Growth is a result. It is not a goal. Growth can be used as a benchmark to determine if a goal is achieved but it should not be a standalone goal.
You should know your growth target based on market analysis and current sales figures. Investors will want to know these numbers and how you arrived at them. However, they should be based on a greater goal. No one on your team gets inspired by market share numbers. They aren’t going to go that extra mile for EBITA. They won’t stay late to push up the market value. They will go the extra mile in pursuit of building a "computer for the rest of us" (Steve Jobs – Apple). They will bend over backward to put “a computer on every desk and in every home” (Bill Gates – Microsoft). Being the best “x” in “y” industry is a goal. Differentiating yourself from the stereotype of an industry (e.g. being the “unconsultant” consultants) is a goal. Transforming the home or work lives of your customers, unending an industry, or changing the world through an innovative approach are all goals. Solving an unaddressed problem of a niche customer segment is a goal. Growing revenue to “x” percent or selling the company for “y” dollars are the results of achieving those goals.
"We started out to get a computer in the hands of everyday people, and we succeeded beyond our wildest dreams."-Steve Jobs
“When Paul Allen and I started Microsoft over 30 years ago, we had big dreams about software. We had dreams about the impact it could have. We talked about a computer on every desk and in every home. It’s been amazing to see so much of that dream become a reality and touch so many lives."-Bill Gates
Having a goal of “x” revenue makes it much easier to pivot on a whim. Taking on that larger customer, building something that isn’t quite in our wheelhouse, or cutting staff on the customer service team is much easier when the goal is just growth. I am not saying you shouldn't do those things. What I am saying is that those decisions should be strategic and proactive, not reflexive and reactive.
If you aren’t seeing the results you expected with the goal you set, it might be time to reexamine the underlying assumptions used to set those target results. Maybe the market isn’t there. Maybe you don’t have the team in place necessary to achieve your goals. Maybe it is time to fail fast. It is not the time to throw the kitchen sink at the problem in an effort to achieve your revenue targets. Having a non-growth goal means that the decision you make to achieve the results will need to be strategic and well thought out because you will need to set a new non-growth goal.
One of my favorite Harvard Business Review articles very accurately describes what I have seen in companies that feel they must achieve a revenue target at all costs. Writing about why quarterly numbers should not dictate strategy, the author describes what happens when growth is your goal; “You push innovation aside, compromise market positioning, turn the product into a dumpster of features, and create a trail of mayhem, making these deals successful post-sale. And every subsequent quarter becomes increasingly difficult.”
You need to know the market potential and you need to know what success will look like from a growth standpoint. You should not use that as a means to motivate your team or get people excited about your product or service. Growth is a result. It is not a goal.
Best,
P.S. Look for new series called "Ask an Entrepreneur" where I interview small business owners about growth and strategy. The first AaE should be released later this month. To get early access to all of my articles (including "Ask an Entrepreneur"), exclusive content, and more visit LenMusielak.com or subscribe to the OPinions blog here.