Getting to £1m is straightforward. One offer, one channel, one customer type. Do it consistently and you’ll get there.
Getting past £1m is where most businesses stall. I’ve broken through this barrier three times. Every time, it came down to the same thing. The maths stopped working.
The decisions you made early on, pricing, payment terms, margins, worked well enough to get you here. But as the business grows, those decisions compound. A 5% margin problem at £200k is annoying. At £1m it’s existential.
Every business I’ve worked with that’s stuck between £1m and £3m has one of three problems. Sometimes all three.
1. Your gross profit doesn’t add up
If you’re using paid advertising, your gross profit needs to support it. That sounds obvious. But most businesses at this stage have never properly calculated it.
They know their revenue. They know roughly what they spend on stock or delivery. But the real number, after returns, after packaging, after payment processing fees, after the hundred small costs that don’t show up on a neat spreadsheet, is almost always worse than they think.
My candle business is a good example. One product, one scent, all that changes is the label. We scaled past £2m in three years matching gift keyword searches on Amazon and our own site.
But the pricing was too low for too long. Outside of Q4, we were going deep into the red. Every other quarter was losing money to fund Christmas.
I knew it was a problem. I was too busy to fix it. That’s the trap.
When I finally sat down with the numbers and split tested some price increases, we moved to £16.99 and the business became healthy. Same product. Same customers. Better margin.
If your gross profit can’t support your growth, you don’t have a scaling problem. You have a pricing problem.
2. Your cash doesn’t come back fast enough
This kills more growing businesses than anything else. You spend money to acquire a customer today, but the revenue doesn’t arrive for 30, 60, or 90 days.
Meanwhile you need to keep spending to keep growing. The gap between cash out and cash in gets wider every month. You’re profitable on paper and broke in practice.
If you’re running paid ads, you need to replenish the money in the bank fast enough to offset the ad spend. That means your cash conversion cycle matters more than your revenue.
A business doing £1m with 14-day payment terms is in a fundamentally stronger position than one doing £2m with 90-day terms. The second one looks bigger but is far more fragile.
3. You’re not tracking the right numbers
You can’t fix what you can’t see. Most businesses at £1m are still making decisions on gut feel.
They don’t know their real customer acquisition cost. They don’t know which channel is profitable and which is burning money. They don’t know their gross margin after all the hidden costs are factored in.
When you can predict how many inputs it takes to get an output, the business changes. You know exactly how many leads turn into calls, how many calls turn into sales, and what each one costs you. That’s when you stop guessing and start scaling.
Without that, you’re driving blind. You might be spending £5,000 a month on a channel that loses money on every customer. You’d never know.
The forecasting trap
Every business plan I’ve ever seen is optimistic. Founders can’t help it. The spreadsheet looks beautiful. Revenue curves up. Costs stay flat. Profit appears on schedule.
It never works like that.
Nobody budgets for the returns. The extra packing materials. The unexpected bill from a supplier. The refund you had to issue to keep a key customer happy. The software subscription you forgot to cancel six months ago.
Factor in 20% on top of your projected overheads. Not because you’re bad at forecasting. Because every business in history has underestimated its true costs. Give yourself breathing room before you need it.
How to fix it
The fix starts with the numbers. Not a new marketing campaign. Not a rebrand. The maths.
Run your real gross margin. Not the one on your spreadsheet. The one after every cost is accounted for. Returns, packaging, processing, shipping, the lot. If the number surprises you, that’s your starting point.
Check your cash conversion. How quickly does money come back after you spend it? If it takes more than 30 days to recover your acquisition cost plus delivery cost, you need to restructure your offer to get more cash up front.
Track your inputs and outputs. How many leads become customers? What does each one cost? Which channels are profitable and which aren’t? If you can’t answer these with a specific number, you’re guessing.
Add 20% to your overhead forecast. Then build your growth plan from that honest number, not the optimistic one.
Once the maths works, growth becomes a decision rather than a struggle. You know exactly what it costs to acquire a customer, how quickly the cash comes back, and whether the business can sustain it.
That’s when you can confidently pour fuel on the fire. Before that, you’re just burning money faster.
If you’re stuck and want someone to look at the numbers with you, get in touch.
FAQ
Why do businesses plateau at £1m?
Usually because the business model that got them there can’t support the next level. Pricing, margins, cash flow, or customer acquisition costs stop working at scale. The founder is often too busy running the business to step back and diagnose the real problem.
How do I know if my business model is the problem?
Calculate your true gross margin after all costs. If your gross profit can’t cover both your cost of goods and your customer acquisition cost within 30 days, the model needs fixing before you try to grow.
What percentage of UK businesses reach £1m turnover?
Around 4% of UK businesses ever reach £1m in annual revenue. Of those, a significant number plateau because they haven’t built the financial foundations to scale further.
Should I hire more people to break past £1m?
Not necessarily. With AI and automation, many businesses can reach £3m without a big team. The constraint is usually the business model and the numbers, not headcount. Fix the maths before you add payroll.
