Entrepreneurs with unrealistic business growth projections are like sprinters in a marathon. They’re in the wrong race, because their objective doesn’t correspond with ability. Don’t make the same mistake. To avoid depleting all of your business oxygen, set reasonable goals that you can strategically achieve.
An especially common error in growth forecasts is a hockey stick pattern. This predicts rapid growth after initiating a marketing strategy, followed by a steady upward trajectory thereafter. But growth doesn’t magically continue simply from momentum. Projecting a fixed percentage of rising revenue masks the actions and costs associated with expansion.
The foundation for a genuinely realistic growth projection is a focus on inputs. Inputs are what you actually control. Time, capital, and equipment are inputs that result in output. These elements dictate growth in the near future. Tie the sales forecast to assumptions about these available resources. Let the output – and its rate of growth – simply fall into place as your input plan unfolds.
Keep in mind, the rate of growth will not be constant. It will rise as your business scales and then reach a ceiling where revenue is capped. To break through this ceiling, you must continue to increase inputs. Hiring more people, automating more tasks, and outsourcing administrative duties are common steps. Of course, these measures require money, which is generated by growth. Consequently, your projections should reflect periodic dips in cash flow to fund renewed expansion, allowing the healthy cycle of growth to continue.