Ramen profitability is a witty term that describes the point at which a startup makes just enough to cover the founder’s living expenses.
How does a startup get ramen profitable?
- The most important things you can do help your company reach ramen profitability quickly are having a sustainable business model and keeping your overhead low.
- First, having a sustainable business model is critical for any company, but it's especially so for early-stage startups who are still trying to figure out their place in the market. Then, having low overhead is another core piece of the ramen profitability puzzle.
- Then, having low overhead is another core piece of the ramen profitability puzzle. And being in the SaaS space sets you up well for that.
- After all, a micro-SaaS product built out of the founder's parent's living room with nothing more than a laptop has an overhead of next to nothing. Contrast that with the overhead required to get a computer hardware start-up off the ground. Equipment, warehousing, manufacturing, R&D — it's much harder to reach ramen profitability with enormous overhead obligations.
Boostrapping vs ramen profitable
- It’s easy to conflate these terms, but they’re not necessarily the same.
- Remember, bootstrapping is when an entrepreneur attempts to build a company using their own money and the operating revenue of the business while not seeking out external investments.
- Just because you’re ramen profitable doesn’t mean you haven’t accepted external investments.
Is ramen profitable a good goal?
Ramen profitability is a good goal, but it’s not the end goal. It’s important to keep that perspective. Celebrate when your startup reaches that milestone, but remember that ramen profitability is about your business surviving, not thriving.
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