This post was originally published on December 19, 2023 on LinkedIn

Ever feel like your revenue goals are out of reach? Or that your company's growth aspirations are a grand vision that never quite hits the ground running? 

If so, you’re not alone. Transitioning from theoretical goals into real results is easier said than done. 

But there's a little tool—often overlooked—that will make it clear what you need to do and directionally, the best way to do it: a Growth Analysis. 

Why a Growth Analysis is the Unsung Hero of a Growth Strategy

A growth analysis isn't just another corporate formality; it's the cornerstone of strategic clarity, focus, and accountability. It empowers you to challenge assumptions, align your team around the right priorities and provides you with justification when facing skeptics and scrutineers. These elements are pivotal for turning your growth strategies into actions. 

Yet, what most people don't realize: growth analyses don’t need to be incredibly complex to make your strategies more actionable. To prove it, here are four steps you can use to create a growth analysis for your growth strategy. 

Developing a Growth Analysis for Your Growth Strategy

Step 1. The Finish Line Is Where You Start

Picture your growth like a marathon: you need to know exactly where the finish line is. What's your revenue target in five years? What’s your revenue today? Use those two numbers to calculate your CAGR and set your annual revenue targets. You may feel tempted to adjust your annual revenue goals to show higher growth in later years, but hold off on that for now. Our goal here is to understand the consistent, year-over-year growth needed to reach that 5-year target.

Step 2. Where Are You Now? Mapping Your Organic Growth Trajectory

Your growth will be inherently buoyed—or hindered—by the momentum of your existing business. So it’s important to know the force of that push or pull and the primary drivers of it. This means diving into some key numbers:

• Existing Customers: How much revenue do existing customers typically bring in each year? Assess this through metrics like net retention rate, client retention rate or revenue retention rate.

• New Kids on the Block: Estimate the contributions from potential new clientele. Collaborate with your finance or sales team for precise figures, or use reasonable estimates based on available data.

• The Industry Playground: What's the forecasted growth for your sector (i.e. the category’s CAGR)? It’s helpful to check multiple sources for this, because the estimates can vary wildly.

Once you’ve got these figures, play them out year over year. Adding them together will give you a clear picture on your current growth trajectory, and spot opportunities or needs within those numbers.

Step 3. Bridging the Gap: Your Incremental Growth Goals

Put your organic growth numbers side-by-side with your annual revenue targets. Any shortfalls represent your incremental growth goals. Now, you can see what new revenue you need to bring in each year, above your current growth trajectory. 

To take this a step further, we can slice this pie a bit finer to understand how much of this growth will likely come from your current business versus any new offerings or ventures. McKinsey’s 82% estimate is a good benchmark here, but remember, your allocation may vary.

Step 4. The Moment of Truth: Reflect and Adapt

Lay it all out – your revenue targets, your organic growth trajectory and those incremental growth goals. What’s the picture? Does it shift how you’re thinking about your strategic priorities over this next year? Does it strengthen your resolve that you and your team are working on the right things? This is your chance to pivot, tweak and align your focus with the numbers in front of you.

From Growth Analysis to Achieving Your Revenue Goals

And there we have it – a key step to transform your growth ambitions into a practical, actionable plan. By running a growth analysis, you not only gain a clearer picture of what you need to accomplish but you also equip yourself with key insights to lead your team in the right direction.

This process isn't just about crunching numbers or plotting graphs; it's about cultivating a strategic mindset. It allows you to anticipate challenges, recognize opportunities, and make informed decisions. The insights gleaned from your growth analysis – understanding your organic growth trajectory, identifying incremental growth targets, and segmenting them across your business domains – are invaluable. They provide a compass for your team, aligning efforts and fostering a culture of strategic execution.

As you get ready to kickoff this next year, remember that your growth strategy is a living, breathing entity. It evolves as your business and market dynamics change. Regularly revisiting and adjusting your growth analysis ensures you stay on course and adapt as necessary. Ultimately, this rigorous approach doesn’t just lead to meeting revenue targets; it drives sustainable growth and positions your company as a dynamic player in your industry.

Here's to your success and the exciting journey ahead!