourne store back when the business focused on jewellery, and began to learn how retail businesses operate.
“I learnt that store owners ALWAYS answered their emails on Sunday afternoon (when I was usually emailing my lookbook to them) and that people weren’t afraid to correct my spelling,” she says.
“Back in those days, every email was exciting! If only that were still the case.”
For other entrepreneurs, their first ever contract deals were an immediate indicator of how much they should be charging for services.
“Our first deal was $25,000 in week one of the business, it was our first client,” says Ben Handler, co-founder of property buyers’ agent Cohen Handler.
“I learned that we had a viable business model and validation for our service, [and] we learned that we could increase our fee for service as our value exceeded the fee we first charged.”
The other key element of business that becomes a reality once you bank that first lot of revenue is the customer and their expectations, says Nimble’s Vera Yan.
When launching Nimble Activewear, she and co-founder Katia Santilli were still working full-time, growing revenue by one individually-packed parcel at a time.
Those early days, where the pair would have to manually attach every swing tag to products before they were sent out, showed up the importance of each individual interaction with a customer, Yan says.
“We would often recognise the name(s) of repeat customers in those early days and even today, repeat customers make up a large proportion of our business,” she says.