Months to Revenue
On Average You Are 18-24 Months from Revenue
- 18-24 months to revenue: In our experience, new federal entrepreneur take ~18-24 months before the start generating revenue
- When the clock starts: Starting a business does not mean quitting your job so you can start that 18-24 month clock while you are working for someone else. The biggest part of that 18-24 months is building relationships with partners and customers and you can do that while you are in uniform, working for civilian government, or working for another government contractor.
- Quit on Friday start your first contract on Monday: MANY entrepreneurs have:
- Started their businesses and built strong relationship and corporate infrastructure while working for someone else
- Won a contract while they were full time employed elsewhere
- Given notice two weeks before the contract started
- Started working the contract they won days after quitting
- Double dipping: Just because your company wins a contract doesn’t mean you have to staff yourself on that contract, or quit your job. This is highly situational, but many people have built thriving contracting companies while being full-time employed elsewhere
Typical first revenue and time to achieving revenue
- SAP contracts: The government can buy smaller products and services through “Simplified Acquisitions Processes” (SAP) contracts which are “new vendor” friendly, but SAP contracts often aren’t published, so the government customer has to know and trust you, before they will alert you to the opportunity, and these relationships take time.
- Subbing: Another common first revenue source are subcontracts to other small businesses. But as with SAP contracts subbing requires strong, trust based relationships with the prime.
How long for you:
- Open your workbook to the Time to Revenue page
- Select the options that best describe where you are
- Choose the smaller of “your time to SAP” and “time to Sub”
What to do with this information
- Compare the number of months you came up with here to the number of months you have in savings and decide
- How you are going to fill any gaps in your income
- How comfortable you are being this many months from revenue
- Think about whether you can keep your current job while working on your business:
- Is your current job flexible enough that you can taking meetings with potential customers and partners during the day
- Can you go to Happy Hours and other networking events
- Are there any prohibitions on what you can do (some government jobs have rules about how you interact with industry)
Example:
Video Transcript(s):
There are two ways to think about time to revenue.
IF you run an established business selling to commercial customers and you’re thinking about expanding into federal, you probably care about the time between starting to invest in federal sales and your first federal revenue, and in our experience, if you’re new to the federal market… so you don’t have a lot of partner and customer relationships, then you’re 18-24 months away from your first win.
But if you’re employed and want to start your first business then you probably care more about the time between leaving your current job and your first win… which, is totally up to you. Because starting a business doesn’t mean quitting your job and we’ve seen lots of people build government contracting companies on nights and weekends and win multiple contracts before quitting, so for these people there are zero days between leaving their jobs and revenue. But of course, when you quit is up to you.
And two quick asides. First, if you’ve already quit your job or are retiring from the military in a couple months, and you don’t have a lot of business relationships, then you too are a year and a half to two years away from revenue, so if you fall into this category please think about working for an established company for a couple of years while you lay the foundation for your own business.
Second aside, the time estimates below are for small businesses, so businesses where a $500,000 contract’s a big deal, if you’re a big business and are only interested in multi million dollar contracts then the timelines are going to be longer.
So with that out of the way in this exercise we’re going to help you assess your relationships to get a little clearer sense for how long things might take for you, so review the questions below, get an idea about how long things might take, and do a quick sanity check about your timeline, your current employment, and how you are going to provide for you and your family on your way to entrepreneurial success.
And if you want more information on how to balance employment and starting a business see our business model classes below
Next, let's look at what you could sell, and the market for the various options you have.