5 Ways to Build a $100 Million Dollar Business

5 Ways to Build a $100 Million Dollar Business

Many people dream of earning a million dollars, let alone creating and building a business that generates a hundred million dollars every year. Thousands of new companies are launched every year, and scale and independence are increasingly crucial for companies.

That doesn't mean building a hundred-million-dollar business isn't possible.

Many 10,000 medium-sized companies paying companies like Snapchat, WhatsApp, Yelp, Workday, Salesforce.com, Evernote, Shopify, MailChimp, and more generate more than $100 million in revenue each year.

If you want to build a business that generates $100 million each year, you need to follow a set of proven strategies.

Following a proven set of strategies makes the opportunity to build and grow a $100 million dollar company possible. Zappos.com started out selling shoes online, and no one knew the company could grow and was eventually acquired by Amazon for $1.2 billion in 2009.

Vishen is the founder of Mindvalley. In 2013, the company generated revenue of $40 million and is currently on track to hit the $100 million mark. Additionally, Vishen's goal is to list Mindvalley in an initial public offering (IPO) and become the IPO of the largest technology company in Malaysia.

Therefore, starting a business and growing it to the hundred million dollar mark is possible. And speaking, there are five ways to build a $100 million business.

If you want to build a company with $100 million in annual revenue, for example, you can:

1. Attract 1,000 business clients who pay you at least $100,000 per year each, or

2. Attract 10,000 midsize businesses that pay you at least $10,000 a year each, or

3. Attract 100,000 small businesses that pay you at least $1k per year each, or

4. Attract 1 million active consumers who pay you at least $100 per year each, or

5. Attract 10 million active consumers that you can monetize with a minimum of $10 per year each.

1. Catch flies

In this business strategy, for your business to earn $100 million a year, you need to have 10 million active users or 1,000 enterprise customers paying you at least $10 per year each. In the online business world, you must build an app or attract 10 million visitors a year to visit and use your website.

Of course, this is just a rough estimate. The exact number depends on many other factors, such as your conversion rate, website engagement, the number of returning visitors, etc. 

However, the fact remains the same. If you're trying to earn $10 from each customer, you'll need a large customer base and millions of visitors to your website each year.

This is not to say that reaching the $100 million mark is impossible. In fact, quite a few companies have grown at a breakneck pace and hit the mark. Companies like Snapchat, Whatsapp, Instagram, YouTube, Google, and Facebook started this way.

And all of these companies have one thing in common, and that is that they have a powerful viral coefficient effect. Companies like Whatsapp, Instagram, and Snapchat are growing at a dizzying pace due to their viral capacity. 

Millions of people use them, and even if they only make just $10 from each paying customer a year, they can make over a hundred million dollars yearly.

Another great example is Wikipedia. It is an information website that relies heavily on user-generated content for its growth. Today, Wikipedia is a multi-billion dollar business.

2. Hunting Mice

In this "mouse hunting" strategy, you must acquire at least one million customers who pay a minimum of $100 annually. Again, this number is a considerable simplification. If two people visit your website and one buys from you, you need to have two million visitors to your website because your conversion rate is 50%.

Some good examples of companies are Evernote and MailChimp. And suppose you're building an eCommerce business. In that case, your business can and has the potential to reach a million customers, but that will require a lot of funding, as you'll need to spend a relatively large amount on paid marketing.

CNBC once covered an article about a 33-year-old man who made a million dollars in just 92 days selling Kevlar pants online from an e-commerce website he created.

This true life story has shown that building a hundred-million-dollar business is possible when you tap on the right platform and follow a proven plan.

3. Hunt rabbits

Next comes the rabbit hunting method. Most software as a service (SaaS) companies that target small businesses charge around $100 per month, which means your average revenue per account (ARPA) per year will be around $1,000.

In the rabbit hunting business, you only need 100,000 paying customers, each paying you a thousand a year, and you'll have a hundred-million-dollar business.

A very successful company that sells software is Adobe. Adobe is a multi-billion dollar business, charging customers for everything from Photoshop to Flash.

Even Microsoft is a software company that uses the Original Equipment Manufacturer (OEM) strategy. Microsoft creates the software and relies on IBM to distribute it to consumers.

4. Deer Hunting

In the deer hunting business, you want to acquire 10,000 customers who pay you at least $10,000 annually. The technique mentioned in rabbit hunting will also work for deer hunting. Traditional business sales work is insufficient to generate $100 million in revenue for $10k per account ARPA per year.

You'll still need to generate 10k+ leads to become paying customers. Your goal is to have each client pay you $10k per year. Therefore you can use an inside sales force to close the leads. Not to mention, you can also use a similar sales force to generate leads.

One potential method of driving sales to the $100 million mark is through channel partners and value-added resellers (VARs), whereby your business pays attractive commissions to these partners.

5. Hunting Elephants

Finally, you can grow your business to hunt elephants and sell expensive and expensive products. In this business strategy, you will need to acquire only 1,000 customers per year, and each customer will pay you $100k per account ARPA per year to reach the hundred million dollar revenue.

Companies implementing this strategy include SuccessFactors, Salesforce.com, Veera, and Workday. Companies that follow this path have a more direct approach.

After all, you only need 1,000 customers. This happens when you have an excellent solution to a serious and significant problem that large companies experience.

The five business strategies mentioned above, regardless of whether you are hunting flies, rabbits, or elephants, as long as you follow the proven path and understand your business and your customers, you can make it a hundred-million-dollar business.

The truth is, it may be years before you can build a $100 million business. On top of that, it will require a lot of capital, problem-solving skills, and hard work to get things going.

Each business strategy requires different skills, whether you're selling physical products through e-commerce or selling software subscriptions.

Scaling your business: two factors

There are many ways to build a $100 million business. However, two factors stand out the most when scaling your business to reach that goal.

The first factor is the lifetime value (LTV) of your customer. When you have a high LTV per customer, you can spend more on customer acquisition because your customers tend to pay more than average.

The second factor is the viral quotient effect which allows your business to grow exponentially without worrying about monetization or spending too much on customer acquisition.

Factor #1: High Lifetime Value Per User

Customer lifetime value is the total of all financial gains a customer generates for the business. Many business owners consider LTV hand-in-hand with the Customer Acquisition Cost (CAC) ratio. 

For example, suppose a business has an LTV that is four or five times the cost of acquiring a customer. In that case, the business will be beautiful and have more significant potential for venture capital investment.

The biggest driver of a high LTV is repeating purchase behavior. Companies that meet everyday needs and offer a unique experience tend to have a higher LTV. For example, an eCommerce company that sells supplements may have a higher LTV because their customers will return to them and buy more after they finish consuming the supplement.

Factor #2 – The Viral Effect

Another crucial factor that the entrepreneur must consider is the viral effect of his business. Viral capability or network effect can be a powerful way to scale and enable businesses to grow to tens or even hundreds of millions of users. 

Think of Facebook, Instagram, Snapchat, and Whatsapp and how the viral effect led these companies to reach hundreds of millions of users.

Many companies created in the early days of the Facebook platform, such as Zynga, benefited from a significant viral coefficient and scaled very quickly.

The Problem Facing Most Companies Today

The problem with startups today is that most businesses must catch up on these two factors. They have low monetization per user and also minimal viral effects of taking advantage. This combination, unfortunately, makes it difficult to hit the $100 million mark.

Take blogs, for example. Today, there are hundreds of millions of blogs in cyberspace. According to WordPress, more than 1.97 million blogs are created every day. And this figure only refers to WordPress alone.

MarketingProfs reported that more than 2 million blog posts are published daily. So, consider these numbers and how you can rise above the crowd and stand out from the noise.

If you're serious about starting an independent business and capturing the attention of investors, you'll need a solid plan to scale your business. The sooner you find this out, the better. You need to know and learn how to scale before starting a business.

Thomas John Watson, the CEO who led IBM to stellar success, once said:

The First Reason is that, from the beginning, he had a clear image of what the company would look like when it was finally ready. I had a model in my mind of what it would look like when the dream, my vision, was in place.

The Second Reason was that once I had that image, I wondered how a company that looked like that should act.

The third reason IBM has been so successful was that once I had a picture of what IBM would look like when the dream was in place and how that company would have to act, I realized that unless we started to act that way from the start. Very early on, we would never get there.