How to Set a Business Growth Goal (And Why You Should Have One)

Discussion in 'Internet Marketing Discussion Forum' started by Mike Newton, Jun 21, 2019.

  1. Mike Newton

    Mike Newton Administrator Staff Member

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    "Within the business world—and life in general—planning isn’t exactly a sexy topic. It’s not something we look forward to, like increasing conversion rates or boosting traffic. It’s boring. But it’s important." Posted on the DigitalMarketer.com blog.

    Great article regarding setting a business growth goal and why you should have one that I found by Ryan Deiss on the DigitalMarketer.com blog.
    *Caveat: All images, videos, audios & content are the property of their respective owners/authors. If they fail to appear because they have been moved or removed, you can refer to the source here.

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    Within the business world—and life in general—planning isn’t exactly a sexy topic. It’s not something we look forward to, like increasing conversion rates or boosting traffic. It’s boring.

    But it’s important.

    How do you plan for the growth of your business? How do you plan to bring in more revenue? An important step in increasing your business is to create an annual growth plan.

    And the first step in creating an annual growth plan is setting a growth goal. It may sound odd to do this early in the process—if the whole idea is to do some growth planning, you might think we’d set the goal at the end. But, no: we set the goal first and spend the rest of our time validating that goal.

    So this post is meant to help you take some time to design a plan that will serve as your guide.

    Setting aside time to plan makes it easier to grow, because you have an aim. If you go into a business cycle with no idea what your aim is, it’s more likely you’ll get lost along the way—and maybe not even realize that you’re lost because you never knew where you were going to begin with.

    How to Set a Growth Goal for Your Business
    There are 2 questions that we’re trying to answer with this exercise:

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    1. What’s the variable within your business that you want to impact in the next 12 months?
    2. And how much do you want it to grow? What’s your target?
    Very often when we think about “growth,” we just think about revenue. But that may or may not be the best variable. It’s important to set a target that’s realistic.

    So let’s start with the variable and offer some possible targets.

    What are You Trying to Grow?
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    The first option is a unit goal. Notice there is no currency symbol in front of a unit goal. Here’s why you might want to have a unit goal:

    This past year at DigitalMarketer, we did set a recurring revenue goal that we wanted to hit. It was good; I’m glad we did it. But the thing about a revenue goal is that when you set a goal focused on increased revenue, you’re always going to find the shortest path to achieve it.

    When we set a revenue goal for DigitalMarketer, the way that we achieved that was through expansion—getting our members and our customers to pay more. That’s when we introduced additional levels of lab and we put better follow up in place. These changes were beneficial, but while we were focusing on growing the revenue…

    Our membership went down.

    We’d taken our focus off of acquiring new members, because that’s expensive—it doesn’t move the needle on revenue. So what did we find? We needed to keep our focus on the unit goal.

    We set that after we set the revenue goal. The other goal we set was a subscription goal. What we actually set were monthly recurring revenue (MRR) and annual recurring revenue (ARR).

    If you set a business growth goal that’s subscription or revenue, you’ll usually achieve expansion. In other words, monetization. Getting more from what you already have. At DigitalMarketer, we were able to hit our monthly revenue goal much faster by getting existing Lab members to ascend to our Elite level (our highest product tier).

    (NOTE: Need a helping hand with your digital marketing efforts? Or maybe you just want proven, actionable marketing tools, tactics, and templates to implement in your business? Check out the latest deal from DigitalMarketer, and you will be on your way to helping your business grow.)

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    That allowed us to hit the goals that we set during this process. We were able to put strong systems and processes in place to make that happen and then bring those into our next goal cycle where we were focusing on unit. Once we figured out how we could spend more to acquire a subscriber, we were able to go and get more of them (i.e. more units).

    If you’re questioning which of these you should focus on, look at subscription or revenue for now. This goes back to Customer Value Optimization. Generally, if you focus on subscriptions or revenues, you’ll have to optimize the acquisition processes that you already have in place.

    If you go with a pure unit goal, you may find that you get hit with a significant cash flow crunch, because you haven’t yet figured out the subscription and revenue pieces.

    So think about the variable you’re growing. Are you trying to grow the number of customers? The number of members? The number of trials?

    If you’re an agency, you want more clients. If you just want more clients but it’s not a revenue goal, the easiest way to get more clients is to charge less for your services. But that may or may not be a good idea. When can dropping prices be a good thing for an agency?

    If you have a good way to ascend those clients.

    If you don’t, it won’t help you to arbitrarily say, “Well, we have 80 clients right now and 100 sounds like a good round number. Let’s try for that.” You might hit that target, and you also might go broke.

    How Much do You Plan to Grow?
    Once you’ve decided your variable, decide….

    What’s your growth target? What percentage of growth are you targeting?

    We talk a lot at DigitalMarketer about doubling businesses. That’s our mission here: we want to double the size of 10,000 businesses by 2020.

    But depending on your particular business, doubling could be a weak target. It could be undershooting. Or there’s the flip side—doubling from where you already are in just 1 year could be a pipe dream.

    How do you know the difference?

    This is a general framework for how to think about growth:

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    There’s this notion of a “hypergrowth” company. That’ a phrase used a lot in Silicon Valley.

    It’s nearly impossible to achieve hypergrowth without some kind of outside VC funding. That’s the top. That’s Unicorn status.

    Next there’s Rapid Growth, which is doubling your business the first and second years. In your first 12–18 months of business, doubling your growth is great. Once you’ve been established for 3 years, it starts getting into diminishing returns. Rapid growth can also be difficult to achieve without outside VC funding. Usually if it does happen on its own, it’s because it’s in a naturally fast-growing market.

    When DigitalMarketer was first starting, we saw rapid growth, but it was due to the growth of the industry as a whole. We still built one of the larger companies in that space, but the market was moving. We were leading it, but the market was dragging us along.

    So ask yourself: what sounds more like you, and what year are you in business?

    Steady Growth is a great business goal for bootstrap companies.

    Mature Growth is 10–25% Year-Over-Year Growth. Companies that have been around 5–7 years are generally growing at this rate. There’s no shame in that, especially if they’re in a market that’s relatively flat.

    Usually when you find yourself here, you’re either in cash-cow mode, or you need to reinvent the business. At DigitalMarketer, we found that we were getting stagnant working with professional marketers and startups, so we got more into agencies and certification. That gave us an opportunity to go back into the rapid growth phase. Apple does this a lot. You’ll see a lot of companies do this.

    So think about where do you live within this? What’s a growth percentage that makes sense for you?

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    Just take a guess. Guessing is good. Guessing is how we learn. We guess, we hypothesize. Then we validate.

    So go back and ask yourself: where you are? Are you in hypergrowth phase? (Again, without VC funds, that’s going to be incredibly difficult to do.) Maybe rapid or steady growth is better for you.

    I hope you don’t settle for mature growth. You may look at that and say, “It’s fine.” Especially if you’re in a market that’s flat or declining.

    But….

    Why do you want to be in a market that’s flat or declining? That’s hard.

    So if you’re landing in mature growth, have that in mind as we move into validation. It may be time to pursue a new opportunity.

    Deciding on Your Goal
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    The main things to think about right now are the variable and the percentage. What do you want to increase and how much? Take a guess right now. Later, once you’ve done some form of validation, then you’ll write the full goal. Right now, this is just your notes.

    Because you probably don’t know where you are right now. Many of you have no idea how much money you made in the last 12 months.

    You don’t know these things yet, that’s why you can’t write the goal yet.

    Focus instead on what variable you most need to grow. What’s the thing that is going to really be impactful if you focus on its growth? And what percentage of growth do you want to shoot for?

    Taking some time to do this will help aim your business growth going forward and help you to keep pushing toward a goal. Now what’s boring about that?

    What do you think? Share your thoughts in the comments below. If you would like to check the source interview or if the respective owners have moved the images, etc, displayed in this article, you can see them here.

    What's your business growth goal?
    #BusinessGrowthGoal
     
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