Revenue growth is the increase in a company’s income over a certain length of time. To calculate growth in revenue, a company will take the current revenue total, subtract the revenue from a previous period of their choosing, and divide that total by the same previous period revenue.
For example, if a company made $100 last month and $75 the month before, its revenue growth would be ($100 - $75) / $75, or 33%, over that period.
Revenue growth can be tracked annually, quarterly, or even monthly. Each company will review and project revenue growth differently, based on its own internal needs as well as investor, industry, or regulatory requirements. It is one of the basic indicators of a company’s performance, but because it doesn’t account for other important factors such as transactions, expenses, and other liabilities, it should not be used as a sole measure of a company’s success or struggles.
There are many different things that can contribute to a company’s revenue growth, such as:
Not all of these factors are within a company’s control. Some, such as industry trends, lifecycle, or economic conditions are external factors that can strongly influence revenue growth. Successful companies will find ways to track and adapt to these factors, in addition to managing internal strategies accordingly.
Within their scope of influence, companies can take several steps to help maintain and improve their revenue growth.
Companies that use slow, outdated, legacy tools and approaches will have a harder time competing against more technologically advanced, nimble competitors. From the software tools they collaborate on to the processes they use to manage projects, emphasis is on speed and agility. Companies should find opportunities to update and increase flexibility where possible.
Companies should shy away from decisions that prioritize short-term gain over long-term success. By making sound decisions, investments, and upgrades with the goal of future returns, companies can better set themselves up to see sustained, consistent growth quarter after quarter, year after year.
In a connected world, companies are increasingly turning to the power of information to analyze industry trends, competitor performance, customer prospects, and internal operations. By building data-driven organizations, top to bottom, companies have more detailed insights on how they’re performing and where gaps and inefficiencies are—to better detect and proactively manage negative external trends.