The business growth rate is not confined to a specific description. Instead, it has various dimensions and parameters. However, it is generally seen as progress in a business's sales, revenue, profit, and departments.
Thus, it helps determine whether a company is becoming victorious over time or its progress graph is going down.
Therefore, to gauge the growth rate of a business, you need to consider different elements.
This blog post will discuss how you calculate it and what factors influence business growth rates.
Method to Calculate Business Growth Rate
The growth rate is the value a business or a company achieves by constantly improving its revenue generation. To determine the growth rate of your business, you need to perform the following simple steps:
Choose a Metric
The business growth rate is not limited to one metric. There are different types of metrics that you can track to calculate the progress of your business.
For example, it could be related to revenue, which counts for the total money your company makes in a timeframe through sales or services.
Moreover, it may include a metric from acquisition comprising the customer acquisition rate, conversion rate, or shopping cart abandonment rate. Or, you can measure a value from customer metrics, including activation, retention, or repeat purchase rate.
Out of these, you can pick the metric you want to improve to enhance your growth rate.
Pick A Starting Value
Once you finalize the metric you want to work on, you have to decide on the starting point of the timeframe from which you want to check the value of that metric.
It will be marked as an initial figure to represent the performance of your business then. Depending upon your timeframe, be it monthly, quarterly, yearly, or all time, you should note down that value to initiate the calculation process.
Pick The End Value
After picking the starting value, you should select the final figure depending on your decided timeframe. It can be a current value or a figure from the past. This will indicate the standing of your decided metric at that specific point.
Apply The Growth Calculating Formula
After finalizing metrics and the values per your chosen timespan, you can calculate your growth by applying the growth calculating formula which is given below:
(Final Value/ Initial Value)*100 = Growth Rate.
However, if you don’t have excellent mathematical skills and feel that you may not get accurate results using manual methods, taking assistance from an online percentage increase calculator will be a better approach. It is so because the backend algorithms of an advanced percentage growth calculator provide you with quick and flawless results in no time.
As a result, the chances of committing an error in calculation diminish.
Before we discuss what factors influence the business growth rate, we will shed some light on how you can enhance it.
How to Improve Business Growth Rate
To augment business growth rate, a company has to stay on its toes all the time and make well-informed calculated decisions. It should optimize its business which stands for streamlining a company's operations more strategically. It means an organization should continuously strive to cut expenses and increase profits by covering the lapses in the business flow. This helps in taking solid control of business growth in a positive direction.
Moreover, it should restructure its business resources, which stands for aligning fund allocation and other materials to produce the best-performing products. It means that a company must try to refrain from investing its money in products that are not yielding profits.
Instead, it should look forward to financing the services becoming more beneficial over time. As a result, the business's profit percentage will observe a boom.
Next, we will discuss some factors that significantly influence the growth rate of a business.
Factors Affecting Business Growth Rate
Your efforts pay dividends when you take care of your business like a child and nurture it with total commitment and dedication without getting lazy. To sustain in the highlight competitive global market, you should constantly keep an eye on the factors affecting the growth rate:
Relationship with Customers
It is the primary and fundamental element that decides the overall growth rate of a business. If a company provides excellent and reliable services to its customers, its customer base keeps increasing, making it more profitable. Therefore, while doing business, you should give the utmost respect to your buyers to win their trust and build an emphatic reputation in the market because customers hold the ultimate power in doing an evolving business and a reputable brand.
On the contrary, if you don't provide excellent customer support to your buyers and don't listen to their queries to offer solutions, your sales drop, causing the failure of your business.
This will ultimately lead to irreparable loss. Thus, the better the customer satisfaction, the better the growth rate, and vice versa.
Ability to Adjust to Changing Trends
It is another decisive factor that plays a vital role in shaping the fate of a growing business. It means that if a business wants to grow constantly, it must learn ways to align itself with the ever-changing local and global market trends. It is important to note that due to technological advancements, things change drastically within no time.
That's why, to stay in the race to achieve the top position, you must integrate technology-based machines and tools in your operation management to automate them. This not only helps in improving the efficiency rate, but it also trims down the chances of error commitment.
Thus, the chances of a business making it to the top tier increase. However, if a company stays static and does not bother to align its efforts and way of handling things per the needs of the contemporary market, it fails to match the speed of its competitors and scatters down like pieces of glass.
Employee satisfaction is equally important as customer satisfaction if a business wants to progress by leaps and bounds. It is so because employees put all their energies and efforts into developing strategies and meeting the customers' needs through a constant struggle.
In addition, they come up with different solutions to solve the buyers' queries. Therefore, a company must compensate its employees with enough recognition and value for their efforts if they want to retain their trust and loyalty.
Otherwise, they can get frustrated and think of quitting their jobs, and filling the void created by experienced workers is challenging.
That's why a company should treat its employees like an asset to keep growing in a positive direction with higher aims.
Brand Marketing is also important for a business that wants to achieve its targets and stay relevant in the market because people tend to buy the services of a ubiquitous company. Therefore, if you're going to take everyone by storm, you should look forward to investing significant energy in your company's marketing.
It means you should build a solid identity digitally and in traditional mode to reach a broader audience. In addition, you must stay consistent in your marketing efforts to achieve a distinctive brand voice.
As a result, you will succeed in winning customer trust on all fronts, which will boost your business growth rate.