What Is Good Revenue Growth Rate

According to research by bain company only about 10 percent of global companies sustain an annual growth rate in revenue and earnings of at least 5 5 percent over ten years while also earning their cost of capital look up another financial concept.

What is good revenue growth rate. We set out to locate the optimal sustainable growth rate for it services firms and came up with the revenue rocket growth principle. Growth rates can be beneficial in assessing a company s performance and to. So if you earned 1 million in revenue last year and 2 million this year then your growth is 100 percent. It s only the outside forces like investors or banks that demand certain growth rates.

To calculate revenue growth as a percentage you subtract the previous period s revenue from the current period s revenue and then divide that number by the previous period s revenue. A company consistently growing at the 90th percentile would reach 100 million of revenue in four years. In the business world the rearview mirror is always clearer than the windshield warren buffett. A previous analysis conducted in 2016 with the same methodology showed revenue growth rates that were respectively 120 82 and 60 compared to 178 100 and 71 this shows more a more positive outlook by founders for the future.

The sustainable growth rate then is the ceiling for your sales growth. While the revenue is an actual number the revenue growth rates simply compares the current sales figures total revenue with a previous period typically quarter to quarter or year to year. In general the expected growth by entrepreneurs grew from 2016. Industry overall grows about the same rate as the economy which is 2 3 in a good year.

If you own it. Even our over optimistic analyst friends agree and expect a 16 7 growth rate which is still really good but not nearly as high as the historical growth rate of 38 8. The revenue growth rate provides a solid indicator of how quickly your startup is growing. Growth rates are used to express the annual change in a variable as a percentage such as revenues or investments.

The power of hyper growth is best demonstrated in the chart below. Revenue growth rate is an indicator of how well a company is able to grow its sales revenue over a given time period. It s the optimum level your sales can grow without new financing and without exhausting your cash flow.