My colleague and serial entrepreneur, Scot Wingo, recently posted on LinkedIn about how hard it was to scale a business. He referenced data from a book by Verne Harnish. The core of the story was this chart:
- There are 28,000,000 businesses in the U.S.
- 96% of them are under $1MM in revenue (first “valley of death,” getting to first $1MM)
- 4% are $1MM-$10MM in revenue (second “valley of death,” breaking through $10MM)
- 0.4% are $10MM-$50MM in revenue (third “valley of death,” breaking through $50MM)
- Only 0.061% are over $50MM in revenue
I was so taken aback by the data here that I thought it was worthy of a deeper discussion. So, why is it so hard to scale?
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