Growth and why it matters

The popular wisdom goes as follows: startups that want to become unicorns need to think about growth all the time; everyone else is off the hook.

This is very, very wrong. Why?

Simply because when you start at zero – as every new business does, without exception – you need to grow a lot even to achieve a small, solid business operation, say $10M in revenue.

And your growth rate determines how quickly you’ll get there.

In entrepreneurial ventures, it’s recommended that, at the very least, you keep an eye on monthly growth rate (if not weekly, which often makes a lot of sense too, but let’s stick with monthly in this example).

Say you have a business that currently brings in $100K in annual revenue – awesome. It probably means that you found some early product-market fit, and a bunch of people who are willing to pay for your products or services.

How long will it take you to grow it to $10M?

If you grow 5% each month from now on, it’ll take almost 8 years.

If you grow 10% each month, that’s about 4 years.

And if you grow 20% each month – ambitious, but possible, especially with highly scalable products – it’d be just over 2 years.

If you grow at 0%, the answer is never. Sorry, it’s not me, it’s the maths.

Side note: I used revenue because I like it more, but the math is the same for users.

This way of thinking may seem weird or even absurdly ambitious if you’ve ever worked in a large corporation. Big companies usually don’t have such aggressive growth targets, but that’s because they’re already massive. Growth always slows down as you get bigger, and smaller percentage increases will still generate a significant amount of money.

Don’t let that distract you. You’re not Google yet. (If you are, hi Sundar! I’m a fan, you seem great. Thanks for subscribing.) Have a think about what kind of growth you’re targeting, make a plan on how to get there, and track it. Whether you want to be a unicorn or not.

Love and cash flow,

Jana

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