![]() Here is a line graph of two companies starting with $1,000 in revenue. Growing at the same rate will grow your revenue exponentially. Now if you take that $1,200 and grow by 20% again - you are at $1,440. For example - if your company has $1,000 in revenue and grows by 20% - you are now at $1,200 in revenue. Because growth is exponential - you are really looking for anything that doesn’t decline. When you chart things like revenue - you are looking for the graph to smart small and then get bigger and bigger. You’ll also notice that they grew by 82% in 2015 and 76% in 2016. This company can be sure they have the correct amount of staffing for these months based on the the previous years data. May also seems to have the most growth year over year. You can see that January tends to be much slower than the previous December. I’ve highlighted negative growth in red and positive growth of 10% or more in green. This is comparing each month to the previous month (comparing August 2014 data to July of 2014): Below is the month over month growth rate data for the same company we saw above. Understanding growth also helps you determine which months are your busiest and which tend to be slower. While both grew their revenue by $1,000, the smaller company that doubled will most likely be ecstatic and the larger company may be disappointed in that growth. For example - a company that went from $1,000 to $2,000 in revenue is a lot different from a company that went from $50,000 to $51,000. Understanding your growth rate helps you better determine the increase in your revenue. It can be calculated using this formula: ( Present Value) - ( Past Value) / ( Past Value) Growth Rate is the percentage change of data over a period of time. Calculating the growth rate can really tell you how your company is doing. While revenue data alone can be really nice to see - it doesn’t tell you much. It can be easier to see by putting this data in a bar chart: While this chart shows a bunch of numbers that look really good, it can be hard to really visualize just how good this company is really doing. There are lots of great tools you can use to track revenue (like Time To Pet) but you can also keep a simple spreadsheet with your revenue data. Revenue is the amount of money your company brings in during a specific period. The simplest thing you can track for your pet sitting or dog walking business is revenue. Not that you should never trust your gut - but using a combination of your gut and the cold hard data that your business metrics provide can help turn that catastrophic decision into the best decision you ever made. Should you discontinue your dog running service? Is it worth moving into a new zip code? Can you afford to hire a new office manager? What can you afford to spend to gain a new client? You may have a gut feeling on these decisions but what happens if your gut is wrong? It can be catastrophic for your business. You need to be able to chart and visualize your data to help you make important business decisions. Using business metrics to help grow your company is more than just tracking the data in Quickbooks. While the data you track may be different than us - there are still a lot of items you can measure to help you grow your business in the most effective way. Things like monthly growth, churn rate (the percentage of clients who cancel each month), customer acquisition cost, trial conversion rates, revenue per customer and many more. Here at Time To Pet - we track lots of different business data. Understanding all of the data your business produces helps you in making smart, informed decisions. Before growing your business - it is extremely important to have a firm grasp on the financials and the business analytics.
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