I spent 10+ years preparing to launch my first big company opportunity at age twenty-nine. Having already started four different businesses before I finished high school, I had some basic experience and knowledge. I worked as a software engineer in my first full-time job after college. I worked on both mainframes and the first Apple computer (Apple II). I then quickly move up the ranks to Senior Software Engineer, Architect and Vice President of Engineering by year five of my professional career.  That is exceptionally fast because I read every book available, did consulting on the side, worked long hours and had little social life. Not for everyone. 

Read more: How long does it take to prepare to become a founder?

Absolutely. That is called a “niche” and often is the intersection of a vertical market and application/problem. And even smaller is okay and sometimes an advantage in the beginning. Of course, you also need a vision and steps into larger markets. Generally, $1 billion minimum if you seek institutional capital, as they only invest in companies that can reach $100M in sales after 5–6 years.

Even if your price point is $250 that’s a $12.5M market opportunity. Which may be enough to validate your product, tune it, prove your value proposition, price point, marketing, and sales economics to raise funding and go after larger markets.

Read more: Market For An MVP And Market Entry Strategy

I believe a minimum of 25% should be planned for in growth as anything less will likely leave you behind competitors and being a follower, not a leader in the marketplace.  I consider “Scaling” to be growth of 50% or more annually. That is far more difficult and requires a quality management team, strong internal processes (systematization) and likely some capital investment in addition to cash-flow.

If you can reinvest your cash-flow and/or get some low-cost debt, which usually requires at least eighteen months of profitability, you can maintain control and avoid the time and complications of raising outside capital.

Read more: What is a good growth rate to plan for in a small company?

Well, although this is not officially defined by anyone, growth is literally any growth at all. We define scaling as the kind of growth that venture capitalists seek for high returns on their investments, which means fifty-percent compound annual growth rate (CAGR).  Typically, the math of this, which is reaching $100 million in sales in about five years, means a company will need at least 50% annual growth, and maybe 100%.  Here is a table that shows this kind of growth and reveals that massive compounding factor of this kind of growth. And explains why venture capital must seek large opportunities to pay high yields on capital invested, which can only come from strong growth.

Read more: Difference between growth and scaling