Strategy Meets Finance Why Businesses Stall Between $1M–$3M and How to Scale Past It | Ep 184
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Sep 3, 2025 Businesses often hit a wall in the $1M to $3M revenue range, known as the 'death zone.' Owners face cash flow issues and struggle with scaling, often relying on solopreneur strategies that fail post-inflection. Hiring experienced professionals can risk profits, while using fractional experts provides necessary skills without the burden of full-time employment. The conversation also emphasizes the importance of financial metrics, cash-positive unit economics, and the need for a solid growth plan to escape this challenging stage.
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The $1M–$3M Death Zone
- Many businesses hit a "death zone" between $1M–$3M in revenue where cash and profit tighten and owners get stuck.
- Steve Coughran says this happens because a solo-run model breaks as scale requires specialized hires and systems.
Wearing Every Hat Until Burnout
- Steve recounts running his first company alone wearing many hats and burning out after hitting ~$1M in revenue.
- He realized the solo approach was unsustainable and needed new hires and systems to grow further.
Hiring Risk Keeps Firms Small
- Owners hesitate to hire because doing so reduces short-term take-home pay and risks personal financial pain if hires fail.
- This risk-aversion keeps many firms stuck under the death zone threshold.