What’s your growth goal for this year? How about next year? Is it above 25% or less than 25%?
If you’re like most of the business owners I know, chances are it’s below 25%. Why? Because 85% of small businesses are either plateaued or in decline. And of those that are growing, most are growing at under 5% per year. Interestingly, if you grow your business by just 13.3% per year over the course of three years, you could literally land in the Inc. 5000 list as one of the fastest growing privately-owned companies in the US.
In other words, 25% growth, year after year, isn’t a common occurrence. However, at 25% per year (technically, 26%, but what’s a percent point amongst friends) you can double your business in just three years (which is why I encourage all of our BizScalers Club members shoot for at least 25% growth per year as their minimum growth number). Imagine that. You can literally double your business in just three years if you shoot for 25% growth, year after year.
Of course, that raises the question, “How?” How can you grow your business at 25% per year, year after year? That’s a great question. Here are a few meta strategies you can use to to do just that.
Note: there are hundreds of different ways to grow by over 25% per year, this is just a starting meta list.
I. Believe That 25% or More, Year After Year, is Possible
Now, before you run by this principle, hang with me for a moment because this is an honest legitimate principle. I’ve been working with business owners and entrepreneurs for more than a decade now and I can tell you that when we have the strategy conversation about their growth goals almost no one ever picks a number north of 20%. The vast majority either pick 10% or 15% as their stretch goal. Why? Because their experience, outlined above in paragraph two, is that either 10% or 15% would be a stretch goal or it would “fit” within what they’ve historically achieved.
When I suggest that they pick a number starting at 25% on up, I’m almost always met with resistance. Even when they do hit 25% or above in a given year, the next year they almost always think, “Well that was an unusual year. Let’s get back to reality.” Note: I’m not making any of this up. I’m reflecting on actual conversations.
If you haven’t been around my community for long, I’m a cognitive behavioralist. In other words, I believe that what we believe determines how we behave. So, if you don’t believe you can grow at 25% or more per year, you won’t act in ways that will allow you and your business to achieve that growth.
In a recent webinar, to help those attending get this principle, I took them to the Inc. 500 list and went to the top five companies. Note: the 2017 list recently came out so I’ve updated the names, but the principle is the same
- Skillz – 50,089%/3 = 16,696% per year
- EnviroSolar Power – 36,056%/3 = 12,019% per year
- Gametime – 34,021%/3 = 11,340% per year
- Club Pilates Franchise – 21,319%/3 = 7,106% per year
- Halo Top Creamery – 20,944%/3 = 6,981% per year
Now, if you’re like most of the business owners I know, if I were to ask you, “Can a business grow by 16,696% per year for three years?” your answer would be, “No way.” I totally get that. However one actually did.
If I were to then follow up and ask a second time, “Can a business grow by 12,019% per year for three years in a row?” your answer, once again, would be, “No way.” But you’d be wrong again.
So, why do you have such a hard time believing those numbers are possible? Chances are it’s because in your mind and experience, you’ve never seen anything like that. However, each of the above companies actually did hit those numbers. They had to submit them for review.
In other words, maybe your idea of what’s possible might not be as accurate as you think.
Now, you might say back to me, “But Bruce, I don’t want to grow my business by 16,000% for even one year, let alone year after year!” Fine. I’m not suggesting that you have to. I’m simply suggesting that you might want to dream a little bigger than 5% or 10% or even 15% growth year after year. It is possible.
Your ability to grow your business by 25% or more, year after year, always begins with you—and it always begins with your belief in what’s possible. Back in my old pastoral days, I led my church to grow by 30.5% per year, year after year, for a decade. I know it’s possible. The more important question is, “Do you?”
In light of the above, what growth rate do you want to adopt for the next 12 months?
II. Go All In on Your Growth Accelerators
If you’re unaware of what a growth accelerator is, you can read one of my blog posts about them by clicking here >> However, in summary, a growth accelerator is a growth strategy that can deliver a minimum revenue growth rate of 5% over the course of the next 12 months. In other words, if you’re leading a $1M company, it would be an idea that can generate at least an additional $50,000 worth of revenue. If you’re leading a $4M company, it would be an idea that could generate at least an additional $200,000 of new revenue over the next twelve months.
Why 5%? Because at 5%, if you pick five growth accelerators and they all deliver at least 5% NEW revenue growth, you will have grown your business by at least 25%. The math is pretty simple.
Note: you don’t want to limit your ideas to 5% growth. If you can come up with an idea that will grow your revenue by 30% or 50% or 100%, that’s even better. The math is simply designed to help you hit at least 25% growth per year, year after year.
So, what ideas do you have that will allow you and your team to grow your business by more than 5% over the next 12 months?
If you’re stuck, let me share just one strategy with you today—move upstream. In other words, go after a more affluent or larger transaction customer/client. For example, I once had someone in the VAR world who heard me discuss this idea who went back to his team and said, “We need to come up with a strategy to move upstream.” Over the next two years, they changed their whole marketing strategy etc. and moved their average client from $25,000 per year to $250,000 per year. In his words, “That advice you gave me completely changed me and my business.”
But here’s what’s so important about that story. He was in an audience of 150 people who all heard the same advice. So, what made the difference? He went all in on it.
One of the great frustrations of being a consultant is that you have no control over your clients. I’ve watched a lot of great strategic plans over the years never materialize because the team never fully committed. They never reached their potential because they never went all in.
So, if you want to grow by 25% or more, year after year, make sure you focus on a handful of strategies (which I call growth accelerators) and go all in on them. Totally commit to them. Work them EVERY DAY until they’re delivering 25% growth or more—and you’ll be, by definition, growing by 25% or more, year after year.
III. Work Your Five Growth Dials
Regardless of what business you’re in, it doesn’t matter if you’re in the software business or the marketing agency business, running a law firm or a dental practice, leading a retail establishment or an accountancy, there are always five dials that you can adjust to grow your business faster. Note: some of these are easier in one business vs. another but all five are in play for all businesses.
The five dials are
- The number of qualified leads you have
- The conversion rate of those leads into customers/clients
- The average transactional value (i.e. the value of each transaction/purchase)
- The frequency of repurchase (i.e. how often they buy)
- The retention rate (what percentage are still with you twelve months later)
Note: Over time, you could include other dials like how many years they remain a customer and/or how many referrals they give but let’s keep it to the five big dials for today’s discussion.
The reason why you always want to focus on the five dials is similar to the growth accelerators idea above. If you grow five items by 5%, you can grow by more than 25%, in this case, because the dials actually multiply off of one another.
To help you see this play out, let’s take an example of 10% growth. Do you think, if you really worked at it, that you and your team could grow your number of qualified leads over the next 12 months by at least 10% over last year? In other words, if you had 50 leads, could you generate 55 leads? Or if you had 500 leads, could you generate 550?
Likewise, if you converted 30% of your leads last year, do you think, that if you and your team worked really hard at it, you could increase your conversion rate 10% so that you’ll be converting 33% of your qualified leads over 30% last year? You get the idea. Ten percent doesn’t seem that outrageous, does it? So let me show you how the numbers of something as simple as a 10% increase on each of the five dials can make a huge difference for you and your business.
First, as our baseline, let’s take a look at a typical non-optimized business
- Leads generated = 200
- Conversion rate = 30%
- New customers = 60 (plus 300 current customers)
- Total customers = 360
- Average transactional value = $2,000
- Frequency of purchase = 2
- Retention rate = 80%
- Revenue = $1.15M
Now, let’s take that same business and observe how a simple 10% increase on each of those dials works out.
- Leads generated = 220
- Conversion rate = 33%
- New customers = 73 (plus 300 current customers)
- Total customers = 373
- Average transactional value = $2,200
- Frequency of purchase = 2.2
- Retention rate = 88%
- Revenue = $1.59M
Did you catch the impact? By simply increasing each of the five dials by 10% (which doesn’t seem like much), you end up with not 25% growth, but 38% growth. How cool is that? Plus, you end up with $440,000 in additional revenue.
In other words, growing by 25% per year, year after year, doesn’t have to be that difficult. All it requires is that you focus on the right things. And the three right things that I suggest you start with are …
- Believe that 25% growth, year after year, is possible
- Go all in on your growth accelerators
- Work your five growth dials
The only question left is, “What are you going to do in response to what you just read?” Most people will move on to their next task. But a few will stop and implement what they just read and change their business for years to come. Which one do you prefer to be?
To your accelerated success!