As any entrepreneur knows, rapid growth doesn’t come without diligent budgeting and a well-thought-out plan. Your business goals must be tangible, measurable, achievable, and relevant to be successful. But how do you make sure your budgeting process is sound? The answer lies in the Business Growth Formula – a simple equation that helps you identify exactly how much revenue growth you need to reach your goals.
How the Business Growth Formula Works
With this formula, you can easily calculate the number of sales pitches it will take to get there.
Here’s how it works:
- Your desired revenue in 2023 – your final revenue in 2022 = 2023 desired growth
- 2023 desired growth + customer attrition = new sales required to hit goal
- New sales required / average selling price = new customers required to hit goal
- New customers required to hit goal / close rate = new sales pitches required to hit goal
Here’s an example:
- $5,000,000 (2023 desired revenue) – $3,500,000 (2022 actual revenue) = $1,500,000 (2023 desired growth)
- $1,500,000 (2023 desired growth) + $250,000 (customer loss) = $1,750,000 (new sales required to hit goal)
- $1,750,000 (new sales required to hit goal) / $50,000 (average selling price) = 35 (new customers)
- 35 (new customers) / 10% (close rate) = 350 new sales meetings required to hit growth goal
A Simple Equation for Success
Using this formula is a great way to start the budgeting process and build measurable and achievable goals for rapid growth. By understanding customer attrition, average selling price and close rate—key factors that influence business development—you can accurately identify the amount of revenue growth you need and how many sales pitches must be held to get there.
The Business Growth Formula can help ensure that your company reaches its maximum potential in terms of growth and profit! Hear more about how to implement this with your business, get valuable sales and business growth insights from my co-hosts, and more with Season 2, Episode 4 of The Grow Show.
