Know your customer. Your customer is the person who gives you money in exchange for your product or service. It’s easier than you might think to get confused about this one.
It doesn't take millions of dollars in revenue to have a wildly successful small business. An incremental $250,000 in annual revenue doesn't move the needle in a 50 person shop, much less a public company. But if you're a 2 person shop filling a niche, your year just became awesome.
There are a ton of profitable niches in software that people need filled. Markets that aren't big enough for a huge company to bother with. Markets that are huge opportunities for a few dudes to make something awesome to serve a dedicated base of customers.
For a recurring revenue net of $250k, it's not unreasonable value it at $750k to $1.25 mil depending on how likely you are to keep that cashflow going and how much ongoing investment is needed. (DISCLAIMER: this is napkin math, nothing more.) Although, after tax that doesn't sound like all that much, it is life-changing for most people. If you can for example pay off your mortgage and other debts, your lifestyle changes overnight.
(Apologies for the terrible landing page).
This is equally true. Without sales, there is no money. Without money, no life or growth. Your point about a 2 person shop getting $250k is equally true.
Of course, many startups would take $250k and immediately spend it on becoming a bigger shop.