Here's a cold hard truth. No legitimate startup ever goes from a handful of sales to $1,000,000 in revenue overnight.

By the time you and I read about a startup's overnight success, they've likely already sunk a lot of time and money into a slow and steady climb that eventually broke their way. And at some point, maybe at several points along the way, their startup hit a revenue ceiling. Everything they were doing on the sales side suddenly stopped working and wouldn't restart.

I've seen this happen up-close-and-personal with dozens of startups, across all types and in all industries. I've had it happen to me more times than I can count.

Here are all the reasons why I've seen a startup's sales slow and stop, and what to do when it happens.

The Startup Maxes Out Their Personal Reach

What Happens: Customer acquisition cost (CAC) goes through the roof, because the startup has reached the end of its list of personal or professional contacts. It's much harder to sell to someone who doesn't know you.

Why It Happens: Most startups, especially those founded by first-time founders, will lean on their own networks to answer these first few critical questions:

  • Does this idea have legs and is the product any good?
  • How much is the product worth?
  • How should I market and sell it?
  • Will customers adopt and use it?

A founder's own network is easy to reach, likely to take the sales call, and maybe even empathetic enough to buy.

It's not a terrible strategy. In the short term, it can be a windfall, just enough of a boost to get out of the gate, learn a few things, and generate some momentum. But in the long term, it's almost always a stream of false positives.

What I Would Do: Flag those personal network customers, either from the beginning or when you hit the wall. Completely remove their data from your analysis, and figure out why complete strangers are buying from you.

Or Better Yet: Do what I've done for my last few startups. Don't even bother with personal networks or local sales efforts. You can always reach out to your contacts to help you get the word out, but make it clear that they should not become a customer.

If they really, truly believe in what your startup is doing, you can find some way to get them involved, either as a "VIP" customer or a "friend of the company."

The Startup Exhausts Their Early Adopters

What Happens: For every new product that goes to market, no matter how niche or how crazy the product might be, there will be a certain subset of the market that wants to try it because it's new. This can be a small group or a large group, and their engagement can be a short cycle or a long cycle.

But the cycle always ends.

Why It Happens: Every product starts life as a "cool new toy." Successful companies engineer a shift in the view of a product from "nice-to-have" to "must-have." If you can get good at predicting when you'll run out of early adopters, and I suggest watching for a dip in Net Promoter Score (NPS), then you can remedy the problem before it happens.

What I Would Do: Strip down the messaging. Talk to your early adopters to get a sense of what it is about your product's value proposition that triggered their interest. Then create derivatives of your marketing and sales campaigns to focus only on messaging that highlights those benefits.

Or Better Yet: Overhaul the offering. Your product might be trying to be all things to all customers, or it might not provide enough value to any one customer. In most cases, one of these two reasons is the primary culprit when early adopter interest dries up.

Lose features that aren't seeing maximum usage. Build around the features that are primary to the value proposition your early adopters found so compelling.

They Overestimate the Curiosity Factor

What Happens: When lifetime value (LTV) starts to shrink or CAC starts to rise for no good reason, it usually signals the end of the curiosity factor.

This can happen during the early adopter phase, which is a bad sign, as it almost always signals a lack of stickiness due to a low-benefit solution to a low-impact problem. Or it can happen after you've sold beyond the early adopters. In the latter case, it's normal, and it usually signifies a natural degradation in customer engagement over time.

Why It Happens: You've "tipped the friction balance" by making the solution just painful enough that the pain of the problem remains acceptable. It's the classic "to-do list" scenario, and I could write an entire post about that, but in a nutshell: People use to-do lists religiously at first, but there always comes a point at which it's more work to track what you're doing than to actually do what you're supposed to do.

What I Would Do: Accelerate the external engagement cycle. In other words, start sending a bunch of emails, educational reminders of the ideal use cases or quick examples of how to be more successful with the product in less time.

Or Better Yet: Accelerate the internal engagement cycle. Figure out why your customer engagement is dropping off and either remove the friction caused by solving the current problem or start solving a broader problem related to the current problem.

They Lose First Mover Advantage

What Happens: Competitors start coming out of the woodwork, either those who were already in business or those who are springing up around the "hot new opportunity" that your startup is honing in on. They're taking notice, and trying to take market share that's rightfully yours.

Why It Happens: Usually this happens when a startup waits too long to go to market or to increase their market share. But sometimes it happens when the startup doesn't spend any time building a competitive moat — taking proactive steps to protect their value proposition.

What I Would Do: Don't take the bait and get into a price war. Competition is natural and it's usually a sign of a healthy market. Focus on your unique competitive advantages and start emphasizing them in your marketing messaging.

Or Better Yet: Deepen that competitive moat. Maybe your unique competitive advantages aren't strong enough, or maybe your competition is making mistakes you've already made.

One way or the other, taking the time to separate and elevate yourself from the competition isn't going to happen on its own, and isn't going to happen by cutting your prices. It happens by adding more value than your competitor and making that added value clear to the customer.

Take the high road, stay positive, and emphasize your value proposition.

This post originally appeared behind the paywall at Inc. Magazine, where I write a startup advice and culture column. For free access to all my public writing, join my email list at joeprocopio.com.

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