How to Pick the Right Growth Goal for Your Business
July 1, 2019
- Business •
Aden Andrus• July 1, 2019
Planning certainly isn’t the most exciting part of marketing. You just don’t hear a lot people saying, “Oh, I can’t wait for next week’s planning session!” or “We had so much fun at last week’s planning retreat.”
But, just because planning isn’t the most thrilling part of marketing—or running a business in general—that doesn’t mean it’s not important. In fact, like many of the less exciting things in life, planning is actually one of the most important keys to achieving your business growth goals.
And, if you think about it, that just makes sense.
After all, without a plan, how do you know what you need to do to achieve your goals? How do you stay focused and push through, even when things are tricky? How do you keep the big picture in mind if there is…well, no big picture?
Most business growth starts with a solid business and marketing plan, which means it pays—literally—to learn how to effectively plan out your marketing strategy. With all of that in mind, in this article, we’re going to talk about business growth goals and how to set goals that will help your business succeed. Let’s get started.
Why Your Business Growth Goal Matters
Many businesses want to grow without actually knowing what that growth looks like or means. Unfortunately, that makes it difficult to focus your efforts appropriately and evaluate whether or not what you’re doing is actually working.
For example, does doubling your follower count on Instagram count as “business growth”? Absolutely! But is it meaningful business growth? That depends on what your business growth goals are.
While it might sound a bit backward, setting your growth goals first and then reverse-engineering your marketing plan from that goal is one of the most effective ways to create a growth strategy. Along the way, you might find that your goal is unreasonable and have to rethink your goal and marketing strategy, but that’s okay. Your goal doesn’t have to be perfect to be useful. It just has to be something that you can use to inspire, direct and align your marketing efforts.
Picking the Right Business Growth Goal
To choose the right business growth goal for your business, you need to understand what success looks like. Are you trying to increase revenue? Your customer base? Brand recognition?
Once you know what aspect of your business you’re trying to increase, you also need to figure out how much you want it to increase by. If your goal is simply to build your customer base, ending with one more customer than you started with is technically a success. If you’re a freelance photographer, finding one more quality recurring client might be all you need. But, if you sell thousands of novelty T-shirts a day, acquiring one new customer is almost meaningless.
While revenue is one of the most common business growth goals, it’s not always the right goal for every business. The best growth goals are aligned with what you’re generally trying to achieve as a business. For some companies, that might be impressing potential investors with the size of their customer base. For others, it might be profit margin. Social media influencers might be focused on increasing their subscriber base, followers or reach.
Ultimately, what you’re trying to grow and how much you want to grow it by will be specific to your business, so let’s take a look at each of these areas in turn.
What Are You Trying to Grow?
Typically, most businesses set growth goals around one of the following variables:
- Revenue (sales, net profit, total recurring revenue, average contract value, etc)
- Subscriptions (monthly recurring revenue, annual recurring revenue, etc)
- Units (total units sold/processed, customer base, new contracts, follower count, etc)
The type of goal that you choose usually has a big impact on how you approach business growth. For example, if you’re running a SaaS business and your goal is to double your user base, offering free trials or free plans is an easy, direct way to get more users. Unfortunately, while you’ll probably have more users, you may not make a whole lot more money.
On the flip side, however, if your goal is to increase revenue, you might focus on getting free customers to pay or paying customers to upgrade their subscription. That will increase your overall revenue, but the size of your customer base may not increase (or may even decrease).
There’s an opportunity cost to everything, so often, focusing on one aspect of your business can mean that other areas don’t perform as strongly as you might like.
This is why picking the right goal at the right time is so important. Most businesses tend to move back and forth between goal types. For example, a SaaS business might focus on revenue for a while and then switch gears to focus on increasing its user base. That way, it has a large group of users to upsell when it’s time to focus on increasing revenue again.
In any case, it’s important to look at the big picture when choosing your growth goal. Our SaaS business can’t simply say, “Let’s increase our client base by 20%” if it isn’t making enough revenue off of its current clients to support the business. The growth goal needs to match where your business is at and what it needs to succeed in the future.
How Much Do You Want to Grow?
This is where things get fun. Once you’ve identified the aspect of your business you want to focus on, you need to decide what level of growth you’re shooting for.
Depending on your business and niche, your growth goals can vary quite a bit. But, there are some general rules of thumb you can use to help identify the right growth goals for your business.
If you’ve spent much time in Silicon Valley, you’ve probably heard the term “hypergrowth” thrown around before. For many new businesses, 2x growth, 3x growth or even 4x growth is their goal. They want to completely disrupt their niche, dominate the competition and take over the market.
While that’s an awesome, exciting goal, it’s also fairly unsustainable for most businesses.
Unless your product or service is truly groundbreaking, you have VC funding…and a miracle happens, this sort of growth is usually impossible to achieve after your first year or so in business. If you’re only making $500 a month, growing to $2,000/month is usually pretty achievable. Growing from $25 million/year to $100 million/year in revenue, however, is a much bigger challenge.
So, unless you’re a new business or you’re already going viral, shooting for hypergrowth isn’t a great goal for most businesses. While it’s certainly exciting if it happens, it’s like trying to catch lightning in a bottle, so you’re better off choosing a more achievable goal.
For many companies, rapid growth is a reasonable goal up to around their second or third year in business. If you’ve got a good product/service and you’re doing a good job marketing yourself, doubling the size of your business every 12-18 months is an aggressive but manageable goal.
After that, however, doubling the size of your business usually becomes much more challenging. It’s doable, but it usually takes some sort of advertising breakthrough, a rapidly growing marketplace or VC investment. So, if your company is fairly well-established, trying to double your revenue probably isn’t the best growth goal.
If you’re bootstrapping your business and you’ve been around for less than 7 years, setting a goal around the mark of 50-75% year-over-year growth is ambitious, yet doable. Unless you’re marketing a new business or meet some of the criteria we’ve mentioned above, this is generally a good range for your growth goals.
Once businesses get to be more than 7 years old, they’re fairly well-established and have found a good place in the market. Unless that market is experiencing rapid growth, 10-25% year-over-year growth is a pretty solid goal.
If you want to grow faster than that, you’re probably going to have to start innovating or change up your business model. These figures are all based on the idea that you’re trying to grow consistently in one area. If you add a new service, product line or marketing channel, it often works like an entirely new business. You’ll see an early hypergrowth phase, followed by a rapid growth phase that eventually matures into steady growth and so forth.
So, for example, if you decide to start a new YouTube channel and your goal is to acquire more followers, you’ll probably see very rapid initial growth. After all, if you have a decent concept, it shouldn’t be hard to go from 0 to 100 followers. The same idea applies to getting your first $5,000-10,000 of sales from a new product or any other new area you try to get into. You can expect rapid increases up front, but expecting that growth to remain linear indefinitely will only bring frustration and disappointment.
Picking the Right Goal
Once you know what aspect of your business you want to focus on and how much you want to grow, all you have to do is figure out what it will take to achieve that goal. Break the necessary growth into pieces, identify the best ways to grow in each necessary area and measure your success. You might need to adjust your goals over time, but knowing what you’re shooting for will set you up for long-term success.
As we mentioned at the beginning of this article, this sort of planning isn’t the most exciting thing in the world, but taking the time to choose the right goal and create a vision for your business is one of the best ways to ensure that you get where you want to go. If you don’t have a goal in mind, you’ll just end up wasting effort on a lot of things that don’t matter.
By the way, if you’d like us to take a look at your business, help you set growth goals and put together the marketing campaigns you need to achieve them, let me know here or in the comments. We’d love to help!
How do you choose growth goals for your business? Is there a particular goal that you think businesses should prioritize? Leave your thoughts in the comments.