A founder can close the first ten deals through people they know, use that revenue to hire a bigger team and then find out that the team has no reliable way to close the next ten. By then, the company has a bigger payroll and has spent months on features the first customers asked for, with little evidence that enough other buyers will pay for the same product.
After the first wave of growth, a company has to decide again who it builds for. The first deals show what a few customers will pay for. Before I commit another year of product work or approve a larger team, the company needs to know how many other buyers have the same problem and what it will cost to reach and serve them.
The Customers Behind the Revenue
At Bitmedia, we had half as many active customers in 2025 as we did in 2022, with total revenue down 30% and revenue per active customer up 40%. In a separate analysis of advertisers who joined in 2024 and 2025, we found that the 15% who set up a way to track conversions accounted for 44% of that group’s revenue and were twice as likely to remain active after six months.
The first comparison describes the business as a whole. The second identifies a group of advertisers whose use of the product merits a closer look. Before we put more money into that part of the business, we need to understand what those advertisers value and how many other companies would pay for the same features. The size of that market and the cost to reach it will determine how much we can afford to invest.
The Cost of a Larger Business
A small team might buy project management software for one launch, while an agency may use it every time it takes on a client. A software company that wants to sell to more agencies may need separate workspaces, a way for clients to see their own projects and staff who can help each agency move its work over. If enough agencies need the same setup, the company can use what it built for the first one to serve the next ten. If each agency needs its own version, the company has to account for that work in the price and in the size of the team.
A large account may offer to pay for a feature we could build this quarter, and I can lose that deal while I check whether other customers need it. The company will have to maintain the feature after the first invoice, and once a few contracts account for most of the new revenue, those customers can have a lot of influence over what the team builds next. For me, the decision is how much of the product budget those accounts justify and what that leaves for the rest of the market.
In the agency example, the sales team can find a few prospects like the agencies that already renew, offer them the current product and see where they get stuck on a real client project. If several are ready to buy and run into the same problem when they invite a client, the team has a reason to work on client access. If every prospect needs a different change, there’s a question about whether one product can serve the group.
After more than 15 years in business, the question I ask before I invest my own money in another founder’s company is where its next customers will come from and what it will cost to win them. A company can have enough demand to keep ten salespeople busy and only enough cash to pay three until the new accounts bring in revenue. If it takes a year to earn back the cost of each sale, the company has to cover salaries and support throughout that period. The time it takes for the cash to come back sets a limit on how fast the business can afford to grow.
What the Next Budget Should Pay For
A profitable company can base next year’s budget on the customers it already knows how to serve. Any extra money for expansion needs its own case. A limited budget gives the team time to find more buyers for the product it has today and see whether those customers pay enough over time to cover the cost of sales and support. Those results tell us how much more we can commit and when the company can afford it.
If the next opportunity requires a different product and a different sales team, that’s a separate investment. Profit from the current business can give the new one time to prove itself and cover its costs for a long time before the new market pays for them. I decide upfront how much of that profit to commit and what results would justify another round of investment.
A profitable business gives me a choice about what to do with the money it earns. If the same product can serve a much larger group at a cost the company can afford, there’s a case for a larger budget. If the market supports the business at its current size, the company can keep serving those customers and put its profit to work elsewhere.
