When Do Startups Start Making Money?

Grace Holden

Startups: we all love them. But whether we admit it or not, we also like money. Can we do both? Some might say no. Startups can admittedly be fickle ventures; unpredictable, unknowing, all-consuming. But, despite popular opinion, they can also make money. Here’s how and when.

How to make money in startups

Startup founders don’t earn lots of money overnight (despite the viral success stories we all hear about). It’s disappointing, but it doesn’t mean it won’t ever happen. Being a startup founder makes you master the art of patience. Believe it or not, one of the best ways to make money in a startup is not by focusing on profit, but the growth of your company. When a startup does start making a profit, sensible founders will often decide to invest that money back into the company to help it grow (and fingers crossed make more money!). By investing in startup growth, founders also have an exit strategy, enabling them to sell their shares if they decide to eventually sell their business. The short story: Growth ✅ Profit ❌

How long until startups are profitable?

It is unlikely your startup will become profitable before you get investment, whether through venture capital or alternative sources. Investors can take startups to a whole new level, helping them grow and giving advice on marketing and team growth. So, not only do they give you money, but help startups make their own money. That doesn’t mean you should panic if you’re not able to get investment straight away, though. Startups can and do operate without venture capital. They also make money.

A startup will not start making money until they are active in the market. Creating a startup can be a drawn-out process, and it’s highly unlikely (or in other words, slightly impossible) to turn a profit if people can’t use it. However, it’s important not to rush the building process just so you can start making money earlier. Take time to perfect your MVP, polish off your business plan and build your product to be the best it can be before you consider putting it out there!

How much do startups make?

Ah, the question every founder wants to know, but no one can answer. Unfortunately, it’s true no one (not even us) can tell you exactly how much your startup is going to make. (We’d like to say millions, but I’m pretty sure that’s what you’d call a misleading truth). The truth is, not knowing is part of what makes being a startup founder so exciting, just as the potential for unbelievable success makes us strive forward to keep working harder.

I can see that might not be a massively satisfying answer, so here are some numbers. Founders (or CEOs) of startups with less than 25 employees, on average, tend to pay themselves 60k. A pretty good salary. Startup founders with over 100 employees on average make 184k.  Unfortunately, how much your startup might make all depends on two main factors:

●      What stage the startup is at.

●      How much profit the startup is turning.

The simple fact is that a successful startup will make more money than a cruising one. Focusing on profit might seem like a good driving point, but it can cause you to get off the beaten track. Focusing on what you want to achieve, how your startup will grow and realising there is a market out there for your business is what will make you and your startup successful!