Do You have a Growth and Revenue Issue
If you’re a business owner, entrepreneur, or are in charge of a line of business that generates revenue, then you will want to know how I solved what I am calling the growth and revenue problem. Do you know the revenue growth formula?
Do You Know How to Calculate Revenue Growth?
To calculate revenue growth rate, each time period that you decide to measure must be of equal length, so last month to this month (October 1st to November 1st), last year to this year (January of 2021 to January of 2022), and so forth.
Once you have these two figures, you have to subtract the previous period’s revenue from that of the current period. Then, you divide that number by the previous period’s revenue and multiply it by 100, to get your revenue growth percentage.
Revenue Growth Formula
As a formula, revenue growth is expressed as follows:
Revenue Growth = (Current Period Revenue – Previous Period Revenue) / Previous Period Revenue x 100
So, for example, if you earned the following revenue:
- Year 2021: $235,000
- Year 2022: $360,000
Your revenue growth for 2022 would be:
Revenue Growth (2017) = ($360,000 – $235,000) / $235,000 x 100 = 53.19%
What is the Growth and Revenue Problem?
The growth and revenue problem is, simply put, your need to generate more revenue every day. But not just any revenue growth. It needs to be profitable revenue and it needs to be done in such a way that you can support your business now and in the future. Growth by itself is necessary but not sufficient for success.
How Do You Do Solve a Growth Rate Problem?
Well, that's the problem. If you run a business like I do and you use a system like HubSpot, like I do, you'll constantly be told you need to set SMART Goals. The problem is, first off - What's a SMART goal?
Smart goal stands for particular type of goal. Alright, SMART stands for:
Well, that's a pretty complicated definition for something so simple as the word ‘smart goal’. Like most people, I've followed all their advice, passed all their certification tests, and yet, I've constantly struggled, at least in the past, with how to set SMART Revenue Growth Goals and how to achieve them.
How Do I set a SMART goal?
Over the years, as a Gold Level Certified HubSpot marketing and sales partner agency, I've experienced many, many clients who could neither set SMART goals nor had any particular methodology or framework with which to do that. That's what this book is about. How to do that, what are the formulas? It is not magic.
Just How Critical is This to Your Future Business Success?
The problem is that if you don't learn how to set these goals and know the math behind it, there's a very good chance that you're going to manage your business right into the ground.
Now, I've been lucky. when I started my business, I had a Fortune 500 business background and a long history of having to build very complex, detailed, executable business plans that then got funded. I did this to facilitate me making my particular revenue targets.
Planning Was and is a Team Effort
Now you should know that it typically took me and my team anywhere from 6 to 10 weeks to fully plan out a year's worth of activity. This included time for me to sit down with each of my account executives and plan out a series of accounts that I knew I had to win in order to hit my goals.
That's What this Book is About.
Over the years, both my company and many of my bosses, especially my first SAP boss, a Saudi billionaire, taught me how to come up with numbers that I could hit. Over the years, other critical business planning numbers and formulas started to float around and finally I started out building my own business.
Started With Limited Funds but Grand Ideas
Of course, I didn’t have unlimited funds and I had to build an organization that was very small, like most startups. But going into it, I had to have particular revenue targets in mind. What you should know is, is that in order to hit those revenue targets, I also needed systems, and this was where I was also able to leverage my Fortune 500 background. You see, when I started my business, the first thing I did before I incorporated, even before I decided what I was going to do, was I designed an IT system landscape that allowed me to build an infinitely scalable business.
Professional Services Solution Served as My Model
Why did I start with designing an IT system landscape before I even incorporated? It's actually very simple and happenstance. I was an SAP industry principal, which is a quota carrying sales representative role and one of my six industries was Professional Services. Professional services is a fancy way of saying people who sell hours. So think Accenture. KPMG, Capgemini, SAP itself and lawyers and accountants, to name just a few. In short, it makes up about 80% of the economy out there. It's part of the service economy, and it would seem simple. But it's not quite as simple as as it should be.
Small Enterprises Need Systems Just Like Large Enterprises
What I found was is that even though I was selling SAP software and services and it provided an end-to-end IT solution, its price is really not meant for the startup, despite what they say. The fact that even I would sometimes say that SAP was consumable by small and medium enterprises, still didn't overcome the simple fact that it took at least $300,000 plus a fairly complex and expensive implementation to even get a baseline SAP system up and running. In other words, it was assuming you're already a working business entity. That's not what I was. What I was was a new guy starting out on my own.
4 Decades of Business Experience
I had four decades of business experience behind me, including drilling wells, fixing airplanes, and selling complex SAP ERP software. What I could do is create a diagram of everything that our professional service solution did or needed to do and then go out and find cloud based solutions that I could substitute in so that I could basically replicate the same functionality – for much less money.
But Why Did I Want to Do That so Desperately?
Well, because I was or had already been through the learning curve that most in the industry went through in the 80s where we would have to take receipts and tape them to paper where it was tough to get paid and on and on and on.
It Made People's Life Miserable.
But it went beyond that. I also needed a sales and marketing system. And that sales and marketing system needed to be integrated into my finance system. That way, I could closely manage every minute of every hour without a lot of effort. Why did I need the system to do that?
Why Did I Obsess With That?
Because I wanted to be able to fly my tiny little business close to the sun so I could continue to work in Fortune 500 companies while keeping that money within my business. That's exactly what I did. I started out with an IT diagram and then I subscribed to several cloud-based systems and I essentially made it such that going to work for me felt just like going to work for a Fortune 500 company. What I got it too was if you're a consultant, here's your laptop. Here's your security card. Here's your user ID. Here's how you get paid and on and on and on.
Standard Operating Procedures (SOPs) are Key
With this approach and my deep project management background, I was able to build an infinitely scalable services business right out of the gate. But I could do much more than that.
Plan for Profit
Now I could plan how much money I intended to make in any given year, but more importantly, I could change that into how much profit I was going to make? What if I wanted to build a $1,000,000 a year in profit size business?
How Much, How Many, By When
Given that I know how much I'm selling each person for and how much profit I'm making on them, I knew how many people I had to hire. I also knew how many hours I had to sell and how long it would take me to do that and I knew how much cash flow I had to account for. Cash flow is kind and must be managed.
Monthly Audited Financial Statements
With my systems in place as planned and designed, and my profit goal set, my accountant could give me a set of audited financial statements every month, including a Balance Sheet, a statement of Cash Flows and an Income Statement, which is exactly what I've done right out of the gate. I have a company that I could take public if I so desired.
That's what this book is about.
How to set those SMART goals? If your goal is to make one million a year in profit, can you plan out exactly how to do that. Do you know how to figure out exactly how much each hour is worth, what to sell it for and how long it would take you to hit your profit target and how to scale that up?
SAP SEM (Strategic Enterprise Management) – A Solid Foundation
Doesn't sound like a big deal, but keep in mind that apart from being a very experienced SAP project manager, I'm also what's called an SAP Strategic Enterprise Management Consultant. In my role as a SAP SEM consultant, I helped companies, both private and government, set up very robust, yet easy to use, annual business plans.
I helped them do this business planning by product and by service line at any size because that's how most big companies work. They have a product or service revenue drivers and they plan it out because you don't get to $100 billion in revenue if you don't have business plans made by each department head that pass all the way down to each person. That's what I did. That's what this book is about. I've translated this process into simple formulas in simple English.
There's No Reason for any Business to Fail.
If you have a strong value proposition, you should be able to predict what success looks like and know how long it will take you to get there. How much it will cost to achieve long term success, and the revenue growth rate benchmarks that you'll have to hit along the way in order to be successful. Please enjoy reading the book and if you have any questions, don't hesitate to reach out to me.
-CONCHITA ORTIZ - INTERNATIONAL SAP CONSULTANT