Is it common for early-stage SaaS startup revenue to plateau around $2-3M ARR? Any milestones or stages that may contribute to this?
It shouldn’t be, and yet, you see it fairly often.
There’s generally one root cause: you don’t get better at sales & marketing.
Often what I see by the time you get to about $1.5m-$2m is a consistent but not really growing anymore stream of in-bound leads. I.e., the lead stream flattens out. It’s been, e.g., 20 organic in-bound leads a month (or 30 or 100 or 10 or whatever) for the past 3-4 months.
You’ll get past it. But …
If you don’t get better at sales by phase, if you don’t drive up revenue per lead, if you don’t get an outbound engine going, if you don’t crank up demand gen by then … then all things being equal, growth will slow down because lead flow stays constant.
Eventually, if you stick at it, your “mini-brand” grows and if customers are happy, the referral engine kicks in, and in 6 or 9 or 12 months the organic leads start to grow.
But the best SaaS companies bridge the gap with basic techniques: bringing on demand gen, starting outbound sales (if they haven’t yet), and closing better.